Stocks Slightly Higher into Final Hour on Stable Long-Term Rates, Earnings Outlook Optimism, Technical Buying, Construction/Road & Rail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Above Average
  

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 15.5 -2.0%
• S&P 500 Intraday % Swing .32 -56.3%.
  
• Bloomberg Global Risk On/Risk Off Index 71.4 +1.4%

• Euro/Yen Carry Return Index 175.5 -1.0%

• Emerging Markets Currency Volatility(VXY) 8.5 -.8%

• CBOE S&P 500 Implied Correlation Index 12.6 +2.5% 

• ISE Sentiment Index 194.0 +42.0 points
  

• Total Put/Call .79 -1.3%

• NYSE Arms 1.21 -28.8%
  
• NYSE Non-Block Money Flow -$39.0M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 48.0 +.4%
  

• US Energy High-Yield OAS 283.8 +.3%
• Bloomberg TRACE # Distressed Bonds Traded 177 +3
  

• European Financial Sector CDS Index 58.9 -1.3%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 142.0 -.7%
  

• Italian/German 10Y Yld Spread 107.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 75.8 -2.0%
  

• Emerging Market CDS Index 158.0 +.3%
• Israel Sovereign CDS 84.8 -.7%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 23.96 +.2%

• 2-Year SOFR Swap Spread -15.5 basis points -.25 basis point
  

• 3M T-Bill Treasury Repo Spread .5 basis point +3.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -.5 +1.25 basis points
  
• MBS  5/10 Treasury Spread 136.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 606.0 -1.0 basis point
  
• Avg. Auto ABS OAS 47.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 37.2 +.2%
• 3-Month T-Bill Yield 4.32% +1.0 basis point
  

• China Iron Ore Spot 106.20 USD/Metric Tonne +.2%
• Dutch TTF Nat Gas(European benchmark) 54.5 euros/megawatt-hour +2.0%

• Citi US Economic Surprise Index 7.7 -2.5 points
  

• Citi Eurozone Economic Surprise Index 5.2 +7.2 points

• Citi Emerging Markets Economic Surprise Index 12.7 +2.7 points
• S&P 500 Current Quarter EPS Growth Rate YoY(293 of 500 reporting) +12.2% +.2 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 273.94 +.02:  Growth Rate +15.6% unch., P/E 22.2 +.2
  
• S&P 500 Current Year Estimated Profit Margin 11.87% -4.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(6 of 10 reporting) +19.7% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 401.91 unch.: Growth Rate +30.0% unch., P/E 34.2 +.1
  
• Bloomberg US Financial Conditions Index .78 +4.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index 1.74 -2.0 basis points
  
• US Yield Curve 22.75 basis points (2s/10s) -.5 basis point
  
• US Atlanta Fed GDPNow Q1 Forecast +2.89% -99.0 basis points
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 26.5% -.6 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.52% unch.: CPI YoY +2.85% unch.
  
• 10-Year TIPS Spread 2.41 unch.
  
• Highest target rate probability for May 7th FOMC meeting: 62.2% (+3.4 percentage points) chance of 4.25%-4.5%. Highest target rate probability for June 18th meeting: 45.8%(+.1 percentage point) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -125 open in Japan 
• China A50 Futures: Indicating -35 open in China

• DAX Futures: Indicating +70 open in Germany

Portfolio:

• Higher: On gains in my tech/industrial/financial sector longs
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -.6%
  

Sector Underperformers:

• 1) Oil Service -3.9% 2) Healthcare Providers -2.6% 3) Defense -2.1%

Stocks Falling on Unusual Volume: 

• TEX, BV, AFL, CRM, QCOM, GOOS, MTSI, HON, ASGN, CF, BDX, TENB, RRX, CMRE, VKTX, HI, IMVT, EFX, BTU, AB, SPB, MRC, CNMD, MNR, OSCR, BLCO, CYTK, PTC, CLS, ENSG, OMCL, FORM, HOLX, MOH, HAE, DLX, PI, EGO, RBLX, HP, SYM, DNA, SITM, HII, LSPD, GHRS, WEX and SWKS
  

Stocks With Unusual Put Option Activity:

• 1) SWKS 2) RBLX 3) EWG 4) AM 5) CCK
  

Stocks With Most Negative News Mentions:

• 1) SWKS 2) WEX 3) HII 4) SYM 5) HP
  

Sector ETFs With Most Negative Money Flow:

• 1) GDX 2) IYZ 3) IYW 4) OIH 5) XBI

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.4%
  

Sector Outperformers:

• 1) Alt Energy +2.5% 2) Road & Rail +2.2% 3) Computer Hardware +1.2%

Stocks Rising on Unusual Volume:

• AMSC, HSAI, NGNE, PSFE, DGII, GRRR, IDCC, PBH, MBX, MT, TPR, COHR, TDOC, RL, AGX, KC, ASTS, TTMI, GTES, PM, SNDX, ACMR, RCAT, YUM, LQDT, NX, DYN, EH, DAR, ZK, SONO, UBER, XPO, OLN, DAVE, PLTR, PGY, TPB, NVST, LI, WB, MGNI, SMCI, VVV, CENTA, UTI, LNC, SERV, HSY, ICE, JLT, MAGN, BBVA, FWONK, OPFI, H, CSGS, TRI, APTV, ENVX, ALGT, PRTH, MP, CNTA, FLG, EZPW, ORIC, MNRO, KROS, LLY, BLBD, CRH, BYRN, MAR, PPG, DRD, RITM, CTSH and NSSC
  

Stocks With Unusual Call Option Activity:

• 1) APPS 2) ACB 3) SWKS 4) CROX 5) BILL

Stocks With Most Positive News Mentions:

• 1) RL 2) COHR 3) AMSC 4) TPR 5) SMCI
  

Sector ETFs With Most Positive Money Flow:

• 1) XLB 2) XLY 3) XLC 4) XHB 5) XLI
  

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:

• (CBOE)/2.13
• (ROAD)/.15
• (FLO)/.20
• (NWL)/.14
  

After the Close: 

• None of note
  

Economic Releases

8:30 am EST

• Annual Revisions: Establishment Survey Data.
• The Change in Non-Farm Payrolls for Jan. is estimated to fall to 173K versus 256K in Dec.
• Average Hourly Earnings MoM for Jan. is estimated to rise +.3% versus a +.3% gain in Dec.
• The Unemployment Rate for Jan. is estimated to rise +4.1% versus a +4.1% gain in Dec. 
  

10:00 am EST

• The Univ. of Mich. Consumer Confidence Index for Feb. is estimated to rise to 71.7 versus 71.1 in Jan.
• Wholesale Trade Sales MoM for Dec. is estimated to rise +.5% versus a +.6% gain in Nov.
• Univ. of Mich. 1Y Inflation Expectations Index for Feb. is estimated at +3.3% versus +3.3% in Jan.
  

3:00 pm EST

• Consumer Credit for Dec. is estimated at $14.55B versus -$7.489B in Nov.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Kugler speaking, Fed's Bowman speaking, Atlanta Fed GDPNow 1Q update, Fed Monetary policy report, US Baker Hughes Oil Rig count and the CFTC weekly speculative net positioning reports 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 +28.8% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.3 -1.1
  
• 4 Sectors Declining, 7 Sectors Rising
• 48.2% of Issues Advancing, 49.3% Declining 
• TRIN/Arms 1.26 -25.9%
  
• Non-Block Money Flow +$138.0M
  
• 92 New 52-Week Highs, 24 New Lows
• 57.1% (+1.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 64.0 +2.6
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 71.5 +1.5%
• Bloomberg Cyclicals/Defensives Index 253.6 +.02%
  
• Russell 1000: Growth/Value 21,180.4 +.3%
• CNN Fear & Greed Index 41.0 (FEAR) +2.0
  
• 1-Day Vix 11.9 +7.2%
  
• Vix 15.5 -1.7%
  
• Total Put/Call .78 -2.5%

Thursday Watch

Night Trading 

• Asian equity indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 76.75 +.25 basis point.

• China Sovereign CDS 57.75 +1.75 basis points.
  
• China Iron Ore Spot 105.2 USD/Metric Tonne +1.4%

• Bloomberg Emerging Markets Currency Index 37.1 -.03%.
• Bloomberg Global Risk-On/Risk Off Index 71.0 +.8%.
• Volatility Index(VIX) futures 17.5 -.2%.
• Euro Stoxx 50 futures +.44%.

• S&P 500 futures +.13%.

• NASDAQ 100 futures +.1%.  

Morning Preview Links

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