Bear Radar

Style Underperformer:

• Small-Cap Growth -.7%

Sector Underperformers:

• 1) Airlines -3.5% 2) Semis -2.1% 3) Disk Drives -1.2%

Stocks Falling on Unusual Volume: 

• PBYI, RES, RDFN, MRCY, UAL, AERI, ADMS, CEVA, AAL, TXN, OLED, DAL, ALK, STM, PETS, SAVE, HFC, RDFN, OLED, TROX, TREE and ESPR

Stocks With Unusual Put Option Activity:

• 1) ILG 2) TXN 3) SPWR 4) VWO 5) UAL

Stocks With Most Negative News Mentions:

• 1) PBYI 2) HF 3) CEVA 4) AAL 5) ATI

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value -.2%

Sector Outperformers:

• 1) Steel +2.9% 2) Gold & Silver +2.7% 3) Medical Equipment +1.1%

Stocks Rising on Unusual Volume:

• STML, SRT, IDT, CARA, NCNA, VUZI, MDCO, CBI, MSCC, POWI, GWW, CQH, EDU, HZO, CCRC, MGNX, PBR, EC, SOI, ITGR, AWR, SECO, GD, PEN, NAVI, CBAY, ATNX, ROL, TSS, BABY, ABT, FAST, ILG and MSM

Stocks With Unusual Call Option Activity:

• 1) ETE 2) MDR 3) SGMS 4) GREK 5) GD

Stocks With Most Positive News Mentions:

• 1) TSS 2) LPX 3) SSW 4) SPI 5) MTOR

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running +25.1% Above 100-Day Average
• 9 Sectors Rising, 1 Sector Declining
• 59.2% of Issues Advancing, 37.8% Declining
• 331 New 52-Week Highs, 18 New Lows
• 66.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 54.2%
• Vix 11.3 +2.1%
• Total Put/Call .80 +.25%
• TRIN/Arms .68 -54.1%

Wednesday Watch

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 62.75 -.5 basis point. 

• Asia Pacific Sovereign CDS Index 10.75 unch.

• Bloomberg Emerging Markets Currency Index 75.79 +.07%.

• S&P 500 futures -.02%.

• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ABT)/.73
• (CMCSA)/.47
• (GD)/2.38
• (GE)/.29
• (ITW)/1.61
• (NSC)/1.57
• (PGR)/.77
• (RCL)/1.20
• (SWK)/2.15
• (UTX)/1.56
• (BGG)/.24
• (CCI)/.98
• (DLB)/.60
• (ETH)/.51
• (FFIV)/2.05
• (F)/.39
• (LRCX)/3.67
• (LVS)/.77
• (RJF)/1.44
• (TER)/.35
• (URI)/3.41
• (VAR)/.94
• (WHR)/4.02
• (XLNX)/.63

Economic Releases

9:00 am EST

• The FHFA House Price Index MoM for November is estimated to rise +.5% versus a +.5% gain in October.

9:45 am EST

• Preliminary Markit US Manufacturing PMI for January is estimated to fall to 55.0 versus 55.1 in December. 
• Preliminary Markit US Services PMI for January is estimated to rise to 54.3 versus 53.7 in December.
  

10:00 am EST

• Existing Home Sales for December are estimated to fall to 5.7M versus 5.81M in November.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +1,589,110 barrels versus a +3,620,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +1,589,110 barrels versus a +3,620,000 barrel gain the prior week.  Distillate inventories are estimated to fall by -17,330 barrels versus a -3,887,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.5% versus a -2.3% decline prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Services PMI report, weekly MBA Mortgage Applications report, $34B 5Y T-Note auction, CIBC Institutional Investor Conference and the (KMI) analyst meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by technology and retail shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the day.

Stocks Rising into Final Hour on Earnings Optimism, Oil Gain, Short-Covering, Tech/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 11.0 +.36%

• Euro/Yen Carry Return Index 141.32 -.32%

• Emerging Markets Currency Volatility(VXY) 8.13 +2.4%

• S&P 500 Implied Correlation 32.97 -3.4%

• ISE Sentiment Index 91.0 -7.14%
  

• Total Put/Call .63 -29.21%

• NYSE Arms 1.43 +95.21%

Credit Investor Angst:

• North American Investment Grade CDS Index 46.43 -1.22%
  

• America Energy Sector High-Yield CDS Index 312.0 -2.79%

• European Financial Sector CDS Index 42.12 -.60%

• Italian/German 10Y Yld Spread 132.75 -2.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.61 -.93%

• Emerging Market CDS Index 115.07 +2.07%
  

• iBoxx Offshore RMB China Corporate High Yield Index 147.13 +.22%

• 2-Year Swap Spread 20.25 -.25 basis point

• TED Spread 31.0 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -26.25 +1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.71 -.02%
• 3-Month T-Bill Yield 1.43% +2.0 basis points
  

