Bull Radar

Style Outperformer:

• Small-Cap Value +.2%

Sector Outperformers:

• 1) Coal +2.7% 2) Airlines +1.6% 3) Homebuilders +1.5%

Stocks Rising on Unusual Volume:

• BXC, INNT, ECYT, MB, AVD, RDNT, DSW, NRE, MU, CRVS, CCXI, NTRA, LFIN, ZSAN, CENX, ALNY, CWH, AAT, HRTX, NTNX, VRTU, AVGO, GTHX, ITCI, BRSS, MNOV, ITCI, MDC, MTOR, CDXS and JNCE

Stocks With Unusual Call Option Activity:

• 1) RCL 2) FLEX 3) LEN 4) ITB 5) JCI

Stocks With Most Positive News Mentions:

• 1) PTI 2) CENX 3) ALK 4) CAT 5) NTNX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -16.3% Below 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 62.6% of Issues Advancing, 33.4% Declining
• 72 New 52-Week Highs, 12 New Lows
• 51.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.3%
• Vix 15.7 -.8%
• Total Put/Call .61 -28.2%
• TRIN/Arms 1.23 +42.3%

Tuesday Watch

Evening Headlines

Bloomberg:

• China Unveils 'Revolutionary' Plan to Give Communist Party Even More Power. China unveiled a “revolutionary” government restructuring plan that consolidates Communist Party authority, giving President Xi Jinping more direct control over the levers of money and power. The plan put before China’s rubber-stamp parliament Tuesday -- some of which had been reported by Bloomberg -- calls for merging several ministries and agencies including the regulators that oversee the country’s $43 trillion banking and insurance sectors. The proposed “CPC leadership system” would also clarify the party’s policy-making authority over state agencies.

• China Creates Super Regulator for $43 Trillion Finance Industry. (video) China is giving its central bank greater regulatory powers while merging the watchdogs responsible for banking and insurance, a key move in the nation’s campaign to curb risks in its financial sector.

• Larry Kudlow Emerges as Trump Favorite to Replace Cohn, Sources Say. CNBC personality Larry Kudlow has emerged as President Donald Trump’s favorite to replace Gary Cohn, the outgoing director of the White House National Economic Council, two people familiar with the matter said. Trump may name Kudlow as his top economic adviser within a day or so, one of the people said. In addition to his duties at CNBC, where he is a senior contributor, Kudlow is a radio host, syndicated columnist and entrepreneur. He was an economist for Bear Stearns & Co. Inc. and served in President Ronald Reagan’s administration.

• Tillerson Says Substance Used in Ex-Spy Poisoning Is From Russia.

• Asian Stocks Mixed Ahead of U.S. Data; Yen Higher. (video) Japanese and Hong Kong equities drifted, while Australian shares fell and South Korea and Shanghai stocks were little changed. The S&P 500 Index slipped overnight following its biggest rally in five weeks that was spurred by a better-than-expected jobs report. The yen continued to climb as political clouds gathered around Japanese Finance Minister Taro Aso. The U.S. 10-year yield held at 2.87 percent after Monday’s Treasury auction was broadly in line with expectations. Japan’s Topix index slid 0.1 percent as of 10:41 a.m. in Tokyo. South Korea’s Kospi index was flat. Australia’s S&P/ASX 200 Index declined 0.6 percent. Hong Kong’s Hang Seng Index fell 0.1 percent and the Shanghai Composite Index fluctuated. S&P 500 Index futures were little changed. The underlying measure lost 0.1 percent.

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

Wall Street Journal: 

• U.K.’s May Says It Is ‘Highly Likely’ Russia Was Behind Skripal Poisoning. Prime minister says military-grade nerve agent developed in Russia was used in attack; responses under consideration.

• Goldman Sachs(GS) Puts David Solomon in Line to Be Next CEO. Solomon’s status rises at firm after fellow president, Harvey Schwartz, announces plans to retire in April.

• Hedge Funds Bet on Volatility. Bullish wagers on VIX outnumber bearish ones for first time since 2016.

MarketWatch.com:

• Stock rally showing internal signs of strength.

• Micron(MU), Nvidia(NVDA), Broadcom(BRCM) lead booming chip sector to seventh straight day of gains.

• The stock market’s technical indicators are improving.

• Bitcoin investors have reason to worry.

CNBC:

• Apple(AAPL) hits a new all-time high and briefly climbs above a $925 billion market cap.

• 'This bull market is only halfway through'. (video)

• Cramer introduces tech's hottest new stock group: the 'cloud kings'. (video)

• Stocks making the biggest moves after hours: Stitch Fix, US Steel, Tilly's & Myriad Genetics.

• Republican senator puts forward bill to quash Trump's new tariffs.

Zero Hedge:  

• Krieger: "Foreign Government Lobbying Is An Abomination, Should Be Eradicated Immediately" - Part 2.

• House Intel Committee Ending Russia Probe, Says No Collusion Found; Schiff Responds.

• Man Cited As Trump's "Russian Link" Actually Works For The FBI.

• February Budget Deficit Surges As Interest On US Debt Hits All Time High.

• VIX Spikes Most In 7 Days As Tech Jumps, Dow Dumps. (graph)

• Internet Inventor Warns "Regulate Tech Firms Now Or Risk A Weaponized Web".

