Tuesday, February 06, 2018

Bear Radar

Style Underperformer:
  • Large-Cap Value -.4%
Sector Underperformers:
  • 1) Utilities -2.6% 2) Insurance -1.7% 3) Shipping -1.3%
Stocks Falling on Unusual Volume: 
  • CAFD, CBOE, IT, CFX, VSH, AGCO, GWPH, PRTA, NYLD, MOH, ATHN and YRCW
Stocks With Unusual Put Option Activity:
  • 1) MTOR 2) PSEC 3) CBOE 4) ARNC 5) ACAD
Stocks With Most Negative News Mentions:
  • 1) SCG 2) CTLT 3) CRUS 4) CXO 5) ALE
Charts:

Bull Radar

Style Outperformer:
  • Large-Cap Growth +.2%
Sector Outperformers:
  • 1) Steel +3.0% 2) Homebuilders +2.6% 3) Semis +1.8%.
Stocks Rising on Unusual Volume:
  • IEFA, EFG, FN, MCHI, ACWI, TOT, EZU, SPGI, UNP, MNOV, VVC, ASML, EFV, RACE, FEM, FTNT, IBUY, TRIP, SWKS, AIA, LITE, TM, LTRPA, ARRY, TRTN, IPHI, RDFN, AQ, HAE, TPR, REI, VIRT, IIVI, AMED, COUP, LHCG, NRZ, TPH, RBC, MPWR, AMTD, CHY, LEG, PBH and DWDP
Stocks With Unusual Call Option Activity:
  • 1) UNP 2) OCLR 3) XHB 4) AXL 5) KOS
Stocks With Most Positive News Mentions:
  • 1) TRIP 2) SWKS 3) RGCO 4) MU 5) VIRT
Charts:

Morning Market Internals

NYSE Composite Index:

Monday, February 05, 2018

Tuesday Watch

Evening Headlines
Bloomberg:
  • China's Willingness to Defend Its Stock Markets Put to the Test. Signs of state support on Monday helped the Shanghai Composite Index rise 0.7 percent, the sole gainer in Asia. A record $1.6 billion of inflows into Hong Kong stocks from mainland investors also insulated the city’s bourse from the worst of the declines, with the Hang Seng China index narrowing its loss to 0.4 percent.
  • Stock Plunge Deepens in Asia After U.S. Sell-Off. (video) Japan’s equity benchmarks plummeted almost 5 percent and stocks across the region extended a global rout with almost all shares on the 1,000-plus member MSCI Asia Pacific Index down. Volatility on the Nikkei 225 Stock Average spiked the most since 2015 and trading volume was more than double the 30-day average. Futures on U.S. equity-indexes headed lower, abandoning an earlier attempt at finding a bottom after the S&P 500 Index Monday sank 4.1 percent, wiping out gains from January. The Dow Jones Industrial Average lost more than 1,100 points. Australian bonds gained after the rally in Treasuries. Japan’s Topix index plunged 5.1 percent, poised for its biggest two-day slide since February 2016, and the Nikkei 225 Stock Average sank 5.3 percent as of 10:50 a.m. in Tokyo. Australia’s S&P/ASX 200 Index slid 3.3 percent. Hong Kong’s Hang Seng Index declined 3.6 percent and the Shanghai Composite Index fell 1.8 percent. South Korea’s Kospi index lost 3 percent. Contracts on the S&P 500 declined 1.7 percent and futures on the Dow sank 2.2 percent. They climbed more than 1 percent earlier.
  • Strategist Who Called Stock Slump Says It Will Be Short-Lived. Peter Garnry said two weeks ago that global stocks were headed for a correction in the second half of the first quarter. While the head of equity strategy at Saxo Bank didn’t get the timing exactly, his alarm bells on the run-up in equity markets were on point. Now, Garnry says the declines are likely to be short-lived as U.S. 10-year Treasury yields haven’t reached a worrying level. “We believe this is a healthy correction in equity markets but also likely short-lived as the higher US 10-year yield is still not in the danger zone,” Garnry said in an e-mail. “That area is more likely in the 3.5-4.0 percent range.”
  • Volatility Jump Has Traders Asking About Poison Pill in VIX Note. The Cboe Volatility Index’s biggest rally ever is raising thorny questions about the future of exchange-traded products tied to the gauge. An ETP meant to mirror moves in the front of the VIX’s futures curve plunged more than 75 percent in after-hours trading following an 80 percent spike in contracts that comprise its underlying index during the trading day, potentially putting in play triggers that would enable the fund’s owners to liquidate it to avoid losses.
Wall Street Journal:
MarketWatch.com
CNBC:
Business Insider:
Forbes:
  • Banks, Retailers, China Have All Turned On Bitcoin. Bitcoin investors need to program a stop-loss at these levels, says Fernando Pertini, founder of Millenia Asset Management in San Jose, Costa Rica. "I believe we will see Bitcoin back to $2,500," says Millenia's fund manager. "Maybe even lower." With retail and banks turning on Bitcoin, frustration is mounting. The walls are closing in around cryptos. Newcomers to the market have only lost money. That's a very different story from the last five years.
NY Times: 
  • As Bitcoin Bubble Loses Air, Frauds and Flaws Rise to Surface. The scale of those problems is starting to become clear as digital tokens have slid more than 50 percent in value from their peaks in early January, with steep drops on Monday pushing the value of Bitcoin specifically below $7,000. Hackers draining funds from online exchanges. Ponzi schemes. Government regulators unable to keep up with the rise of so-called cryptocurrencies. Signs of trouble have appeared at nearly every level of the industry, from the biggest exchanges to the news sites and chat rooms where the investment frenzy has been discussed.
Night Trading 
  • Asian equity indices are -4.25% to -2.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 73.0 +5.5 basis points
  • Asia Pacific Sovereign CDS Index 11.75 unch.
  • Bloomberg Emerging Markets Currency Index 75.44 -.14%.
  • FTSE 100 futures -4.94%.
  • S&P 500 futures -1.8%.
  • NASDAQ 100 futures -1.6%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • (AGCO)/1.13
  • (ABC)/1.35
  • (ADM)/.71
  • (BDX)/2.41
  • (BP)/.10
  • (CMI)/2.62
  • (DNKN)/.63
  • (EMR)/.55
  • (GM)/1.43
  • (LH)/2.38
  • (LITE)/1.13
  • (VSH)/.38
  • (WCG)/.18
  • (AKAM)/.63
  • (APC)/.03
  • (BZH)/.02
  • (CERN)/.61
  • (CMG)/1.32
  • (GILD)/1.67
  • (MANH)/.45
  • (MCHP)/1.35
  • (OLN)/.45
  • (OI)/.54
  • (SNAP)/-.16
  • (DIS)/1.61
Economic Releases
8:30 am EST
  • The Trade Deficit for December is estimated at -$52.1B versus -$50.5B in November.
10:00 am EST
  • JOLTS Job Openings for December are estimated to rise to 5961 versus 5879 in November.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Australia Trade Balance report, German Factory Orders report, 3Y T-Note auction, weekly US retail sales reports, hearing on cryptocurrencies with SEC/CFTC commissioners and the (FAST) Jan. sales report could also impact trading today.
BOTTOM LINE:  Asian indices are sharply lower, weighed down by technology and industrial shares in the region. I expect US stocks to open lower and to rally into the afternoon, finishing mixed.  The Portfolio is 25% net long heading into the day.

