Stocks Reversing Slightly Higher into Final Hour on Global Growth Optimism, Short-Covering, Technical Buying, Tech/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Light

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 14.2 -4.5%

• Euro/Yen Carry Return Index 126.50 -.05%

• Emerging Markets Currency Volatility(VXY) 6.58 +.15%

• S&P 500 Implied Correlation 43.0 -6.2%

• ISE Sentiment Index 92.0 +10
  

• Total Put/Call 1.02 +14.6%

• NYSE Arms .84 -10.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 45.22 +.89%
  

• America Energy Sector High-Yield CDS Index 546.0 +.24%

• European Financial Sector CDS Index 51.64 +.08%

• Italian/German 10Y Yld Spread 159.75 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 53.45 +.50%
  

• Emerging Market CDS Index 173.74 +.01%
  

• iBoxx Offshore RMB China Corporate High Yield Index 167.44 +.02%

• 2-Year Swap Spread 12.75 +1.5 basis points

• TED Spread 36.5 -3.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap 3.75 -.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.73 +.13%
• 3-Month T-Bill Yield 1.54% unch.

• Yield Curve .30 unch.

• China Iron Ore Spot 91.06 USD/Metric Tonne +2.21%

• Citi US Economic Surprise Index -3.1 +.8 point

• Citi Eurozone Economic Surprise Index 30.40 +1.3 points

• Citi Emerging Markets Economic Surprise Index -14.3 -1.6 basis points

• 10-Year TIPS Spread 1.79 +2.0 basis points
• 28% chance of Fed rate cut at March 18th meeting, 9.3% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -199 open in Japan 
• China A50 Futures: Indicating +26 open in China

• DAX Futures: Indicating -2 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth unch.

Sector Underperformers:

• 1) Oil Service +1.6% 2) Gold & Silver -.2% 3) Social Media -.2%

Stocks Falling on Unusual Volume: 

• MAXR

Stocks With Unusual Put Option Activity:

• 1) SWN 2) WW 3) ACHN 4) SIG 5) FL

Stocks With Most Negative News Mentions:

• 1) CLB 2) MDR 3) BA 4) BHI 5) T

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.5%

Sector Outperformers:

• 1) Disk Drives +.7% 2) Shipping +.6% 3) Energy +.6%

Stocks Rising on Unusual Volume:

• MTOR, EOLS, EPZM, IIPR, PSNL, WW, NLTX, LGF/A, REAL, NGL, ADPT, CHNG, LVGO and CRNC

Stocks With Unusual Call Option Activity:

• 1) MMP 2) FCEL 3) SWN 4) GES 5) HTZ

Stocks With Most Positive News Mentions:

• 1) NIO 2) NHLD 3) NVDA 4) ATVI 5) NFLX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -15.5% Below 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 68.0% of Issues Advancing, 28.3% Declining
• 52 New 52-Week Highs, 4 New Lows
• 64.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.3%
• Vix 15.0 +1.3%
• Total Put/Call 1.1 +22.5%
• TRIN/Arms .76 -19.2%

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 53.25 +.25 basis point.

• China Sovereign CDS 31.25 +.5 basis point.

• Bloomberg Emerging Markets Currency Index  66.67 +.04%.
• FTSE 100 futures -.35%.

• S&P 500 futures +.13%.

• NASDAQ 100 futures +.15%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• None of note

After the Close:

• None of note

Economic Releases  

9:00 am EST

• The FHFA House Price Index MoM for Oct. is estimated to rise +.4% versus a +.6% gain in Sept.
• The S&P CoreLogic CS 20-City MoM for Oct. is estimated to rise +.3% versus a +.36% gain in Sept.
  

10:00 am EST

• The Conference Board Consumer Confidence Index for Dec. is estimated to rise to 128.5 from 125.5 in Nov.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The end-of-year portfolio positioning could also impact trading today.

Market Hours

Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and consumer 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 Lower into Afternoon on Profit-Taking, Yen Strength, Technical Selling, Tech/Biotech Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.3 +6.3%

• Euro/Yen Carry Return Index 126.73 -.2%

• Emerging Markets Currency Volatility(VXY) 6.56 +.92%

• S&P 500 Implied Correlation 43.42 -4.84%

• ISE Sentiment Index 82.0 -7
  

• Total Put/Call 1.08 +25.6%

• NYSE Arms .63 -60.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 44.45 +.95%
  

• America Energy Sector High-Yield CDS Index 542.0 -.70%

• European Financial Sector CDS Index 51.72 -.89%

• Italian/German 10Y Yld Spread 159.75 -3.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 53.18 +.10%
  

• Emerging Market CDS Index 174.18 -.31%
  

• iBoxx Offshore RMB China Corporate High Yield Index 167.41 +.04%

• 2-Year Swap Spread 10.75 +1.25 basis points

• TED Spread 39.5 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 4.5 +5.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.69 +.19%
• 3-Month T-Bill Yield 1.54% -2.0 basis point

• Yield Curve .30 +3.0 basis points

• China Iron Ore Spot 89.57 USD/Metric Tonne +.11%

• Citi US Economic Surprise Index -3.9 +4.4 points

• Citi Eurozone Economic Surprise Index 29.10 +1.2 points

• Citi Emerging Markets Economic Surprise Index -12.7 +3.2 basis points

• 10-Year TIPS Spread 1.77 +1.0 basis point
• 5.9% chance of Fed rate cut at March 18th meeting, 12.7% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -131 open in Japan 
• China A50 Futures: Indicating -11 open in China

• DAX Futures: Indicating -94 open in Germany

Portfolio:

• Slightly Lower: On losses in my medical/tech/biotech sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long