Stocks Stocks Slightly Lower into Final Hour on China Trade Deal Uncertainty, Oil Decline, Profit-Taking, Retail/Gaming Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.9 -4.7%

• Euro/Yen Carry Return Index 124.08 -.11%

• Emerging Markets Currency Volatility(VXY) 7.98 -2.21%

• S&P 500 Implied Correlation 35.81 -4.9%

• ISE Sentiment Index 90.0 -8.16%
  

• Total Put/Call 1.28 +29.3%

• NYSE Arms 1.23 +98.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.62 -1.66%
  

• America Energy Sector High-Yield CDS Index 498.0 -3.82%

• European Financial Sector CDS Index 62.97 +3.18%

• Italian/German 10Y Yld Spread 137.0 -1.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 75.0 -.44%
  

• Emerging Market CDS Index 205.37 +.54%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.47 +.05%

• 2-Year Swap Spread 6.0 +.5  basis point

• TED Spread 34.0 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -14.0 +4.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.56 -.14%
• 3-Month T-Bill Yield 1.66% unch.

• Yield Curve .14 n/a

• China Iron Ore Spot 85.85 USD/Metric Tonne -2.76%

• Citi US Economic Surprise Index 15.20 -.1 point

• Citi Eurozone Economic Surprise Index -75.0 +3.1 points

• Citi Emerging Markets Economic Surprise Index -19.90 -2.0 points

• 10-Year TIPS Spread 1.56 -1.0 basis point
• 82.8% chance of Fed rate cut at Dec. 11th meeting, 88.5% chance of cut at Jan. 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +237 open in Japan 
• China A50 Futures: Indicating -9 open in China

• DAX Futures: Indicating -8 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.3%

Sector Underperformers:

• 1) Steel -1.8% 2) Retail -.9% 3) Tobacco -.8%

Stocks Falling on Unusual Volume: 

• ARLP, RGNX and PE

Stocks With Unusual Put Option Activity:

• 1) DISCA 2) HOG 3) TUR 4) EMB 5) UNG

Stocks With Most Negative News Mentions:

• 1) CRWD 2) SDC 3) CGC 4) IPGP 5) PCG

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Shipping +1.6% 2) Gold & Silver +1.1% 3) Biotech +.8%

Stocks Rising on Unusual Volume:

• RVNC, INMD, SLDB, RETA, HGV, FLXN, GH, LPG, ACM, DSSI, ABMD, SGMS, TSLA, PPL, APA and PLNT

Stocks With Unusual Call Option Activity:

• 1) PPL 2) ALXN 3) PE 4) PG 5) APC

Stocks With Most Positive News Mentions:

• 1) HPE 2) REPR 3) PLNT 4) WDC 5) CCL

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -21.7% Below 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 42.8% of Issues Advancing, 54.2% Declining
• 52 New 52-Week Highs, 43 New Lows
• 52.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.3%
• Vix 14.9 -4.6%
• Total Put/Call 1.18 +19.2%
• TRIN/Arms 1.22 +96.8%

Monday Watch

Today's Headlines

Bloomberg:

• Hunter Biden Steps Down From Chinese Board as Trump Attacks.  

• Syria’s Assad Sends Troops North As Turkish Offensive Escalates.

• Goldman Sees Pound Rallying Further as Hopes of Brexit Deal Rise. 

• Trump’s Sanction Threat May Give Lira Bears License to Go All In.

• Trump Says U.S. Treasury ‘Ready to Go’ With Sanctions on Turkey.   

• Global Hunt for Yield Prompts Fresh Surveillance by Regulators.

• Ukraine Aid Delay Didn’t Harm U.S. National Security, Defense Secretary Says.

