Stocks Rising into Final Hour on Rising Fed Rate-Cut Odds, Diminished Mid-East Regional War Fears, Loose US Financial Conditions, Tech/Medical Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.8 unch.
• DJIA Intraday % Swing .35% -24.3%
  
• Bloomberg Global Risk On/Risk Off Index 57.4 -.2%

• Euro/Yen Carry Return Index 171.9 +1.2%

• Emerging Markets Currency Volatility(VXY) 7.75 +.13%

• CBOE S&P 500 Implied Correlation Index 18.1 -3.5% 

• ISE Sentiment Index 179.0 +34.0
  

• Total Put/Call .83 -9.8%

• NYSE Arms 1.53 +3.4% 
• NYSE Non-Block Money Flow +$90.6M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 55.4 -2.2%
  

• US Energy High-Yield OAS 327.9 -2.2%
• Bloomberg TRACE # Distressed Bonds Traded 326 +13
  

• European Financial Sector CDS Index 69.05 -4.0% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 212.68 -3.3%
  

• Italian/German 10Y Yld Spread 163.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 100.3 -2.0%
  

• Emerging Market CDS Index 175.0 -3.2%
• Israel Sovereign CDS 116.18 -6.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.21 unch.

• 2-Year SOFR Swap Spread -16.5 basis points -.75 basis point
  

• TED Spread 21.75 basis points n/a
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.25 -1.0 basis point
  
• MBS  5/10 Treasury Spread 145.0 -4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 966.0 -3.0 basis points
  
• Avg. Auto ABS OAS 75.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.2 +.03%
• 3-Month T-Bill Yield 5.38% +1.0 basis point
  

• China Iron Ore Spot 132.3 USD/Metric Tonne -.4%
• Dutch TTF Nat Gas(European benchmark) 30.94 euros/megawatt-hour +.98%

• Citi US Economic Surprise Index 6.8 +.3 point

• Citi Eurozone Economic Surprise Index -16.0 +1.5 points

• Citi Emerging Markets Economic Surprise Index 16.4 -.5 point
• S&P 500 Current Quarter EPS Growth Rate YoY(21 of 500 reporting) +9.1% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 243.45 -.07:  Growth Rate +11.9% unch., P/E 19.6 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.04% -1.0 basis point
  
• 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 290.58 -.05: Growth Rate +36.2% unch., P/E 30.0 +.2
  
• Bloomberg US Financial Conditions Index .84 n/a
  
• Bloomberg Euro-Zone Financial Conditions Index .45 +6.0 basis points
  
• US Yield Curve -34.0 basis points (2s/10s) +1.25 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +2.21% -2.0 basis points
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 65.4% +1.1 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.02% unch.: CPI YoY +3.32% unch.
  
• 10-Year TIPS Spread 2.22 unch.
  
• Highest target rate probability for March 20th FOMC meeting: 64.5%(+3.7 percentage points) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 55.4%(+6.7 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +424 open in Japan 
• China A50 Futures: Indicating -10 open in China

• DAX Futures: Indicating +180 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value -.1%
  

Sector Underperformers:

• 1) Alt Energy -1.2% 2) Oil Service -1.2% 3) Energy -1.2%

Stocks Falling on Unusual Volume: 

• AMPH, BECN, CORT, MBLY, MIRM, IRBT, GNE, GCT, TGTX and AEHR
  

Stocks With Unusual Put Option Activity:

• 1) AVTR 2) CFLT 3) ICLN 4) INFY 5) CNM
  

Stocks With Most Negative News Mentions:

• 1) DCGO 2) AEHR 3) MDRX 4) CHPT 5) FSR
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.9%
  

Sector Outperformers:

• 1) AI/Robotics +2.5% 2) Homebuilding +1.9% 3) Medical Equipment +1.6%

Stocks Rising on Unusual Volume:

• SATS, ESTA, PD, SGH, ISRG, ACVA, HUT, ACMR, VRNA, U, SWAV, MARA, PSMT, PANW, INTA, ALC, SONY, MASI, LGF/A, ASAN, SPR, META, NARI, MEG, PTGX, HTHT, BROS, TM, CLS, FBRT and WWD
  

Stocks With Unusual Call Option Activity:

• 1) MDRX 2) JNPR 3) ISRG 4) PD 5) DHR

Stocks With Most Positive News Mentions:

• 1) ISRG 2) SANA 3) AMRN 4) WDFC 5) LAES
  

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:

• None of note
  

After the Close: 

• None of note
  

Economic Releases

8:30 am EST

• The CPI MoM for Dec. is estimated to rise +.2% versus a +.1% gain in Nov. 
• The CPI Ex Food and Energy MoM for Dec. is estimated to rise +.3% versus a +.3% gain in Nov.
• Real Avg. Weekly Earnings YoY for Dec.
• Initial Jobless Claims for last week are estimated to rise to 210K versus 202K the prior week. 
• Continuing Claims are estimated to rise to 1870K versus 1855K prior.
  

2:00 pm EST

• The Budget Deficit for Dec. is estimated at -$63.8B versus -$85.0B in Nov.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Barkin speaking, 30Y T-Bond auction, Fed's balance sheet report, Cleveland CPI for Dec., weekly EIA natural gas inventory report and the (SUM) shareholders meeting could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -7.2% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.4 -1.5
  
• 4 Sectors Declining, 7 Sectors Rising
• 53.2% of Issues Advancing, 44.2% Declining 
• TRIN/Arms 1.62 +8.8% 
• Non-Block Money Flow +$44.7M
  
• 53 New 52-Week Highs, 30 New Lows
• 62.9%(+.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 61.0 unch.
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 57.3 -.4%
• Bloomberg Cyclicals/Defensives Pair Index 137.2 -.02%
  
• Russell 1000: Growth/Value 18,486.5 +.99%
• CNN Fear & Greed Index 75.0 (Extreme Greed) +2.0
• 1-Day Vix 11.0 +22.3%
  
• Vix 12.9 +.9%
  
• Total Put/Call .79 -14.1%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 101.75 -.75 basis point.

• China Sovereign CDS 64.5 -.75 basis point.
  
• China Iron Ore Spot 135.0 USD/Metric Tonne -2.0%.

• Bloomberg Emerging Markets Currency Index 41.18 -.05%.
• Bloomberg Global Risk-On/Risk Off Index 58.2 +1.3%.
  
• Bloomberg US Financial Conditions Index .84 n/a.
  
• Volatility Index(VIX) futures 14.5 +.22%.
• Euro Stoxx 50 futures -.11%.

• S&P 500 futures -.02%.

• NASDAQ 100 futures +.02%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by consumer and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.