Stocks Rising into Close on Stable Long-Term Rates, US Economic "Soft-Landing" Hopes, Short-Covering, Gambling/Commodity Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.4 -1.4%
• DJIA Intraday % Swing .55% n/a
  
• Bloomberg Global Risk On/Risk Off Index 57.1 -1.5%

• Euro/Yen Carry Return Index 169.5 +1.3%

• Emerging Markets Currency Volatility(VXY) 7.84 -.38%

• CBOE S&P 500 Implied Correlation Index 19.7 +1.44% 

• ISE Sentiment Index 143.0 -12.0
  

• Total Put/Call .93 -7.0%

• NYSE Arms .96 -13.1% 
• NYSE Non-Block Money Flow +$291.5M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 56.81 -1.7%
  

• US Energy High-Yield OAS 339.40 -1.9%
• Bloomberg TRACE # Distressed Bonds Traded 357 -12
  

• European Financial Sector CDS Index 68.81 -2.8% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 211.55 -.55%
  

• Italian/German 10Y Yld Spread 162.0 basis points -7.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 89.90 -.28%
  

• Emerging Market CDS Index 170.23 -1.20%
• Israel Sovereign CDS 108.77 -.77%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 23.99 +.31%

• 2-Year SOFR Swap Spread -19.25 basis points +.25 basis point
  

• TED Spread 28.25 basis points +3.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -5.75 +1.5 basis points
  
• MBS  5/10 Treasury Spread 143.0 -4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 964.0 +2.0 basis points
  
• Avg. Auto ABS OAS 81.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.79 +.16%
• 3-Month T-Bill Yield 5.37% -1.0 basis point
  

• China Iron Ore Spot 132.55 USD/Metric Tonne +.17%
• Dutch TTF Nat Gas(European benchmark) 32.60 euros/megawatt-hour -8.3%

• Citi US Economic Surprise Index 18.1 +5.1 points

• Citi Eurozone Economic Surprise Index -45.5 +.5 point

• Citi Emerging Markets Economic Surprise Index 19.2 -.5 point
• S&P 500 Current Quarter EPS Growth Rate YoY(9 of 500 reporting) +10.9% -1.3 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.61 +.13:  Growth Rate +11.4% unch., P/E 19.6 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.04% -4.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +0.0% -0.0 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 287.52 -6.93: Growth Rate +34.8% -3.2 percentage points, P/E 30.4 +.8
  
• Bloomberg US Financial Conditions Index .67 -1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .42 unch.
  
• US Yield Curve -51.5 basis points (2s/10s) -.75 basis point
  
• US Atlanta Fed 4Q GDPNow Forecast +2.68% +7.0 basis points
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 64.1% +1.0 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.43% unch.: CPI YoY +3.33% -5.0 basis points
  
• 10-Year TIPS Spread 2.20 -2.0 basis points
  
• Highest target rate probability for March 20th FOMC meeting: 67.5%(+4.1 percentage points) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 58.8%(+3.2 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +171 open in Japan 
• China A50 Futures: Indicating +48 open in China

• DAX Futures: Indicating +211 open in Germany

Portfolio:

• Higher:  On gains in my consumer discretionary/tech/industrial/transport/utility sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth +.4%
  

Sector Underperformers:

• 1) Disk Drives -.4% 2) Computer Services -.2% 3) Computer Hardware +.1%

Stocks Falling on Unusual Volume: 

• NXT, EC and ARRY
  

Stocks With Unusual Put Option Activity:

• 1) UBS 2) FCEL 3) UEC 4) EWJ 5) BLUE
  

Stocks With Most Negative News Mentions:

• 1) CVAC 2) FSR 3) EH 4) FCEL 5) CHPT
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +2.0%
  

Sector Outperformers:

• 1) Digital Health +3.0% 2) Gambling +2.7% 3) Gold & Silver +2.6%

Stocks Rising on Unusual Volume:

• PLSE, AFRM, GPCR, CRNX, CENX, MARA, CVNA, DFH, HOOD, KURA, ENPH, CHWY, TRIP, OLMA, GCT, RUN, UBS, LNTH, SGML, AI, GRFS, PEB, PGTI, FLEX, UPST, WB and MATX
  

Stocks With Unusual Call Option Activity:

• 1) UBS 2) MO 3) CLNE 4) STX 5) EWW

Stocks With Most Positive News Mentions:

• 1) PBLA 2) AFRM 3) NOVA 4) CRNX 5) ENPH
  

Charts:

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

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (GIS)/1.16
• (TTC)/.56
• (WGO)/1.18
  

After the Close: 

• (BB)/-.04
• (MU)/-1.01
• (MLKN)/.54
  

Economic Releases

8:30 am EST

• The Current Account Deficit for 3Q is estimated at -$196.0B versus -$212.1B in 2Q.
  

10:00 am EST

• Existing Home Sales for Nov. is estimated to fall to 3.78M versus 3.79M in Oct.
• Conference Board Consumer Confidence for Dec. is estimated to rise to 104.5 versus 102.0 in Nov.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,354,830 barrels versus a -4,258,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +876,500 barrels versus a +409,000 barrel gain the prior week. Distillate inventories are estimated to rise by +397,000 barrels versus a +1,494,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.3% versus a -.3% decline prior.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The German PPI report, 20Y T-Bond auction, weekly MBA Mortgage Applications report and the (AZO) annual meeting could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +.16% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.1 +.8
  
• 0 Sectors Declining, 11 Sectors Rising
• 79.7% of Issues Advancing, 18.3% Declining 
• TRIN/Arms .88 -11.11% 
• Non-Block Money Flow +$304.2M
  
• 220 New 52-Week Highs, 15 New Lows
• 64.1%(+4.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 76.0+2.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 57.3 -1.3%
• Bloomberg Cyclicals/Defensives Pair Index 141.9 +.4%
  
• Russell 1000: Growth/Value 18,351.07 -.41%
  
• 1-Day Vix 7.7 -12.4%
  
• Vix 12.4 -1.3%
  
• Total Put/Call .95 -5.0%

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 90.25 unch.

• China Sovereign CDS 59.0 unch.
  
• China Iron Ore Spot 132.0 USD/Metric Tonne -.4%.

• Bloomberg Emerging Markets Currency Index 41.7 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 58.5 +.8%.
  
• Bloomberg US Financial Conditions Index .67 -1.0 basis point.
  
• Volatility Index(VIX) futures 14.8 +1.1%.
• Euro Stoxx 50 futures +.13%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.10%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly lower and rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the day.