Stocks Surging into Final Hour on China Trade Deal Hopes, Oil Gain, Technical Buying, Transport/Gaming Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 20.3 -4.9%

• Euro/Yen Carry Return Index 129.18 -.35%

• Emerging Markets Currency Volatility(VXY) 9.42 -.11%

• S&P 500 Implied Correlation 49.71 +1.25%

• ISE Sentiment Index 54.0 -48.6%
  

• Total Put/Call .92 +3.37%

• NYSE Arms 1.38 +39.39%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.57 -2.5%
  

• America Energy Sector High-Yield CDS Index 748.0 -4.26%

• European Financial Sector CDS Index 109.43 -1.83%

• Italian/German 10Y Yld Spread 272.75 +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 92.48 -3.35%
  

• Emerging Market CDS Index 194.03 +1.58%
  

• iBoxx Offshore RMB China Corporate High Yield Index 153.57 +.06%

• 2-Year Swap Spread 13.25 -1.0 basis point

• TED Spread 39.25 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 1.50 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.67 -.33%
• 3-Month T-Bill Yield 2.44% +4.0 basis points

• Yield Curve 13.5 -2.5 basis points

• China Iron Ore Spot 73.06 USD/Metric Tonne +.3%

• Citi US Economic Surprise Index -9.0 +3.1 points

• Citi Eurozone Economic Surprise Index -84.9 -14.4 points

• Citi Emerging Markets Economic Surprise Index -15.0 -1.2 points

• 10-Year TIPS Spread 1.82 +4.0 basis points
• 9.1% chance of Fed rate hike at March 20th meeting, 14.7% chance at May 1st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +131 open in Japan 
• China A50 Futures: Indicating +85 open in China

• DAX Futures: Indicating +27 open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.7%

Sector Underperformers:

• 1) Semis -.7% 2) Banks -.6% 3) Insurance unch.

Stocks Falling on Unusual Volume: 

• CFX, HELE, AXGN, PCG, CWEN, ILMN, WB, SAGE and MED

Stocks With Unusual Put Option Activity:

• 1) XLRE 2) FXY 3) CHS 4) AET 5) RCII

Stocks With Most Negative News Mentions:

• 1) PCG 2) WG 3) MAXR 4) CMCM 5) EIX

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.3%

Sector Outperformers:

• 1) Road & Rail +4.7% 2) Gaming +2.0% 3) Internet +1.6%

Stocks Rising on Unusual Volume:

• TCMD, NHTC, MPAA, LMRK, ASND, MRTX, ESTC, PKE, IGV, RLJ, FOR, IFN, AZZ, ESE, EFG, WWD, BPT, ADNT, UNP, MTLS, CUK, WLK, RETA, CHRS and THC

Stocks With Unusual Call Option Activity:

• 1) DISCA 2) SC 3) DVN 4) M 5) PSX

Stocks With Most Positive News Mentions:

• 1) UNP 2) MEET 3) GNMK 4) VC 5) BA

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +15.6% Above 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 68.4% of Issues Advancing, 29.2% Declining
• 12 New 52-Week Highs, 9 New Lows
• 18.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.5%
• Vix 20.6 -3.9%
• Total Put/Call .95 +6.7%
• TRIN/Arms 1.39 +40.4%

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 93.0 -2.0 basis points. 

• China Sovereign CDS 65.25 -1.75 basis points.

• Bloomberg Emerging Markets Currency Index 67.88 -.01%.

• FTSE 100 futures +.39%.

• S&P 500 futures +.30%.

• NASDAQ 100 futures +.30%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (AZZ)/.62
• (HELE)/2.36
• (LNN)/.42

After the Close:

• (SGH)/1.77

Economic Releases
6:00 am EST

• The NFIB Small Business Optimism Index for Dec. is estimated to fall to 103.0 versus 104.8 in November.

10:00 am EST

• The JOLTS Job Openings report for November is estimated to fall to 7050 versus 7079 in October.
  

3:00 pm EST

• Consumer Credit for November is estimated to fall to $17.5B versus $25.384B in October.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Industrial Production report, weekly US retail sales reports, Citi TMT Conference, Goldman Energy Conference and the JPMorgan Tech Forum could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to strengthen into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Surging into Final Hour on China Trade Deal Hopes, Buyout Speculation, Less European/Emerging Markets/US High-Yield Debt Angst, Biotech/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 21.23 -.7%

• Euro/Yen Carry Return Index 129.55 +.78%

• Emerging Markets Currency Volatility(VXY) 9.52 -.63%

• S&P 500 Implied Correlation 49.22 -2.22%

• ISE Sentiment Index 110.0 -13.4%
  

• Total Put/Call .91 unch.

• NYSE Arms .91 +139.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 81.86 -3.91%
  

• America Energy Sector High-Yield CDS Index 786.0 -4.09%

• European Financial Sector CDS Index 111.47 -1.04%

• Italian/German 10Y Yld Spread 267.75 -1.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 95.0 -2.8%
  

• Emerging Market CDS Index 190.98 -3.6%
  

• iBoxx Offshore RMB China Corporate High Yield Index 153.49 +.50%

• 2-Year Swap Spread 14.25 -1.25 basis points

• TED Spread 40.0 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 1.0 -.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.88 +.31%

• 3-Month T-Bill Yield 2.40% -1.0 basis point

• Yield Curve 16.0 -1.0 basis point

• China Iron Ore Spot 72.83 USD/Metric Tonne -.30%

• Citi US Economic Surprise Index -12.1 -.5 point

• Citi Eurozone Economic Surprise Index -70.5 +4.6 points

• Citi Emerging Markets Economic Surprise Index -13.80 +.2 point

• 10-Year TIPS Spread 1.78 +2.0 basis points

• 0.0% chance of Fed rate hike at March 20th meeting, 2.0% chance at May 1st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +207 open in Japan 

• China A50 Futures: Indicating +57 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 100% Net Long