Stocks Reversing Slightly Lower into Afternoon on Economic Data, Profit-Taking, Technical Selling, Financial/Energy Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.2 -2.6%

• Euro/Yen Carry Return Index 126.49 +.14%

• Emerging Markets Currency Volatility(VXY) 6.39 -2.4%

• S&P 500 Implied Correlation 37.57 +.7%

• ISE Sentiment Index 93.0 -20
  

• Total Put/Call .76 +16.9%

• NYSE Arms 1.15 +4.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 43.93 +.65%
  

• America Energy Sector High-Yield CDS Index 534.0 +2.77%

• European Financial Sector CDS Index 50.45 -.21%

• Italian/German 10Y Yld Spread 152.0 -3.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 54.01 -1.64%
  

• Emerging Market CDS Index 180.67 +.75%
  

• iBoxx Offshore RMB China Corporate High Yield Index 168.63 +.02%

• 2-Year Swap Spread 6.5 unch.

• TED Spread 31.25 -3.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.59 +.03%
• 3-Month T-Bill Yield 1.53% unch.

• Yield Curve .25-3.0 basis points

• China Iron Ore Spot 91.52 USD/Metric Tonne -.54%

• Citi US Economic Surprise Index .5 -1.2 points

• Citi Eurozone Economic Surprise Index 43.30 +.9 point

• Citi Emerging Markets Economic Surprise Index -6.0 +2.4 basis points

• 10-Year TIPS Spread 1.76 unch.
• 3.8% chance of Fed rate cut at March 18th meeting, 12.4% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -90 open in Japan 
• China A50 Futures: Indicating +28 open in China

• DAX Futures: Indicating -6 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.6%

Sector Underperformers:

• 1) Education -1.1% 2) Oil Service -1.0% 3) Defense -.7%

Stocks Falling on Unusual Volume: 

• PLMR, ATI, URBN, FLXN, TRUP, GRUB, TPTX, CYRX, SIX and PTLA

Stocks With Unusual Put Option Activity:

• 1) NLOK 2) RUN 3) MAC 4) NLY 5) GRUB

Stocks With Most Negative News Mentions:

• 1) SIX 2) ADRO 3) ACB 4) GRUB 5) ATI

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%

Sector Outperformers:

• 1) Gold & Silver +2.1% 2) Homebuilding +.9% 3) Video Gaming +.8%

Stocks Rising on Unusual Volume:

• RARE, NKTR, RVNC, SNX, ZYXI, MRNA, INMD, BBBY, BYND, MAXR, VYGR, BPMC, GTT, APPN, APLS, DERM, SPCE, CSOD, XNCR, CDNA, HCC, PBF, HCC, PEN, KOD, TGTX, LB, NVTA, IRTC, TSN, TROX, ISRG, PING and NVCR

Stocks With Unusual Call Option Activity:

• 1) WETF 2) DERM 3) NKTR 4) MET 5) TSN

Stocks With Most Positive News Mentions:

• 1) SRNE 2) SNX 3) ISRG 4) DERM 5) MRNA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -7.5% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 51.2% of Issues Advancing, 45.4% Declining
• 149 New 52-Week Highs, 13 New Lows
• 65.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.7%
• Vix 12.2 -3.1%
• Total Put/Call .68 +4.6%
• TRIN/Arms 1.01 -8.2%

Friday Watch

Night Trading 

• Asian equity indices are +.5% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 54.0 -.75 basis point.

• China Sovereign CDS 30.75  -.5 basis point.

• Bloomberg Emerging Markets Currency Index  66.58 unch.
• FTSE 100 futures n/a.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.25%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (INFY)/9.78

After the Close:

• None of note

Economic Releases  

8:30 am EST

• The Change in Non-Farm Payrolls for Dec. is estimated to fall to 160K versus 266K in Nov.
• The Unemployment Rate for Dec. is estimated at 3.5% versus 3.5% in Nov.
• Average Hourly Earnings MoM for Dec. is estimated to rise +.3% versus a +.2% gain in Nov.

10:00 am EST

• Wholesale Trade Sales MoM for Nov. is estimated to rise +.2% versus a -.7% decline in Oct.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Trade Balance report, Bloomberg US Economic Survey for Jan. and the (FDX) Jan. economic update could also impact trading today.

Market Hours

Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are 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.

Stocks Rising into Final Hour on China Trade Deal Optimism, Diminished Mideast Tensions, Technical Buying, Energy/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.9 -4.3%

• Euro/Yen Carry Return Index 126.30 +.38%

• Emerging Markets Currency Volatility(VXY) 6.6 -2.1%

• S&P 500 Implied Correlation 38.2 -10.0%

• ISE Sentiment Index 113.0 +2
  

• Total Put/Call .63 -16.0%

• NYSE Arms 1.22 -9.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 44.39 -2.18%
  

• America Energy Sector High-Yield CDS Index 524.0 +2.58%

• European Financial Sector CDS Index 50.56 -3.81%

• Italian/German 10Y Yld Spread 155.75 +6.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 54.51 -2.22%
  

• Emerging Market CDS Index 178.89 -.58%
  

• iBoxx Offshore RMB China Corporate High Yield Index 168.59 +.16%

• 2-Year Swap Spread 6.5 unch.

• TED Spread 35.0 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.59 -.02%
• 3-Month T-Bill Yield 1.53% unch.

• Yield Curve .28 unch.

• China Iron Ore Spot 91.83 USD/Metric Tonne -.91%

• Citi US Economic Surprise Index 1.7 +1.4 points

• Citi Eurozone Economic Surprise Index 42.40 -1.3 point

• Citi Emerging Markets Economic Surprise Index -8.4 -.9 basis point

• 10-Year TIPS Spread 1.76 unch.
• 4.7% chance of Fed rate cut at March 18th meeting, 12.2% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +36 open in Japan 
• China A50 Futures: Indicating +28 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long