Stocks Plunging into Final Hour on Fed Rate-Hike Fears, Technical Selling, Yen Strength, Homebuilding/Bank Sector Weakness

Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Every Sector Declining
  • Volume: Heavy
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 24.60 +42.1%
  • Euro/Yen Carry Return Index 141.87 -.79%
  • Emerging Markets Currency Volatility(VXY) 8.62 +.7%
  • S&P 500 Implied Correlation 44.20 +7.46%
  • ISE Sentiment Index 62.0 -23.46%
  • Total Put/Call .86 -2.27%
  • NYSE Arms 1.70 +17.0%
Credit Investor Angst:
  • North American Investment Grade CDS Index 53.04 +6.46%
  • America Energy Sector High-Yield CDS Index 371.0 +3.29%
  • European Financial Sector CDS Index 45.31 +3.06%
  • Italian/German 10Y Yld Spread 129.0 +.25 basis point
  • Asia Pacific Sovereign Debt CDS Index 11.84 +.59%
  • Emerging Market CDS Index 121.49 +2.71%
  • iBoxx Offshore RMB China Corporate High Yield Index 147.17 -.02%
  • 2-Year Swap Spread 23.75 +1.75 basis points
  • TED Spread 30.75 unch.
  • 3-Month EUR/USD Cross-Currency Basis Swap -29.0 +1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 75.67 -.34%
  • 3-Month T-Bill Yield 1.49% +1.0 basis point
  • Yield Curve 71.25 +1.75 basis points
  • China Iron Ore Spot 74.06 USD/Metric Tonne +.12%
  • Citi US Economic Surprise Index 50.0 +5.5 points
  • Citi Eurozone Economic Surprise Index 36.90 +2.8 basis points
  • Citi Emerging Markets Economic Surprise Index 1.8 +.8 basis point
  • 10-Year TIPS Spread 2.12 -2.0 basis points
  • 100.0% chance of Fed rate hike at May 2 meeting, 100.0% chance at June 13 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -488 open in Japan 
  • China A50 Futures: Indicating -104 open in China
  • DAX Futures: Indicating -132 open in Germany
Portfolio: 
  • Slightly Lower: On losses in my medical/retail/tech/biotech sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  • Market Exposure: Moved to 25% Net Long