Bear Radar

Style Underperformer:

• Small-Cap Value +.6%

Sector Underperformers:

• 1) REITs -.4% 2) Gaming -.1% 3) Retail +.1%

Stocks Falling on Unusual Volume: 

• STMP, LL, RPD, VIRT, ABEO and LJPC

Stocks With Unusual Put Option Activity:

• 1) PPG 2) MNK 3) URBN 4) AMJ 5) OMER

Stocks With Most Negative News Mentions:

• 1) LL 2) LJPC 3) STMP 4) NGVC 5) ULTA

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.6%

Sector Outperformers:

• 1) Gold & Silver +2.8% 2) Oil Service +2.5% 3) Computer Hardware +1.9%

Stocks Rising on Unusual Volume:

• CSRA, FRM, IEFA, CIVI, USMV, FTCS, EFAV, QSR, NOBL, EFV, GLPG, IO, COLL, CBIO, XT, VRSN, TEP, ECH, BAH, ZIV, FBHS, MCHI, SWIR, FTV, QLYS, TMST, WMS, IRBT, AMAG, AAPL, ATSG, AQ and MTCH

Stocks With Unusual Call Option Activity:

• 1) SPB 2) ITB 3) JNK 4) MA 5) SMH

Stocks With Most Positive News Mentions:

• 1) CSX 2) BA 3) PRU 4) AXP 5) CSCO

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +16.9% Above 100-Day Average
• 9 Sectors Rising, 1 Sector Declining
• 58.9% of Issues Advancing, 38.0% Declining
• 8 New 52-Week Highs, 71 New Lows
• 39.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.4%
• Vix 27.5 -5.4%
• Total Put/Call 1.01 -23.5%
• TRIN/Arms .59 +2.4%

Monday Watch

Today's Headlines

Bloomberg:

• U.K. Government to Offer Vision on Brexit as Divisions Rage. Divisions over Brexit were on display again on Sunday. International Development Secretary Penny Mordaunt said a series of speeches planned by Prime Minister Theresa May and other Cabinet ministers in the coming weeks would offer a vision of the sort of relationship the government is seeking with the European Union.

• Asia Stocks Rise With S&P Futures; Dollar Declines. Investors got a reprieve from the recent turmoil with Asian stocks recovering from their worst weekly rout since 2011 as volatility swept global markets. The dollar declined against most major peers. Equity benchmarks rose in Hong Kong, China and South Korea after the S&P 500 Index jumped on Friday and the futures extended gains in Asia at the start of the week. Australian banks dragged the benchmark there down at the start of a sweeping inquiry into the nation’s financial system. Japan is closed for a holiday. Oil maintained losses. Hong Kong’s Hang Seng Index rose 0.5 percent. The Shanghai Composite Index added 0.3 percent. The S&P/ASX 200 Index declined 0.6 percent. South Korea’s Kospi index gained 0.9 percent. Futures on the S&P 500 advanced 0.5 percent as of 11:01 a.m. in Tokyo. The underlying gauge climbed 1.5 percent Friday. The MSCI Asia Pacific Index excluding Japan gained 0.7 percent.

• Five Things You Need to Know to Start Your Day. (video)

• Volatility’s Awakening Spurs Record Long Position in VIX Futures. Bets on market tranquility that blew up in spectacular fashion helped spark a record shift in the futures market. The weekly commitment of traders report shows non-commercial positioning in VIX futures contracts spiked to a record net long of 85,818 contracts as of Feb. 6.

• When Will It End? Bloodied Traders Seeking Clues. Thanks to analyst earnings upgrades, a measure known as the PEG ratio -- which takes into account future growth -- just fell below its historic average for the first time since 2012, according to Yardeni Research data that goes back to 1985. That’s not enough to convince James Investment Research’s Brian Culpepper to warm up to stocks. His funds have been cutting holdings this year.

• What If the World's Richest Paid for Government Spending?

Wall Street Journal: 

• New Tax Law Haunts Companies That Did ‘Inversion’ Deals. Tax experts and companies say law will reduce advantages of corporate relocations.

• Bitcoin Mania Triggers Miner Influx to Rural Washington.

• Comcast Considers Reviving Pursuit of Fox After Higher Bid Was Rejected. Cable giant’s offer for Fox’s entertainment assets was in the low $60 billions, exceeding Disney’s winning offer.