• Stocks in Asia to Advance After Trade Progress. Asian stocks looked set to start the week higher after signs of progress in U.S.-China trade negotiations lifted U.S. equities Friday and sent Treasury yields higher, though sentiment may be capped as investors voiced skepticism on the accord. Equity futures pointed higher across Asia -- Japan will be shut for a holiday. On Friday, the S&P 500 Index climbed to within 1.8% of a record after President Donald Trump said the two sides agreed to the outlines of a deal that could be signed as early as next month. The yuan edged down after Friday’s advance. Futures on the S&P 500 Index rose 0.1% as of 6:10 a.m. in Hong Kong. The underlying gauge added 1.1% on Friday. Futures on Hong Kong’s Hang Seng Index rose 0.7%. Futures on Australia’s S&P/ASX 200 Index gained 0.5%.

• As One Massive Blackout Ends, California Is Bracing for Next.

Wall Street Journal:

• Trump Orders U.S. Forces to Withdraw From Northern Syria.

• Stocks’ Path Toward Records Led by Defensive Plays.

• Beto O’Rourke’s Progressive Tolerance.

• Democrats Push Warren for Plan to Pay for Medicare for All.

• SoftBank Seeking to Take Control of WeWork Through Financing Package. 

• Trump Wins Every Democratic Debate.

• The China Trade Truce.

• U.S. Military to Withdraw From Northern Syria.

• Hong Kong Protesters Maintain Pressure Ahead of Speech by City’s Leader.

MarketWatch.com:

• Semiconductor stocks are poised to benefit as industry sales growth resumes in 2020.

• Democratic debate on Tuesday features a surging Elizabeth Warren and a recuperating Bernie Sanders.

Fox News:

• GOP accuses Cummings of violating bipartisan agreement with latest inquiry.

• Actress pulls support for Hillary Clinton, rips her connection to disgraced mogul Weinstein.

• KIMBERLEY STRASSEL: Media waging relentless crusade to destroy Trump.

CNBC:

• Investors are flocking to money markets at the highest rate since the financial crisis.

Zero Hedge:    

• The CIA Versus Donald J. Trump.

• Turkey Warns Of War As Syrian Army Heads To Turkish Border.

• Schiff's CIA 'Whistleblower' May Not Testify In Impeachment Probe After All.

• Any Attempt To Divide China Will End In "Shattered Bones", China's Xi Warns.

• Matt Taibbi: "We're In A Permanent Coup".

• Bill Gates Was Much Closer To Jeffrey Epstein Than He Initially Let On.

• Kansas Girl, 13, Charged With Felony For Making "Gun-Like Hand Gesture" Toward Classmates.

• Central Bank Issues Stunning Warning: "If The Entire System Collapses, Gold Will Be Needed To Start Over".

• "Anarchy" As 750 ISIS Prisoners Escape Syria Camp After Turkish Shelling.

• China's Modern Blueprint For Global Power

• Hunter Biden Emerges; Quits Board Of Chinese Private-Equity Firm

• US Troops Can Fire Back If Turkey Attacks Positions Again, Pentagon Says

• Trump Orders 1,000 Troops To Evacuate Syria, Warns Sanctions On Turkey "Ready To Go".

• American STD Cases Rise To Record High.

• Retail Investors Are Acting As If A Financial Crisis Is Just Around The Corner.

• The World's Least-Free Countries Reveal Just How Much "Socialism Sucks".

• The "Safe Drivers Act" Is A Real-Time National Driver Surveillance Program.

Night Trading

• Asian indices are +.5% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 75.25 -2.75 basis points.

• China Sovereign CDS 44.25 -2.25 basis points.

• Bloomberg Emerging Markets Currency Index 65.64 -.01%.

• FTSE 100 futures +.63%.

• S&P 500 futures +.32%.

• NASDAQ 100 futures +.38%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note

After the Close:

• None of note

Economic Releases

• None of note

Upcoming Splits

• (ELS) 2-for-1
  

Other Potential Market Movers

• The Eurozone Industrial Production report, WTO meeting regarding EU tariffs and the (THO) investor day could also impact trading today.

BOTTOM LINE: Asian indices are 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 100% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.

• Global Economy Week by Bloomberg. 

• The Week Ahead 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, diminished China trade tensions, fewer global growth concerns, less European/Emerging Markets/US High Yield debt angst, oil strength and yen weakness. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.