Stocks Surging into Final Hour on Diminished Trade War Fears, Stable Long-Term Rates, Oil Gain, Tech/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 16.5 -8.5%

• Euro/Yen Carry Return Index 134.05 +.1%

• Emerging Markets Currency Volatility(VXY) 10.15 -.2%

• S&P 500 Implied Correlation 41.23 -4.65%

• ISE Sentiment Index 99.0 -34.4%
  

• Total Put/Call .75 unch.

• NYSE Arms .77 -10.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.59 -1.0%
  

• America Energy Sector High-Yield CDS Index 667.0 -.98%

• European Financial Sector CDS Index 101.39 -3.14%

• Italian/German 10Y Yld Spread 284.0 -6.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 9.31 -4.85%

• Emerging Market CDS Index 200.65 -2.99%
  

• iBoxx Offshore RMB China Corporate High Yield Index 146.75 -.45%

• 2-Year Swap Spread 17.5 +.75 basis point

• TED Spread 39.5 +2.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -24.75 -2.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.46 +.09%
• 3-Month T-Bill Yield 2.33% -3.0 basis points

• Yield Curve 15.75 -4.25 basis points

• China Iron Ore Spot 63.18 USD/Metric Tonne +.17%

• Citi US Economic Surprise Index -2.8 +25 points

• Citi Eurozone Economic Surprise Index -57.60 +5.3 points

• Citi Emerging Markets Economic Surprise Index -4.4 +1.0 point

• 10-Year TIPS Spread 1.97-2.0 basis point
• 82.9% chance of Fed rate hike at Jan. 30th meeting, 91.8% chance at March 20th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +31 open in Japan 
• China A50 Futures: Indicating +92 open in China

• DAX Futures: Indicating -4 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.2%

Sector Outperformers:

• 1) Gaming +5.0% 2) Oil Service +3.4% 3) Computer Hardware +3.0%

Stocks Rising on Unusual Volume:

• IEFA, TRCO, TSRO, GBT, BHVN, ESL, EFG, CRON, NXST, ICLR, ARGX, ORBK, ACWX, VONV, AMPH, FMO, ECH, CLVS, SSNC, SFM, UBX, BX, CEM, TYG, HTHT, VNDA, GH, APLS, ESTC, WYNN, KPTI, CLR, PS, FSLR, PKI, TIF, AINV and MGLN

Stocks With Unusual Call Option Activity:

• 1) SFM 2) TSRO 3) RH 4) ADM 5) SMH

Stocks With Most Positive News Mentions:

• 1) CLVS 2) BHVN 3) AMD 4) GBT 5) WYNN

Charts:

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

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +31.0% Above 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 66.9% of Issues Advancing, 31.8% Declining
• 71 New 52-Week Highs, 103 New Lows
• 28.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.1%
• Vix 16.6 -8.0%
• Total Put/Call .77 +2.7%
• TRIN/Arms .84 -2.3%

Monday Watch

Today's Headlines

Bloomberg:          

• Trade Truce Lands in Stock Market Already Rallying on Dovish Fed.  

• Trump-Xi Give Markets the Most They Could Have Expected.

• Trade Truce Offers Dose of Cheer for Emerging-Market Investors.  

• Investors Expect a Big Monday for Currencies and Stocks.

• May Threatened With Vote to Bring Down Government Over Brexit.  

• Trump Expects a Meeting With Kim Jong Un as Soon as January.     

• Australian House Prices Fall Most Since Global Financial Crisis.

• Trump Weighs Putting Off Government Shutdown After Bush's Death.  

• Putin Says Russia, Saudi Arabia Will Extend OPEC+ Oil Pact.

• Trade Truce Brings Relief as S&P 500 Futures Jump. Risk appetite returned to markets early Monday, as U.S. equity futures climbed with the Australian dollar and China’s yuan after a truce between Washington and Beijing emerged from the Group-of-20 summit. U.S. President Donald Trump and his Chinese counterpart Xi Jinping agreedto pause the introduction of new tariffs and intensify their trade talks. S&P 500 Index futures jumped over 1.5 percent, while the Aussie and the currencies of South Africa, Turkey and Mexico all rose. Contracts also pointed to gains for Asian equities on Monday. Havens such as the Japanese yen slipped and the greenback was lower against most of its large developed-market counterparts. Crude climbed on an agreement between Saudi Arabia and Russia. Futures on the S&P 500 gained 1.4 percent. The S&P 500 closed up 0.8 percent on Friday. Australia’s S&P/ASX 200 Index rose 0.1 percent.

