Stocks Slightly Higher into Final Hour on US Economic Activity, Buyout Speculation, Short-Covering, Retail/Homebuilding Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 11.82 -.42%

• Euro/Yen Carry Return Index 124.76 +.19%

• Emerging Markets Currency Volatility(VXY) 6.99 -.43%

• S&P 500 Implied Correlation 41.39 -.79%

• ISE Sentiment Index 79.0 -81
  

• Total Put/Call 1.07 +13.8%

• NYSE Arms 1.56 +62.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.47 -1.6%
  

• America Energy Sector High-Yield CDS Index 618.0 +.60%

• European Financial Sector CDS Index 57.94 -1.93%

• Italian/German 10Y Yld Spread 154.0 +2.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 65.09 -.43%
  

• Emerging Market CDS Index 203.04 -.16%
  

• iBoxx Offshore RMB China Corporate High Yield Index 168.03 -.01%

• 2-Year Swap Spread -.25 +1.0 basis point

• TED Spread 34.25 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -13.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.23 -.19%
• 3-Month T-Bill Yield 1.58% unch.

• Yield Curve .16+1.0 basis point

• China Iron Ore Spot 84.08 USD/Metric Tonne -1.59%

• Citi US Economic Surprise Index 2.1 +1.9 basis points

• Citi Eurozone Economic Surprise Index -15.50 -.1 point

• Citi Emerging Markets Economic Surprise Index -27.20 +.6 basis point

• 10-Year TIPS Spread 1.64 unch.
• 11.7% chance of Fed rate cut at Jan. 29th meeting, 25.4% chance of cut at March 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +46 open in Japan 
• China A50 Futures: Indicating -33 open in China

• DAX Futures: Indicating +10 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value unch.

Sector Underperformers:

• 1) Oil Service -1.8% 2) Computer Hardware -1.7% 3) Healthcare Providers -1.0%

Stocks Falling on Unusual Volume: 

• ZYXI, BSM, AMBA, HPE, BECN, PANW, DLTR and MOV

Stocks With Unusual Put Option Activity:

• 1) DLTR 2) DKS 3) PANW 4) BBY 5) VMW

Stocks With Most Negative News Mentions:

• 1) AIRG 2) MOV 3) MTSC 4) FMCC 5) IRBT

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.4%

Sector Outperformers:

• 1) Gold & Silver +1.4% 2) Restaurants +1.1% 3) Retail +1.0%

Stocks Rising on Unusual Volume:

• CCXI, DKS, ARWR, NTNX, BBY, DTIL, BUYL, YMAB, DY, ALEC, BBBY, GBT, RVLV, FIZZ, EVER, ALNY, MNTA, CG, ICPT, USCR, NSTG, ALLO, GES, INMD, AAN, AXNX, FOE, HRL, ABMD, INTU, VAC and CMG

Stocks With Unusual Call Option Activity:

• 1) DKS 2) DLTR 3) BBY 4) MOS 5) ADI

Stocks With Most Positive News Mentions:

• 1) NTNX 2) DKS 3) CCXI 4) DY 5)BBY

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +3.4% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 53.2% of Issues Advancing, 44.1% Declining
• 122 New 52-Week Highs, 21 New Lows
• 58.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.0%
• Vix 11.7 -1.2%
• Total Put/Call 1.09 +16.0%
• TRIN/Arms 1.54 +60.4%

Tuesday Watch

Evening Headlines

Bloomberg:     

• Hong Kong’s Pro-Democracy Forces Bolstered by Huge Election Win.  

• China Spy Claims Deliver New Hit to Damaged Australia Relations.  

• Oil Holds Gain Amid Signs of U.S.-China Trade Deal Progress.

• Asian Stocks Advance Amid Trade Optimism, M&A. Asian stocks gained Tuesday amid optimism over U.S.-China trade talks and a fresh wave of merger and acquisition activity. The yen slipped. Shares climbed in Tokyo and Sydney, and were little changed in Seoul. U.S. futures were flat. Earlier, the S&P 500 Index, Dow Jones Industrial Average and Nasdaq Composite Indexes reached all-time highs, with tech shares leading gains. Among the M&A deals, Charles Schwab Corp. agreed to buy TD Ameritrade Holding Corp., while LVMH is purchasing Tiffany & Co. Treasuries were steady. Topix index rose 0.6% as of 9:01 a.m. in Tokyo. Australia’s S&P/ASX 200 Index rose 0.6%. South Korea’s Kospi index added 0.3%. Hang Seng Index futures added 0.2%. S&P 500 futures were flat. The S&P 500 Index advanced 0.8%.  

