Stocks Rising into Final Hour on Lower Long-Term Rates, Earnings Outlook Optimism, Short-Covering, Transport/Alt Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Gaining
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.6 -7.7%
• DJIA Intraday % Swing .59 -49.3%
  
• Bloomberg Global Risk On/Risk Off Index 59.8 +6.2%

• Euro/Yen Carry Return Index 174.5 +.02%

• Emerging Markets Currency Volatility(VXY) 6.8 -.6%

• CBOE S&P 500 Implied Correlation Index 17.0 -5.7% 

• ISE Sentiment Index 154.0 +29.0
  

• Total Put/Call .96 +9.1%

• NYSE Arms 1.11 +3.7% 
• NYSE Non-Block Money Flow +$129.0M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 54.2 -1.1%
  

• US Energy High-Yield OAS 310.62 +.75%
• Bloomberg TRACE # Distressed Bonds Traded 300 -9
  

• European Financial Sector CDS Index 68.2 -.24% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 211.9 +1.0%
  

• Italian/German 10Y Yld Spread 152.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 102.0 +1.8%
  

• Emerging Market CDS Index 180.9 -1.5%
• Israel Sovereign CDS 116.4 +1.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.4 -.29%

• 2-Year SOFR Swap Spread -11.0 basis points +.75 basis point
  

• Treasury Repo 3M T-Bill Spread 7.25 basis points -1.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -6.0 unch.
  
• MBS  5/10 Treasury Spread 159.0 unch.
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 843.0 +4.0 basis points
  
• Avg. Auto ABS OAS 65.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 40.4 -.01%
• 3-Month T-Bill Yield 5.37% -1.0 basis point
  

• China Iron Ore Spot 129.2 USD/Metric Tonne +.05%
• Dutch TTF Nat Gas(European benchmark) 24.9 euros/megawatt-hour -2.3%

• Citi US Economic Surprise Index 47.2 +2.5 points

• Citi Eurozone Economic Surprise Index 34.6 +12.3 points

• Citi Emerging Markets Economic Surprise Index -.3 -.5 point
• S&P 500 Current Quarter EPS Growth Rate YoY(369 of 500 reporting) +5.7% +.4 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 245.70 +.15:  Growth Rate +11.0% +.1 percentage point, P/E 20.2 unch.
  
• S&P 500 Current Year Estimated Profit Margin 11.24% -3.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +44.2% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 306.39 +.46: Growth Rate +43.6% +.2 percentage point, P/E 31.7 unch.
  
• Bloomberg US Financial Conditions Index 1.05 -4.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .89 +6.0 basis points
  
• US Yield Curve -30.75 basis points (2s/10s) +3.0 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +3.4% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 55.1% -4.7 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.74% unch.: CPI YoY +3.06% unch.
  
• 10-Year TIPS Spread 2.30 +1.0 basis point
  
• Highest target rate probability for May 1st FOMC meeting: 61.5%(-4.0 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 53.7%(+1.6 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +317 open in Japan 
• China A50 Futures: Indicating -65 open in China

• DAX Futures: Indicating +86 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +.5%
  

Sector Underperformers:

• 1) Foods -.9% 2) Energy -.1% 3) Computer Services unch.

Stocks Falling on Unusual Volume: 

• WMB, OTTR, ESTA, GDDY, SONY, CART, KHC, CAR, HE, MGM, R, TGLS, CAE, CC, UPST and QDEL
  

Stocks With Unusual Put Option Activity:

• 1) ATMU 2) GDDY 3) LYFT 4) CART 5) FSLY
  

Stocks With Most Negative News Mentions:

• 1) QDEL 2) UPST 3) CC 4) MITQ 5) NVTA
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.0%
  

Sector Outperformers:

• 1) Alt Energy +4.1% 2) Road & Rail +3.9% 3) Computer Hardware +2.4%

Stocks Rising on Unusual Volume:

• LRMR, LYFT, HCSG, REZI, KTOS, ASPN, MRC, TSEM, ALSN, VGR, HOOD, UBER, SAGE, IQV, BFAM, CLSK, CRL, AVTR, CHEF, WCC, SMCI, CLCO, DVA, UPWK, CRSR, MODG, PSN, Z, ZG, ES, ARM, ENTG, CSAN and REVG
  

Stocks With Unusual Call Option Activity:

