Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 53.0 -1.5 basis points.

• China Sovereign CDS 31.25  +1.25 basis points.

• Bloomberg Emerging Markets Currency Index  66.51 -.05%.
• FTSE 100 futures -.03%.

• S&P 500 futures -.15%.

• NASDAQ 100 futures -.19%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (BAC)/.69
• (BLK)/7.42
• (GS)/5.48
• (PNC)/2.91
• (USB)/1.09
• (UNH)/3.75

After the Close:

• (AA)/-.23
• (KMI)/.26

Economic Releases 

8:30 am EST

• PPI Final Demand MoM for Dec. is estimated to rise +.2% versus unch. in Nov.
• PPI Ex Food and Energy MoM for Dec. is estimated to rise +.2% versus a -.2% decline in Nov.
• Empire Manufacturing for Jan. is estimated to rise to 3.6 versus .3 in Dec.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +384,730 barrels versus a +1,164,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +3,389,100 barrels versus a +9,137,000 barrel gain the prior week. Distillate supplies are estimated to rise by +2,023,900 barrels versus a +5,330,000 barrel gain the prior week.Finally, Refinery Utilization is estimated to fall by -.26% versus a -1.5% decline prior.
  

2:00 pm EST

• US Fed Beige Book report.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Harker speaking, Fed's Kaplan speaking, China Phase 1 Trade Deal Signing, UK CPI report, Japan Machine Orders report, (TGT) holiday sales update, weekly MBA Mortgage Applications report and the (CRM) Jefferies investor meeting could also impact trading today.

Market Hours

Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are slightly lower, weighed down by technology and consumer shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the day.

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.