Stocks Rising into Final Hour on Earnings Optimism, Dovish FOMC Commentary, Technical Buying, Tech/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 15.60 -.83%

• Euro/Yen Carry Return Index 130.43 -.15%

• Emerging Markets Currency Volatility(VXY) 8.82 -1.12%

• S&P 500 Implied Correlation 42.20 -3.94%

• ISE Sentiment Index 80.0 -23.1%
  

• Total Put/Call .86 +3.61%

• NYSE Arms 1.43 +60.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.21 -1.75%
  

• America Energy Sector High-Yield CDS Index 662.0 -.36%

• European Financial Sector CDS Index 85.72 -2.87%

• Italian/German 10Y Yld Spread 262.5 +6.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 77.87 -.44%
  

• Emerging Market CDS Index 166.13 -2.71%
  

• iBoxx Offshore RMB China Corporate High Yield Index 156.20 +.02%

• 2-Year Swap Spread 14.25 -.25 basis point

• TED Spread 32.5 -2.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -4.75 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 68.76 +.03%

• 3-Month T-Bill Yield 2.40% +2.0 basis points

• Yield Curve 17.75 -1.0 basis point

• China Iron Ore Spot 86.0 USD/Metric Tonne -.15%

• Citi US Economic Surprise Index 17.0 -1.3 points

• Citi Eurozone Economic Surprise Index -71.5 -6.7 points

• Citi Emerging Markets Economic Surprise Index -13.2 -.7 point

• 10-Year TIPS Spread 1.87 unch.

• 0.0% chance of Fed rate hike at May 1st meeting, 4.7% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +111 open in Japan 

• China A50 Futures: Indicating +176 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.2%

Sector Underperformers:

• 1) Banks -.7% 2) Steel -.6% 3) Oil Service -.3%

Stocks Falling on Unusual Volume: 

• CTRL, SXC, LMNX, HAE, CRON, APHA, CHD, CBT, ITUB, FN, LITE, BE, ADM and CVNA

Stocks With Unusual Put Option Activity:

• 1) AET 2) NVAX 3) CORT 4) VIAB 5) SIRI

Stocks With Most Negative News Mentions:

• 1) CTL 2) CRON 3) IMMU 4) APHA 5) RCII

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.5%

Sector Outperformers:

• 1) Papers +1.3% 2) Software +.8% 3) Robotics +.7%

Stocks Rising on Unusual Volume:

• SXCP, EOLS, USAK, GPRK, EL, ARRY, CDXS, ETSY, SONO, RL, EFG, AGX, PZZA, LEG, CDK, HZNP, RGNX, QTNA, BOX, OLN, IGV, PLNT, VIAB, RBC, BP, LEG, TDG, QTNA and CORT

Stocks With Unusual Call Option Activity:

• 1) ETSY 2) CARS 3) RL 4) JCI 5) EL

Stocks With Most Positive News Mentions:

• 1) EL 2) AGX 3) AMRS 4) CRK 5) ARRY

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -10.8% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 62.7% of Issues Advancing, 33.5% Declining
• 75 New 52-Week Highs, 3 New Lows
• 38.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 56.1%
• Vix 15.15 -3.7%
• Total Put/Call .77 -7.23%
• TRIN/Arms 1.29 +44.9%

Tuesday Watch

Evening Headlines

Bloomberg:    

• Australia Banks Surge as Misconduct Report Delivers `Soft' Blow.  

• U.K. Consumer Spending Recovers Slightly as Brexit Dims Outlook.

• Guaido U.S. Envoy Vows to Open Oil Deals, Restructure Debt.