• 1) LBTYA 2) PPC 3) JCI 4) LYFT 5) GDDY

Stocks With Most Positive News Mentions:

• 1) LYFT 2) BLNK 3) UBER 4) REZI 5) GLSI
  

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:

• (ARCH)/7.55
• (CBRE)/1.18
• (CGNX)/.07
• (COHU)/.23
• (CROX)/2.36
• (DE)/5.27
• (GPC)/2.20
• (H)/.37
• (LH)/3.26
• (PENN)/-.54
• (RS)/3.92
• (SHAK)/.01
• (SO)/.60
• (SPWR)/-.25
• (WEN)/.23
• (YETI)/.96
• (ZBRA)/1.65
  

After the Close: 

• (AEM)/.49
• (AMAT)/1.90
• (COIN)/.02
• (ED)/.97
• (DLR)/1.65
• (DASH)/-.13
• (DKNG)/.08
• (DBX)/.48
• (IR)/.77
• (TXRH)/1.06
• (TTD)/.41
• (TOST)/.03
• (TRUP)/-.18
• (YELP)/.38
  

Economic Releases

8:30 am EST

• Empire Manufacturing for Feb. is estimated to rise to -12.5 versus -43.7 in Jan.
• Retail Sales Advance MoM for Jan. is estimated to fall -.2% versus a +.6% gain in Dec.
• Retail Sales Ex Autos MoM for Jan. is estimated to rise +.2% versus a +.4% gain in Dec.
• Retail Sales Ex Autos and Gas MoM for Jan. is estimated to rise +.2% versus a +.6% gain in Dec.
• The Philly Fed Business Outlook Index for Feb. is estimated to rise to -8.1 versus -10.6 in Jan.
• The Import Price Index MoM for Jan. is estimated unch. versus unch. in Dec.
• The Import Price Index ex Petrol MoM for Jan. is estimated unch. versus unch. in Dec.
• The Export Price Index MoM for Jan. is estimated to fall -.1% versus a -.9% decline in Dec.
• Initial Jobless Claims for last week is estimated to rise to 220K versus 218K the prior week.
• Continuing Claims is estimated to rise to 1880K versus 1871K prior.
  

9:15 am EST

• Industrial Production MoM for Jan. is estimated to rise +.2% versus a +.1% gain in Dec.
• Capacity Utilization for Jan. is estimated to rise to 78.8% versus 78.6% in Dec. 
• Manufacturing Production for Jan. is estimated unch. versus a +.1% gain in Dec.  
  

10:00 am EST

• Business Inventories for Dec. is estimated to rise +.4% versus a -.1% decline in Nov.
• The NAHB Housing Market Index for Feb. is estimated to rise to 46.0 versus 44.0 in Jan.
  

4:00 pm EST

• Net Long-Term TIC Flows for Dec.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Bostic speaking, Fed's Waller speaking, weekly EIA natural gas inventory report, (WOR) investor meeting, (DDOG) investor day, (OTIS) investor day and the Wolfe Research Auto/Auto Tech Conference 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 -.1% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 10.6 +1.9
  
• 2 Sectors Declining, 9 Sectors Rising
• 77.4% of Issues Advancing, 20.3% Declining 
• TRIN/Arms 1.20 +12.2%
  
• Non-Block Money Flow +$174.9M
  
• 63 New 52-Week Highs, 25 New Lows
• 58.2% (+3.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 58.0 +2.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 59.4 +5.4%
• Bloomberg Cyclicals/Defensives Pair Index 138.9 +.13%
  
• Russell 1000: Growth/Value 19,528.1 -.06%
• CNN Fear & Greed Index 72.0 (Greed) +1.0
• 1-Day Vix 10.4 -24.2%
  
• Vix 14.8 -6.8%
  
• Total Put/Call 1.01 +14.8%

Wednesday Watch

Night Trading 

• Asian equity indices are -1.25% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 102.5 +2.25 basis points.

• China Sovereign CDS 65.5 +.75 basis point.
  
• China Iron Ore Spot 127.3 USD/Metric Tonne -1.0%.

• Bloomberg Emerging Markets Currency Index 40.3 -.06%.
• Bloomberg Global Risk-On/Risk Off Index 59.2 +5.0%.
• Volatility Index(VIX) futures 15.8 -1.7%.
• Euro Stoxx 50 futures -.23%

• S&P 500 futures +.02%.

• NASDAQ 100 futures +.03%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.