Stocks Slightly Higher into Afternoon on Stable Long-Term Rates, US Economic "Soft-Landing" Hopes, Short-Covering, Biotech/Commodity Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.3 -2.7%
• DJIA Intraday % Swing .55% n/a
  
• Bloomberg Global Risk On/Risk Off Index 55.5 +.3%

• Euro/Yen Carry Return Index 168.6 +.33%

• Emerging Markets Currency Volatility(VXY) 7.83 +.26%

• CBOE S&P 500 Implied Correlation Index 20.5 +.6% 

• ISE Sentiment Index 137.0 +33.0
  

• Total Put/Call .79 -15.0%

• NYSE Arms 1.19 +176.7% 
• NYSE Non-Block Money Flow +$267.6M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 55.64 -.85%
  

• US Energy High-Yield OAS 336.59 -.04%
• Bloomberg TRACE # Distressed Bonds Traded 319 -12
  

• European Financial Sector CDS Index 67.6 -1.9% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 208.90 -1.2%
  

• Italian/German 10Y Yld Spread 158.0 basis points -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 91.6 +1.4%
  

• Emerging Market CDS Index 166.84 -1.11%
• Israel Sovereign CDS 110.0 -.02%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.05 +.13%

• 2-Year SOFR Swap Spread -22.0 basis points -.25 basis point
  

• TED Spread 26.5 basis points +.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.0 -2.5 basis points
  
• MBS  5/10 Treasury Spread 144.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 963.0 -1.0 basis point
  
• Avg. Auto ABS OAS 79.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.7 -.07%
• 3-Month T-Bill Yield 5.35% -2.0 basis points
  

• China Iron Ore Spot 138.1 USD/Metric Tonne -.43%
• Dutch TTF Nat Gas(European benchmark) 34.20 euros/megawatt-hour -.08%

• Citi US Economic Surprise Index 18.2 +.9 point

• Citi Eurozone Economic Surprise Index -42.9 -.6 point

• Citi Emerging Markets Economic Surprise Index 18.3 unch.
• S&P 500 Current Quarter EPS Growth Rate YoY(17 of 500 reporting) +13.5% +.5 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.75 +.14:  Growth Rate +11.5% +.1 percentage point, P/E 19.6 +.2
  
• S&P 500 Current Year Estimated Profit Margin 12.04% unch.
  
• 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 287.93 +.18: Growth Rate +35.0% +.1 percentage point, P/E 30.4 +.2
  
• Bloomberg US Financial Conditions Index n/a
  
• Bloomberg Euro-Zone Financial Conditions Index -.27 -65.0 basis points
  
• US Yield Curve -43.0 basis points (2s/10s) +2.75 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +2.68% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 67.7% -.1 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.02% -.41 percentage point: CPI YoY +3.33% unch.
  
• 10-Year TIPS Spread 2.20 -2.0 basis points
  
• Highest target rate probability for March 20th FOMC meeting: 74.1%(+2.8 percentage points) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 69.5%(-.1 percentage point) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +176 open in Japan 
• China A50 Futures: Indicating +39 open in China

• DAX Futures: Indicating +189 open in Germany

Portfolio:

• Higher:  On gains in my tech/industrial/transport/utility sector longs and emerging market shorts
  

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

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%
  

Sector Underperformers:

• 1) Social Media -3.1% 2) Video Gaming -2.6% 3) Computer Hardware -.2%

Stocks Falling on Unusual Volume: 

• CROX, OLK, CHWY, MIRM, SAVA, TTD, TAL, FL, EDU, BILI, SMCI, RILY, LGF, AIR, NKE, NTES and MULN
  

Stocks With Unusual Put Option Activity:

• 1) ENTG 2) INVZ 3) NKE 4) WW 5) FDX
  

Stocks With Most Negative News Mentions:

• 1) NTES 2) NKE 3) BROG 4) DKS 5) CROX
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.2%
  

Sector Outperformers:

• 1) Biotech +2.6% 2) Shipping +1.7% 3) Steel +1.6%

Stocks Rising on Unusual Volume:

• KRTX, NMRA, HUT, ANSS, MARA, ALTR, RYZB, NBIX, IEP and CSWC
  

Stocks With Unusual Call Option Activity:

• 1) RKLB 2) ASPN 3) ESPR 4) NKE 5) ZIM

Stocks With Most Positive News Mentions:

• 1) KRTX 2) ANSS 3) RKLB 4) MARA 5) TDY
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open:

• None of note
  

After the Close: 

• None of note
  

Economic Releases

8:30 am EST

• The Chicago Fed National Activity Index for Nov.
• The Philly Fed Non-Manufacturing Activity Index for Dec.
  

9:00 am EST

• The FHFA House Price Index MoM for Oct. is estimated to rise +.5% versus a +.6% gain in Sept.
• The S&P CoreLogic CS 20-City MoM SA for Oct. is estimated to rise +.6% versus a +.67% gain in Sept.
  

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for Dec.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The M2 Money Supply report and the 2Y T-Note auction could also impact global trading on Tuesday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• Volume Running -14.0% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.3 -1.0
  
• 1 Sector Declining, 10 Sectors Rising
• 76.0% of Issues Advancing, 21.6% Declining 
• TRIN/Arms 1.42 +230.2% 
• Non-Block Money Flow +$269.4M
  
• 149 New 52-Week Highs, 4 New Lows
• 66.3%(+3.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 70.0 +3.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 55.0 -.5%
• Bloomberg Cyclicals/Defensives Pair Index 142.08 +-.08%
  
• Russell 1000: Growth/Value 18,414.5 -.40%
  
• 1-Day Vix 8.99 -27.3%
  
• Vix 13.7 +.5%
  
• Total Put/Call .75 -19.4%

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 90.75 +.25 basis point.

• China Sovereign CDS 59.25 +.75 basis point.
  
• China Iron Ore Spot 138.6 USD/Metric Tonne +.8%.

• Bloomberg Emerging Markets Currency Index 41.74 unch.
• Bloomberg Global Risk-On/Risk Off Index 57.7 +4.4%.
  
• Bloomberg US Financial Conditions Index n/a.
  
• Volatility Index(VIX) futures 15.7 -.%.
• Euro Stoxx 50 futures +.04%.

• S&P 500 futures -.15%.

• NASDAQ 100 futures -.3%.  

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 higher and weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.