Business Insider: 

• President Trump blocks the $117 billion Broadcom takeover of Qualcomm on national security grounds.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 64.5 -1.5 basis points. 

• Asia Pacific Sovereign CDS Index 11.0 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 75.42 +.03%.

• FTSE 100 futures -.18%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.16%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DKS)/1.20

• (DSW)/.27

• (HDS)/.44

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for February is estimated to rise to 107.1 versus 106.9 in January.
  

8:30 am EST

• The CPI MoM for February is estimated to rise +.2% versus a +.5% gain in January.

• The CPI Ex Food and Energy MoM for February is estimated to rise +.2% versus a +.5% gain in January.

• Real Avg. Weekly Earnings YoY for February. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Machine Orders report, weekly retail sales reports, $13B 30Y T-Bond auction, Barclays Healthcare Conference, Susquehanna Semi/Storage/Tech conference, BofA Merrill Consumer/Retail Tech conference, JPMorgan Aviation/Transport/Industrials Conference and the (CRM) investor meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by commodity and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

Stocks Slightly Higher into Final Hour on Lower Long-Term Rates, Buyout Speculation, Technical Buying, Tech/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.11 +10.0%

• Euro/Yen Carry Return Index 136.66 -.19%

• Emerging Markets Currency Volatility(VXY) 7.71 -.26%

• S&P 500 Implied Correlation 40.89 +3.0%

• ISE Sentiment Index 91.0 -10.78%
  

• Total Put/Call .85 +4.9%

• NYSE Arms .72 +13.73%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.0 -1.5%
  

• America Energy Sector High-Yield CDS Index 397.0 -.76%

• European Financial Sector CDS Index 49.22 -1.80%

• Italian/German 10Y Yld Spread 137.0 +.75 basis point
  

• Asia Pacific Sovereign Debt CDS Index 11.0 -5.7%

• Emerging Market CDS Index 113.83 +.49%
  

• iBoxx Offshore RMB China Corporate High Yield Index 148.18 +.07%

• 2-Year Swap Spread 31.50 +1.5 basis points

• TED Spread 42.0 +1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -27.5 +.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.43 +.07%
• 3-Month T-Bill Yield 1.67% unch.
  

• Yield Curve 60.5 -1.75 basis points

• China Iron Ore Spot 68.17 USD/Metric Tonne -.13%

• Citi US Economic Surprise Index 45.0 -2.9 points

• Citi Eurozone Economic Surprise Index -25.80 -4.2 points

• Citi Emerging Markets Economic Surprise Index 33.90 +2.2 points

• 10-Year TIPS Spread 2.11 -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 -169 open in Japan 
• China A50 Futures: Indicating +22 open in China

• DAX Futures: Indicating -9 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• Trump Pushes EU to Cut Tariffs as Bloc Vows to Resist ‘Bullies’. The European Union told U.S. President Donald Trump it won’t be cowed by his escalating protectionist rhetoric and talk of punitive tariffs. “Europe is prepared,” Dutch Finance Minister Wopke Hoekstra said Monday as he headed into a meeting with his counterparts from the rest of the euro area. “We are not afraid, we will stand up to the bullies,” Trade Commissioner Cecilia Malmstrom said earlier in the day.

• Theresa May Says Russia Responsible for Poisoning Ex-Spy. (video) In a move that threatens to worsen already tense relations between the Kremlin and the West, Prime Minister Theresa May blamed Russia for poisoning a former spy and his daughter eight days ago on British soil. May told Parliament on Monday that Sergei Skripal and his daughter Yulia had been targeted with a “military grade” nerve agent known as “Novichok” that was developed by Russia.

• Oil Slides Amid Supply Concerns After Biggest Gain in 7 Months. (video)

• These Three Options Charts Point to More Gains for U.S. Stocks. (video)

Wall Street Journal:

• Democrats’ Path to a November Majority Has Hurdles. Strong economic news and polling on GOP tax cut could impede the blue wave.

MarketWatch.com: 

• Small-cap barometer less than 1 percentage point from all-time high close as stock market climbs.

• Here’s the No. 1 tech stock, according to money flows.

• These 4 companies will be the big early winners from the $326 billion push to 5G.

Fox News:

• Austin package explosions leave teen dead, women hurt after three blasts in 2 weeks. (video)

CNBC:

• Trump wants a 'phase two' of tax cuts. (video)

• Companies are putting tax savings in the pockets of shareholders. (video)

• Apple(AAPL) buys Texture, a digital magazine subscription service.

• Multinationals pay lower taxes than a decade ago.

• Free cash handouts take a step closer to mainstream thanks to California Democrats.

Zero Hedge:

• Mueller Said To Be "Close To Completion" Of Trump Obstruction Probe.

• More Than Half Of 2018 Earnings Growth Is From Trump's Tax Cuts And Stock Buybacks. (graph)

• Larry Kudlow "Leading Contender" To Replace Gary Cohn: Report.

• Netflix(NFLX) Slides After Citron Says "Short To $300", "Stranger Things Are Happening".

• Goldman(GS) Names David Solomon Sole President, Next In Line To Replace Blankfein.

• Dropbox Set To Go Public At $6.7BN Market Cap, A Huge Haircut To Its Private Valuation.

• Jeff Bezos Is Smiling: Regulators Approve "Limited Drone Deliveries".