• Saudi’s Tadawul Leads Gauges in Middle East Markets: Inside EM. 

• Oil Jumps After Saudi Arabia and Russia Agree to Extend Pact.

Wall Street Journal:

• U.S., China Reach Truce in Trade Fight

• America Is Addicted to Outrage. Is There a Cure?

• Amazon(AMZN) Tests Its Cashierless Technology for Bigger Stores.

• Paris Rioting Puts Macron’s Economic Overhaul to the Test.

• Democrats and Racial Division

• Trump Declares Day of Mourning for Bush; NYSE, Nasdaq to Close

• G-20 Agrees to Joint Statement, With Compromises by U.S., EU and China 

• U.S. Mulls Changing Movie Rules for the Big Screen.

• Nexstar Reaches Deal to Buy Tribune Media for $4.1 Billion.

• Jeffrey Talpins Quietly Reigns Over Hedge-Fund World.

Fox News:

• President sending Air Force One to Texas to carry George H.W. Bush's casket to DC for final tributes.

• Michelle Obama curses, dismisses feminist advice during book tour.

CNBC: 

• Trump hails trade deal with China as one of the largest ever made.

• US, China call a 90-day truce in trade war as Trump, Xi agree to continue wide ranging talks.

• US-China trade truce may breathe new life into the scuttled $44B deal between Qualcomm and NXP.   

• Mining software isn't just for cryptocurrency — it could also be used to steal corporate secrets.

• France to consider state of emergency following fresh riots.

Zero Hedge:   

• US Equity & WTI Crude Futures Surge At The Open, Yuan Fades.

• Yuan Surges In Early Trading, Signals 2800 Open For The S&P.

• France In Chaos; Macron Considers State Of Emergency Amid "Yellow Vest" Protests; "All Options" Considered.

• Visualizing Eastern Europe's Deadly HIV Problem.

• "It's A Truce": Trump, Xi Agree No New Tariffs After January 1, Keep Tariffs At 10% For 90 Days.

• "We Are Losing Too Many Americans": Drug Overdose Deaths Spike, Life-Expectancy Tumbles.

• San Francisco's Wealthy Leftists Are Making Homelessness Worse.

• Commander Of US Navy's Middle East Fleet Found Dead.

• "I Begged Them To Kill Me": Muslim Woman Describes Degrading, Electroshock Torture In Chinese Internment Camp.  

• Is Abegeddon Nigh? The Zombification Of Japan's Economy.

Business Insider:

• Jailing Muslims, burning Bibles, and forcing monks to wave the national flag: How Xi Jinping is attacking religion in China.

Night Trading

• Asian indices are +1.0% to +1.5% on average.

• Asia Ex-Japan Inventment Grade CDS Index 91.25 -2.5 basis points.

• Asia Pacific Sovereign CDS Index 9.75 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 67.42 +.04%.

• FTSE 100 futures +1.69%.

• S&P 500 futures +1.48%.

• NASDAQ 100 futures +1.78%.

Morning Preview Links

Earnings of Note

Company/Estimate
Before the Open:

• (FNSR)/.21

After the Close:

• (COUP)/.23

• (MESA)/.50

Economic Releases
10:00 am EST

• Construction Spending MoM for October is estimated to rise +.4% versus unch. in September.

• ISM Manufacturing for November is estimated to fall to 57.6 versus 57.7 in October.

• ISM Prices Paid for November is estimated to fall to 70.0 versus 71.6 in October.
  

Afternoon:

• Wards Total Vehicle Sales for November are estimated to fall to 17.2M versus 17.5M in October.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Brainard speaking, Eurozone PMI report, UBS Media/Communications Conference, Raymond James Tech Conference, Wells Fargo Tech Summit, BofA Merrill Leveraged Finance Conference, Cowen Energy/Natural Resources Conference, (F) November sales call and the (SLG) investor conference could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by industrial and technology shares in the region. I expect US stocks to open sharply higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters. 

• Weekly Market Outlook by Yahoo. (video)

• 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 technical buying, diminishing growth fears, less European/Emerging Market/US High-Yield debt angst, less US/China trade deal pessimism, stable long-term rates and seasonal strength. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.