• Stocks Rise in Holiday-Hit Trading; Dollar Steady. Stocks gained in Japan and Australia Tuesday, with many markets in Asia closed for the Lunar New Year. The dollar and Treasury yields stabilized after gains. Australian shares outperformed as financials rallied after the results of a yearlong inquiry into misconduct in the financial services sector published Monday were not as harsh as had been anticipated. The S&P 500 Index closed at a two-month high on lower than average volume and the Nasdaq climbed as technology shares advanced. U.S. futures were becalmed in Asian trading Tuesday. Markets in Hong Kong and China are among those shut for the Year of the Pig celebrations, keeping volumes subdued after a busy week that included relatively dovish Federal Reserve comments and U.S.-China trade talks in Washington. Investors will continue to look for direction from a corporate earnings season that’s been mixed so far. Japan’s Topix index rose 0.4 percent as of 9:16 a.m. in Tokyo. Australia’s S&P/ASX 200 Index rose 1.7 percent. S&P 500 futures were flat.  

• Yen Surge in Offing, Uncertainty Soars, Fed Rate Regret: Eco Day.  

• Bitcoin Technical Indicators Suggest a Retest of December Low.  

• Mega-Rich at Palm Beach Soiree Dismiss Democrats' Tax Proposals.

Wall St. Journal: 

• Trump to Call for Bipartisanship as He Threatens to Declare Emergency.

• Remember When Chuck Schumer and Bernie Sanders Loved Business?

• The Left’s Idea of Generosity.

• Mohammed bin Salman Meets Resistance—From His Own Bureaucrats.

• Venezuela Struggles to Pump, Ship Oil.

• Stock-Market Rally Revives Appetite for Risky Margin Loans.

• Investors Pull Record $25 Billion From U.S. Stock ETFs.

• Fed Survey Shows Tighter Lending Standards, Weakening Credit Demand. 

• Trump to Begin Releasing Fiscal 2020 Budget Plan on March 11.

Fox News:

• Virginia’s lieutenant governor suggests embattled gov could be behind unearthed sex-assault claim. 

• Crypto boss dies with passwords needed to unlock customer accounts.

CNBC:

• Alphabet(GOOG) drops after revealing declining advertising prices and rising costs

• Democratic super PAC unleashes wave of opposition research against Starbucks and Howard Schultz

• The Sanders-Schumer proposal to limit buybacks could be a very big negative for the stock market

• Boeing shares hit another record, bucking China slowdown concerns: ‘Things are just heating up’.

• Stocks making the biggest moves after hours: Alphabet, Gilead and more.

Zero Hedge:

• Trump Inaugural Committee Subpoenaed By New York Prosecutors.

• Amazon Hauling Cargo On I-10 In Self-Driving Trucks Developed By Embark.

• WaPo Defends Decision To Mothball Graphic Sex-Assault Claim Against Virginia Lt. Gov Fairfax.

• The Next Recession Will Sweep The Socialists Into Power.

• More Millennials Own A Cannabis Stock Than Apple.

• "Frothing With Bigots": SPLC Sued By Gavin McInnes For Defamation.

• Mega-Rich Scoff At Democrat Tax Grab Even As Most Americans Support.

• With China Away, Algos Will Play - Stocks Melt-Up As Earnings Throw-Up.

Night Trading 

• Asian equity indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 78.25 -.5 basis point. 

• China Sovereign CDS 54.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 68.74 +.01%.

• FTSE 100 futures +.56%.

• S&P 500 futures -.12%.

• NASDAQ 100 futures -.07%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (AGCO)/1.22

• (ADM)/.93

• (BMI)/.37

• (BDX)/2.63

• (BP)/.13

• (EMR)/.66

• (EL)/1.54

• (LITE)/1.16

• (RL)/2.15

• (VIAB)/1.03

• (WCG)/1.56

After the Close:

• (ALL)/1.24

• (APC)/.62

• (CERN)/.63

• (CB)/2.00

• (EA)/1.94

• (MCHP)/1.57

• (OI)/.62

• (SWKS)/1.84

• (DIS)/1.57

• (ZEN)/.03

Economic Releases

10:00 am EST

• The ISM Non-Manufacturing Index for January is estimated to fall to 57.1 versus 57.6 in Dec.

Upcoming Splits

• None of note

Other Potential Market Movers

• The State of the Union, Eurozone PMI report, $38B 3Y T-Note auction and the (SCHW) business update could also impact trading today.

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