Wednesday Watch

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 56.75 -2.75 basis points.

• China Sovereign CDS 33.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index  66.27 -.06%.
• FTSE 100 futures +.02%.

• S&P 500 futures -.01%.

• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (GIS)/.88
• (PAYX)/.68
• (TTC)/.45

After the Close:

• (ABM)/.63
• (MLHR)/.87
• (MU)/.48

Economic Releases 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,040,000 barrels versus a +822,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +2,062,500 barrels versus a +5,405,000 barrel gain the prior week. Distillate inventories are estimated to fall by -162,500 barrels versus a +4,118,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.79% versus a -1.3% decline prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Brainard speaking, UK Inflation Data report, weekly MBA Mortgage Applications report and the (AJG) investor meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher higher, boosted by commodity and technology 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.

Stocks Reversing Slightly Higher into Final Hour on Rising Global Growth Optimism, Oil Gain, Short-Covering, Retail/Financial Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 12.3 +1.3%

• Euro/Yen Carry Return Index 126.70 -.01%

• Emerging Markets Currency Volatility(VXY) 6.47 +.31%

• S&P 500 Implied Correlation 40.70 -2.16%

• ISE Sentiment Index 132.0 +30
  

• Total Put/Call .59 -33.7%

• NYSE Arms 1.01 +20.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 45.83 -1.31%
  

• America Energy Sector High-Yield CDS Index 578.0 -2.48%

• European Financial Sector CDS Index 52.43 +.82%

• Italian/German 10Y Yld Spread 156.75 -.5 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 57.58 -2.99%
  

• Emerging Market CDS Index 180.87 -.57%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.93 +.19%

• 2-Year Swap Spread 5.75 +1.25 basis points

• TED Spread 35.25 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -17.0 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.31 unch.
• 3-Month T-Bill Yield 1.55% -1.0 basis point

• Yield Curve .23 +2.0 basis points

• China Iron Ore Spot 91.99 USD/Metric Tonne -.04%

• Citi US Economic Surprise Index -3.90 +7.2 basis points

• Citi Eurozone Economic Surprise Index .7 +2.0 points

• Citi Emerging Markets Economic Surprise Index -17.3 +.4 basis point

• 10-Year TIPS Spread 1.76 +4.0 basis points
• 8.1% chance of Fed rate cut at March 18th meeting, 18.6% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -21 open in Japan 
• China A50 Futures: Indicating +27 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.1%

Sector Underperformers:

• 1) Tobacco -1.0% 2) REITS -.8 3) Telecom -.6%

Stocks Falling on Unusual Volume: 

• HEI, WIFI, TENB, DDOG, GOSS, NAV and BOOM

Stocks With Unusual Put Option Activity:

• 1) PTI 2) CHK 3) CAG 4) QRVO 5) FDX

Stocks With Most Negative News Mentions:

• 1) ADMS 2) GRPN 3) SCPL 4) BAX 5) ROKU

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.5%

Sector Outperformers:

• 1) Alt Energy +1.6% 2) Airlines +1.3% 3) Retail +.9%

Stocks Rising on Unusual Volume:

• REGI, TGE, BRKS, BBBY, WOR, VRA, GES, RETA, DAR, WEST, TPTX, DCPH, ZGNX, PLCE, EQM, GTHX, BRP, JBL, ETRN, IBP, DCP, INMD, WPX, JCAP, PI, BYND, GEO, LOGM, PAA, CXW, PAGP, PRVB, HRC, SAVE, KYN, NFLX, CURO, GH, NRZ, PD, BCEI, GH, NRZ, TYG, GMRE and LLY

Stocks With Unusual Call Option Activity:

• 1) PAGP 2) DPLO 3) UTX 4) MMP 5) LOGM

Stocks With Most Positive News Mentions:

• 1) JBL 2) WOR 3) WPX 4) NFLX 5) LLY

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +1.0% Above 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 60.3% of Issues Advancing, 36.8% Declining
• 135 New 52-Week Highs, 11 New Lows
• 62.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.1%
• Vix 12.3 +.9%
• Total Put/Call .61 -31.5%
• TRIN/Arms .98 +16.7%

Tuesday Watch

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 59.0 -1.25 basis points.

• China Sovereign CDS 33.5 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index  66.30 -.02%.
• FTSE 100 futures n/a.

• S&P 500 futures -.13%.

• NASDAQ 100 futures -.12%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (JBL)/.93
• (NAV)/.97
• (WOR)/.58

After the Close:

• (CTAS)/2.02
• (FDX)/2.80
• (SCS)/.35

Economic Releases 

8:30 am EST

• Housing Starts for Nov. is estimated to rise to 1345K versus 1314K in Oct.
• Building Permits for Nov. is estimated to fall to 1418K versus 1461K in Oct.

9:15 am EST

• Industrial Production MoM for Nov. is estimated to rise +.8% versus a -.8% decline in Oct.
• Manufacturing Production for Nov. is estimated to rise +.8% versus a -.6% decline in Oct.
• Capacity Utilization for Nov. is estimated to rise to 77.4% versus 76.7% in Oct.
  

10:00 am EST

• JOLTS Job Openings for Oct. is estimated to fall to 7009 versus 7024 in Sept.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan trade balance report, weekly US retail sales reports and the (LLY) investor update call could also impact trading today.

BOTTOM LINE: Asian indices are modestly higher higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.