• Five Things You Need to Know to Start Your Day.  

• China Risks Rise, ‘Cheap’ Fed Funding, IMF Prods Japan: Eco Day.

• A Booming Corner of Private Credit Has Some Investors on Edge.  

• Recession Warning of Inverted Yield Curve Looks So Last Year.  

• Musk Accepts Ford Challenge to Apples-to-Apples Truck Tug of War.  

• Fed's Powell Says U.S. Economy's Glass Is ‘More Than Half Full’.

Wall Street Journal:

• Inside LVMH, Tiffany to Fall Under Billionaire’s Exacting Eye.

• New Drugs Emerge to Treat Sickle Cell Disease.

• Turo, the ‘Airbnb for Cars,’ Angers Rental-Car Companies.

• Investment Advisers Fear Losing Out in Schwab-TD Ameritrade Deal.

• EBay to Sell StubHub in Deal to Create Global Tickets Giant.

• Activist Investor Takes Stake in CVS.

Fox News:

• Judge rules ex-WH counsel McGhan must obey subpoena, go before Congress; DOJ vows appeal.

MarketWatch.com:      

• New ad claims Bernie Sanders, Elizabeth Warren and Alexandria Ocasio-Cortez want to punish success.  

• One of the biggest risks facing stocks, according to Goldman: Democrats.

CNBC:

• Stocks jump to records after one-week pause, Dow adds more than 150 points.

• Powell says the Fed is ‘strongly committed’ to 2% inflation goal.

• House Democrats are ‘within range’ of reaching a USMCA trade deal, Pelosi says.

• Bitcoin sinks to lowest level since May, falling $3,000 in a month as China accelerates crackdown.

• Stocks making the biggest moves after hours: CVS Health, Nutanix, Palo Alto Networks & more.

Zero Hedge:

• Twenty Crazy Beliefs On Economics And Politics.

• Triggered: Mayor de Blasio Threatens To Destroy FedEx Robots Running Around New York.

• Bombogenesis Could Bring Snow, Rain, And Winds From Northern California To Central US.

• Biden Bluntly Backpedals On 'Potaway Drug' Marijuana After Vowing To Keep It Illegal.

• Lindsey Graham Barks Back At Biden Over 'Obvious Conflict Of Interest' With Hunter And Burisma.

• The Resistance Digs Their Hole Deeper.

• "No Capitulation" - Bitcoin Miners Completely Unfazed By Crypto-Collapse.

• VIXtermination Sends Stocks Surging Amid Massive Short-Squeeze.

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 65.0 -.25 basis point.

• China Sovereign CDS 39.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index  65.36 +.01%.

• FTSE 100 futures +.16%.

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.14%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ANF)/.24

• (AMWD)/1.74

• (ADI)/1.22

• (BBY)/1.03

• (BURL)/1.40

• (CHS)/-.06

• (CBRL)/2.04

• (DKS)/.38

• (DLTR)/1.13

• (DY)/.72

• (EV)/.88

• (HRL)/.47

• (MOV)/1.03

• (TECD)/2.99

• (TITN)/.47

After the Close:

• (ADSK)/.72

• (CENT)/.17

• (DELL)/1.59

• (GES)/.18

• (HPQ)/.58

• (VMW)/1.43

Economic Releases
8:30 am EST

• The Advance Goods Trade Deficit for Oct. is estimated at -$71.0B versus -$70.4B in Sept.

• Retail Inventories MoM for Oct. is estimated to rise +.1% versus a +.2% gain in Sept.

• Wholesale Inventories MoM for Oct. is estimated to rise +.1% versus a -.4% decline in Sept.

9:00 am EST

• The FHFA House Price Index MoM for Sept. is estimated to rise +.3% versus a +.2% gain in Aug.

• The S&P CoreLogic CS 20-City MoM for Sept. is estimated to rise +.3% versus a +.2% gain in Aug.
  

10:00 am EST

• The Richmond Fed Manufacturing Index for Nov. is estimated to fall to 5.0 versus 8.0 in Oct.

• New Home Sales for Oct. is estimated to rise to 707K versus 701K in Sept.

• The Conference Board Consumer Confidence Index for Nov. is estimated to rise to 127.0 versus 125.9 in Oct.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Brainard speaking, German Retail Sales report, $41B 5Y T-Note auction and the US weekly retail sales reports could also impact trading today.

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