• It’s a Bad Time to Build Ships—Unless They Are Cruise Ships. Business is booming for two European ship builders that have cornered the market for cruise ships. 

• Experimental Drug Promises to Kill the Flu Virus in a Day. Even if drug lives up to claim, it likely won’t be available in U.S. until next year at earliest.

• Nostalgic for the Atari-Era Arcade? Millennial Gamers Are Reinventing It. Though arcades all but disappeared years ago, crowds are gathering at special events to play artist-created games inspired by 1980s classics. Here’s how to get in on the action.

• Israel Vows More Aggression to Stop Iranian Military Expansion in Syria. Reaction after fighter jet is shot down shows how competing aims of Iran and Israel could lead to a war.

MarketWatch.com:

• This stock-market selloff is creating a rare opportunity to buy Apple on the cheap.

• Italian cryptocurrency exchange BitGrail says $170 million in Nano tokens missing.

Barron's:

• Had bullish commentary on (AAPL), (DAL), (SBUX), (VZ), (TSM), (DHI), (BABA), (NEE) and (AEP). 

• Had bearish commentary on (WFC), (SNAP) and (TWTR).

Fox News:

• Democrats ought to worry about the midterm elections.

• Russian plane with 71 aboard crashes outside Moscow, no reports of survivors.

• CNN slammed for glowing puff piece about Kim Jong Un's sister at Olympics. (video)

CNBC: 

• Trump administration's $200 billion infrastructure plan to be unveiled Monday, will include a mix of grants and loans.

• Bull market looks safe for now as fewer than half of corrections deepen into full-blown bears.

• Market drop is a ‘welcome correction’ for the IMF, says Christine Lagarde.

• Most teens can't afford a virtual reality headset, so they're going to VR arcades instead.

Zero Hedge:       

• Dow Futures +200, Run Friday Stops As The Dollar Sinks.

• White House Official: Schiff Intentionally Sabotaged Democratic Rebuttal To FISA Memo.

• White House Will Release Promised $1.5 Trillion Infrastructure Plan Monday.

• Equifax Data Breach Larger Than Disclosed, Congress Slams For Hiding From Public".

• Hulu Falls Deeper Into The Red After Burning Nearly $1 Billion In 2017.

• Israel "Preparing For War In North", Boosts Air Defenses; Warns Iran.

Business Insider: 

• 2 Ohio police officers were shot and killed responding to a 911 hang-up call.

• ALLIANCEBERNSTEIN: Here are 17 stocks you might want to buy when the stock market gets rocky.

• Coastal California has a reputation as a leader in green energy — but only the rich are benefiting.

Yonhap News:

• LG's OLED TV sales exceed 14,000 units in Jan. LG Electronics Inc. said Monday its domestic sales of high-end organic light-emitting diode (OLED) TVs surpassed the 14,000 unit mark last month. The sales figure means that the South Korean tech giant sold one OLED TV every three minutes last month. In comparison, LG Electronics sold about 5,000 units of OLED TVs in January 2017. The growth of OLED TVs was driven by sales of large-sized TVs, including 65-inch models, the company said.

Night Trading

• Asian indices are unch. to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 75.5 -.25 basis point.

• Asia Pacific Sovereign CDS Index 13.75 +1.0 basis  point.

• Bloomberg Emerging Markets Currency Index 74.90 +.15%. 

• FTSE 100 futures +1.46%.

• S&P 500 futures +.61%.

• NASDAQ 100 futures +.40%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (CNA)/.82

• (DO)/-.04

• (L)/.71

• (DNB)/3.04

• (VECO)/.09 

• (VNO)/.80

• (VIPS)/1.33

Economic Releases
2:00 pm EST

• The Monthly Budget Deficit for Jan. is estimated to fall to $50.0B versus $51.3B in Dec.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The President Trump's infrastructure plan release, Japan CPI report, CSFB Energy Summit and the BIO investor conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 75% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters. 
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on positive earnings outlooks, yen weakness, economic optimism, stable long-term rates, bargain-hunting and technical buying. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Today's Headlines

Bloomberg:

• Worst Week in 2 Years for Stocks Ends on High Note. (video) U.S. equities ended their worst week in two years on a positive note, but rate-hike fears that pushed markets into a correction remain as investors await American inflation figures on Feb. 14. The S&P 500 tumbled 5.2 percent in the week, its steepest slide since January 2016, jolting equity markets from an unprecedented stretch of calm. At one point, stocks fell 12 percent from the latest highs, before a furious rally Friday left the equity benchmark 1.5 percent higher on the day. Still, the selloff has wiped out gains for the year.

