Stocks Slightly Lower into Afternoon on US Economic Data, China Tariff Worries, Profit-Taking, Energy/REIT Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 12.4 +.7%

• Euro/Yen Carry Return Index 127.02 -.03%

• Emerging Markets Currency Volatility(VXY) 6.35 -.78%

• S&P 500 Implied Correlation 37.6 -8.7%

• ISE Sentiment Index 88.0 +8
  

• Total Put/Call .76 -1.3%

• NYSE Arms 1.11 -2.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 44.7 +1.05%
  

• America Energy Sector High-Yield CDS Index 548.0 +2.6%

• European Financial Sector CDS Index 51.09 +.2%

• Italian/German 10Y Yld Spread 156.75 +3.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 52.77 -1.18%
  

• Emerging Market CDS Index 181.95 +.67%
  

• iBoxx Offshore RMB China Corporate High Yield Index 168.82 +.05%

• 2-Year Swap Spread 5.75 -.25 basis point

• TED Spread 29.25 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -1.5 +1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.53 -.07%
• 3-Month T-Bill Yield 1.55% +1.0 basis point

• Yield Curve .27 +1.75 basis points

• China Iron Ore Spot 94.17 USD/Metric Tonne -.74%

• Citi US Economic Surprise Index -5.8 -7.8 points

• Citi Eurozone Economic Surprise Index 41.50 -.3 point

• Citi Emerging Markets Economic Surprise Index -2.60 +2.6 basis points

• 10-Year TIPS Spread 1.76 -1.0 basis point
• .7% chance of Fed rate cut at March 18th meeting, 10.5% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -95 open in Japan 
• China A50 Futures: Indicating +5 open in China

• DAX Futures: Indicating -16 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.1%

Sector Underperformers:

• 1) REITs -.6% 2) Foods -.2% 3) Telecom -.1%

Stocks Falling on Unusual Volume: 

• WFC, ACIW, MOH, BSX and CVNA

Stocks With Unusual Put Option Activity:

• 1) HBI 2) MNK 3) BSX 4) HTZ 5) WFC

Stocks With Most Negative News Mentions:

• 1) GME 2) WFC 3) CVNA 4) MWA 5) LPCN

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.6%

Sector Outperformers:

• 1) Biotech +1.6% 2) Steel +1.6% 3) Homebuilding +1.5%

Stocks Rising on Unusual Volume:

• XBIT, ICHR, DNLI, SDC, MNTA, PINS, CWH, FRTA, MMSI, SGRY, AIMT, PGNY, PETQ, UCTT, RAD, ZUMZ, ACM, THO, CRNC, XENT, FIVE, INCY, RARE, FRC, BYND, MCK, NYT, DAL, SMPL, TGTX, REPH, RVNC, EAF, SPCE, TPIC, MKSI, VSH, ALRM, EXAS and BPMC

Stocks With Unusual Call Option Activity:

• 1) ZIOP 2) COF 3) EBAY 4) JPM 5) DAL

Stocks With Most Positive News Mentions:

• 1) ACMR 2) SDC 3) DNLI 4) DAL 5) PERI

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -1.2% Below 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 53.6% of Issues Advancing, 43.8% Declining
• 174 New 52-Week Highs, 9 New Lows
• 65.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.5%
• Vix 12.2 -1.1%
• Total Put/Call .71 -7.8%
• TRIN/Arms .87 -23.7%

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 54.5 +.5 basis point.

• China Sovereign CDS 30.0  -2.0 basis points.

• Bloomberg Emerging Markets Currency Index  66.57 -.01%.

• FTSE 100 futures +.26%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (C)/1.83

• (DAL)/1.39

• (JPM)/2.36

• (WFC)/1.11

• (WIT)/4.15

After the Close:

• None of note

Economic Releases  

6:00 am EST

• The NFIB Small Business Optimism Index for Dec. is estimated to fall to 104.8 versus 104.7 in Nov.

8:30 am EST

• The CPI MoM for Dec. is estimated to rise +.3% versus a +.3% gain in Nov.

• The CPI Ex Food and Energy MoM for Dec. is estimated to rise +.2% versus a +.2% gain in Nov.

• Real Avg. Weekly Earnings YoY for Dec.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's George speaking, Japan money flow data, weekly US retail sales reports and the Needham Growth Conference 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 modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Rising into Final Hour on Diminished China Trade Tensions, Earnings Optimism, Technical Buying, Tech/Road & Rail Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 12.6 +.24%

• Euro/Yen Carry Return Index 127.11 +.52%

• Emerging Markets Currency Volatility(VXY) 6.40 unch.

• S&P 500 Implied Correlation 37.8 -8.1%

• ISE Sentiment Index 80.0 -13
  

• Total Put/Call .73 -15.1%

• NYSE Arms 1.25 -3.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 44.32 +.37%
  

• America Energy Sector High-Yield CDS Index 534.0 +.19%

• European Financial Sector CDS Index 51.02 +1.31%

• Italian/German 10Y Yld Spread 153.5 +1.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 53.43 -1.06%
  

• Emerging Market CDS Index 180.95 +.16%
  

• iBoxx Offshore RMB China Corporate High Yield Index 168.75 +.07%

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

• TED Spread 30.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -3.75 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.58 +.02%
• 3-Month T-Bill Yield 1.54% +1.0 basis point

• Yield Curve .25 unch.

• China Iron Ore Spot 93.39 USD/Metric Tonne +.27%

• Citi US Economic Surprise Index 2.0 +1.5 points

• Citi Eurozone Economic Surprise Index 41.80 -1.5 points

• Citi Emerging Markets Economic Surprise Index -5.20 +.8 basis point

• 10-Year TIPS Spread 1.77+1.0 basis point
• .7% chance of Fed rate cut at March 18th meeting, 10.5% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +95 open in Japan 
• China A50 Futures: Indicating +86 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long