• Yield Curve 58.0 -1.25 basis points

• China Iron Ore Spot 72.20 USD/Metric Tonne +.03%

• Citi US Economic Surprise Index 49.60 -2.3 points

• Citi Eurozone Economic Surprise Index 51.80 +.7 basis point

• Citi Emerging Markets Economic Surprise Index 4.10 -1.0 basis point

• 10-Year TIPS Spread 2.05 -2.0 basis points
  
• 86.9% chance of Fed rate hike at March 21 meeting, 87.4% chance at May 2 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -89 open in Japan 
• China A50 Futures: Indicating +46 open in China

• DAX Futures: Indicating -4 open in Germany

Portfolio: 

• Higher: On gains in my biotech/tech sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• Trump Swings Into Action on Trade, Adds Edge to Nafta Talks. President Donald Trump’s threat to scrap the North American Free Trade Agreement could take on a sharper edge now that he’s pulled the trigger on new import tariffs. Trump took his first big step toward erecting trade barriers on Monday by slapping new “safeguard” duties on solar-panel and washing machine imports to protect U.S. industry. The decision could fray nerves at this week’s round of negotiations with Canada and Mexico to revamp Nafta. Trump has repeatedly threatened to withdraw from the pact -- and now he’s shown that he’s ready to put harsh words on trade into action.
• German Investor Sentiment Gains as Economy Faces Bumper Year. German investor confidence rose to an eight-month high in January, setting an optimistic tone for Europe’s largest economy in 2018. The ZEW Center for European Economic Research in Mannheim said on Tuesday that its index of investor expectations increased to 20.4 from 17.4 in December. Economists in a Bloomberg survey predicted a gain to 17.7.
• Iron Ore Tumbles Back Toward $60s.
• Disney(DIS) to Give Employees $1,000 Bonuses in Wake of Tax Reform.
• Caterpillar(CAT) Earnings Outlook Improves Most Among Dow Members.

Wall Street Journal:

• Manufacturers Fight Over New Tariffs’ Effect on U.S. Jobs. Tariffs target imported solar panels and washing machines.
• The Programmer at the Center of a $100 Billion Crypto Storm. How a top source of bitcoin data contributed to a sudden plunge in digital currencies.
• Tesla(TSLA) Gives Musk New Long-Term Pay Deal Tied to Big Targets. The 10-year compensation plan ultimately aims for Tesla market cap of $650 billion.
• Unlike the North, Many in the South See the U.S. Tax Plan as Good News. Officials expect a cap on federal deductions of state and local taxes for taxpayers to be a boon for the low-tax region.
• Apple(AAPL) to Begin Selling Delayed HomePod Speaker. Delay cost the tech giant a potentially lucrative debut during of the holiday shopping season.

MarketWatch.com:

• Here’s what the Netflix haters don’t get about the soaring stock.

Fox News:

• FBI's Strzok allegedly dismissed Mueller probe: 'no big there there'. (video)
• Kentucky school shooting leaves at least two dead and 19 others injured, officials say. (video)

CNBC:

• Fearful millennials are finally ready to take a chance on the stock market.
• JP Morgan Chase(JPM) to build 400 new branches, raise wages because of the tax cut.
• Bank of America(BAC) raises its 2018 market forecast after S&P 500 surpasses initial target in January.
• A 'big money indicator' is pointing to more record highs for stocks. (video)
• Verizon(VZ) says many workers will receive shares of stock.
• These Obamacare taxes are suspended in the deal to end the government shutdown.
• Billionaire hedge fund manager Ray Dalio says market surge ahead: 'If you're holding cash, you're going to feel pretty stupid'. (video)
• McDonald's(MCD) franchisees expect new Dollar Menu to boost sales in early 2018.
• Criminal activity will spur government intervention and kill bitcoin: Hermitage CEO Bill Browder. (video)
• Credit card debt hits a record high. It's time to make a payoff plan.

Zero Hedge:

• FBI Agents Discussed "Secret Society" Within DOJ And FBI Working To Undermine Trump.
• "Jaw-dropping" Text Message By FBI Agent Suggests No Trump Collusion With Russia.
• "Stupidest Damn Thing I've Ever Seen": 'Sellout Schumer' Under Fire For Shutdown Deal.
• BofA Raises S&P Target To 3000 After Getting Steamrolled By The Market.
• Richmond Fed Suffers Biggest 2-Month Drop Since 2006. (graph)
• Twitter(TWTR) COO Anthony Noto Resigns, Stock Slides.
• Violent Yen Rollercoaster Stuns Traders As BOJ Sends Conflicting Messages.
• U.S. On Track To Unseat Saudi Arabia As No.2 Oil Producer In the World