• JPMorgan Sees ‘Severe’ Unwind by Systematic Strategies Coming to an End. “The position unwinding from both CTAs and Risk Parity funds has been so severe that any further position unwinding by these investors should be limited from here, especially if stop losses have been triggered already,” the report said. “This, combined with the low equity exposures of Discretionary Macro and Equity Long/Short hedge funds, leaves retail investors as the main residual risk for equity markets going forward.”

• How'd Your Week Go? Low-Vol Blowup, Stocks Jitters, in 5 Charts. (graph/video)

• Bond Traders Smash Fed-Hike Odds Lower as Stocks Whipsawed. (video) The interest-rates market is signaling just 2.3 Fed hikes in 2018, down from 2.76 a week ago, according to fed funds futures data compiled by Bloomberg. The median projection from central-bank officials is for three increases this year, a stance reiterated Thursday by Kansas City Fed President Esther George. New York Fed President William Dudley went so far as to say four hikes were possible if the economic outlook further improves. 

• Bank of Italy Revises GDP Growth Forecast Up. The Bank of Italy expects the nation’s economy to expand in 2018 at the same pace as last year since monetary policy “is working” and the ongoing reduction of economic slack has strengthened confidence, Governor Ignazio Visco said. The central bank expects Italy’s gross domestic product will expand about 1.5 percent this year and should remain above 1 percent in the next two years, Visco said Saturday. In January the Bank of Italy forecast GDP growth of 1.4 percent for 2018 and 1.2 percent for the following year.

• Trump Administration Said to Eye Big Cuts to Fuel Economy Rules.

MarketWatch.com:

• Here’s the really bad news: Only half of Americans actually own stocks.

• Stock market patterns suggest bullishness will triumph over bearishness.

• This stock-market shakeout looks a lot like 1996-97.

CNBC:

• Dow travels more than 22,000 points in one of the wildest weeks since the financial crisis. (video)

• Correction is two-thirds over; we'd buy into this weakness, says value investor David Katz. (video)

• The financials got wrecked this week. Here are three names to buy amid the wreckage. (video)

• The market may be swinging, but the last thing you should do is freak out: Wall Street trading coach. (video)

• Here's a simple strategy during market plunges that helped Josh Brown buy Netflix(NFLX) on the cheap.

Zero Hedge:

• BofA's 'Critical Stress Signal' Was Just Triggered: "This Is Where Central Banks Step In".

• Iran's Revolutionary Guard Vows "Hell To The Zionists" As Putin Warns Netanyahu.

• CIA Paid $100,000 To "Shadowy" Russian For Dirt on Trump, Including Sex Video.

• CIA Slams "Fictional" Report Of Payment For Trump Sex Tape, NSA Cyberweapons.

• Trump Blocks Democratic Counter-Memo Over "National Security Concerns".

• Traders Now Record Short Bonds After Biggest VIX Futures Liquidation Ever. (graph)

• Israel Carries Out "Large Scale Attack" On Syria After Israeli F-16 Shot Down.

• Deep State Mantra: Use An Existing Crisis... Or Create One.

• $20 Billion Hidden In The Swamp: Feds Redact 255,000 Salaries.

• WSJ Asks: Why Is The Media Ignoring The Real Bombshell FISA Memo?

• "It's Just Not The Same" - People Are Fleeing The Bay Area At The Fastest Rate In Years.

• San Francisco Unveils 'Safe Spaces' For Injecting Heroin.

• Former Official Confirms Steele Dossier Was Shared With Obama State Department.

• 'Goldilocks' Is Dead - Stocks Plunge Most Since Lehman Before Sudden Buying-Panic. (graph)

Business Insider:

• North Korean leader Kim Jong Un invites South Korean president to Pyongyang, setting up the first meeting of Korean leaders in more than 10 years.

• Wall Street is piling back into the trade that blew up earlier this week.

• This is the full schedule for the 2018 Winter Olympics in PyeongChang.

Reuters:

• Frenzied demand for Nvidia's(NVDA) graphic chips shoot prices through the roof.