Thursday Watch

Night Trading 

• Asian equity indices are -.5% to +.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 65.75 unch.
• China Sovereign CDS 44.25 +2.25 basis points.
• China Iron Ore Spot 107.7 USD/Metric Tonne -.4%. 
• Gold 4,598.3 USD/t oz. -.8%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.71 +.04%.
• Bloomberg Emerging Markets Currency Index 36.1 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 100.4 -1.0%.
• US 10-Year Yield 4.14% unch.
• Japan 30-Year Yield 3.51% -2.0 basis points. 
• Volatility Index(VIX) futures 18.9 +.2%.
• Euro Stoxx 50 futures +.17%. 
• S&P 500 futures -.08%.
• NASDAQ 100 futures -.07%.

Morning Preview Links

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

Stocks Lower into Final Hour on US Tariff Ruling Uncertainty, US/Iran Tensions, Sector Rotation, Tech/Consumer Discretionary Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 49.6 +.9%
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .20 +1.0 basis point
• BofA Global Financial Stress Indicator -.28 -1.0 basis point
• European Financial Sector CDS Index 53.8 +1.4%
• Emerging Market CDS Index 130.7 +2.0%
• Bloomberg Global Trade Policy Uncertainty Index 2.5 +.3

• Citi US Economic Surprise Index 5.8 +1.3 points

• Citi Eurozone Economic Surprise Index 22.4 -1.4 points

• Citi Emerging Markets Economic Surprise Index 23.7 -1.1 point 
• S&P 500 Current Quarter EPS Growth Rate YoY(23 of 500 reporting) +18.0% -.4 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 312.14 +.08:  Growth Rate +15.9% unch., P/E 22.1 -.3
• S&P 500 Current Year Estimated Profit Margin 13.41% -10.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +n/a +n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 489.66 +.35: Growth Rate +19.2% +.1 percentage point, P/E 31.6 -.9
• Bloomberg US Financial Conditions Index .81 -3.0 basis points
• US Yield Curve 62.5 basis points (2s/10s) -1.75 basis points 
• Bloomberg Industrial Metal Index 174.6 +1.3% 
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 27.6% +.3 percentage point
• US Atlanta Fed GDPNow Q4 Forecast +5.3% +.2 percentage point
• US 10-Year T-Note Yield 4.14% -4.0 basis points
• 1-Year TIPS Spread 2.72 +5.0 basis points

• Highest target rate probability for March 18th FOMC meeting: 72.8% (-.1 percentage point) chance of 3.5%-3.75%. Highest target rate probability for April 29th meeting: 59.2%(-1.6 percentage points) chance of 3.5%-3.75%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -261 open in Japan 
• China A50 Futures: Indicating -59 open in China

• DAX Futures: Indicating +120 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/consumer discretionary sector longs
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.6%

Sector Underperformers:

• 1) Airlines -2.6% 2) Software -2.6% 3) AI/Innovation -2.2%

Stocks Falling on Unusual Volume: 

• ISRG, LTM, KYIV, IMSR, ARM, TVTX, PDD, CPA, BAC, C, APLS, APTV, WFC, GOLD GWRE, INTU, FMS, HNRG, GKOS, U, APP, PSO, DAVE, VELO, PSO, DAVE, VELO, TCOM and THH

Stocks With Unusual Put Option Activity:

• 1) LQD 2) LPTH 3) RZLV 4) ONON 5) APLS

Stocks With Most Negative News Mentions:

• 1) TCOM 2) PI 3) GKOS 4) FRMI 5) RIVN

Sector ETFs With Most Negative Money Flow:

• 1) XBI 2) SMH 3) XLB 4) XLV 5) XLY

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.5%

Sector Outperformers:

• 1) Coal +3.5% 2) Energy +3.1% 3) Agriculture +2.4%

Stocks Rising on Unusual Volume:

• CRML, AMN, AHMA, TNGX, BTDR, VKTX, MBX, GLSI, ORIC, BIOA, ICHR, UEC, ISSC, ALMS, EWTX, INFY, VNET, NEXA, BKKT, ADNT, CMPO, LTBR, SYNA, GPCR, NTR, LPTH, MOS, LYB, XPRO, WBI, DOW, UCTT, CVI, AD, TTI, LUNR, CLSK, APGE, PCT, IMCR, CWH, CF, ALGM, HTFL, PSLV, JAZZ, ATRO, BILI, SPT, TTMI, PBR, EH, AVAV, LNG, ACN, CNXC, DVN, RIOT, ABVX, CVE, CNH, LB, NOC, CLDX, RDW, HCC, WFG, ABVX, SMLR, GMAB, USAR, EOSE, LW, VALE, CEF, CLDX, EQNR, TDS, RDN, PBR/A, BF/B, USAR, WDS, GDS, ALHC, AIR, XOM, GIS, DNOW, RDN, CAG, SKYT and GOLF

Stocks With Unusual Call Option Activity:

• 1) BILI 2) PR 3) PAA 4) ALTS 5) GT 

Stocks With Most Positive News Mentions:

• 1) AMN 2) CLOV 3) ICHR 4) GTEC 5) SYNA

Sector ETFs With Most Positive Money Flow:

• 1) XLP 2) XLK 3) XLE 4) SOXX 5) MAGS

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:

• (BLK)/12.27
• (FHN)/.46
• (GS)/11.70
• (IIN)/.38
• (MS)/2.43
• (CBSH)/.99 

After the Close: 

• (JBHT)/1.81
• (TSM)/na 

Economic Release 

8:30 am EST

• Empire Manufacturing for Jan. is estimated to rise to 1.0 versus -3.9 in Dec.
• The Philly Fed Business Outlook for Jan. is estimated at -1.0 versus -10.2 in Dec.
• Initial Jobless Claims for last week is estimated to rise to 215K versus 208K the prior week.
• Continuing Claims is estimated to fall to 1899K versus 1914K prior.
• BLS releases limited Oct. Import-Export Series with Nov. data. 

4:00 pm EST

• Net Long-Term TIC flows for Nov. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Barr speaking, Fed's Barkin speaking, Fed's Bostic speaking, weekly EIA natural gas inventory report, (MU) annual meeting, (COST) annual meeting and the Needham Growth 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 +4.5% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 18.0 +4.7
• 6 Sectors Declining, 5 Sectors Rising
• 51.8% of Issues Advancing, 45.8% Declining 
• TRIN/Arms .92 -33.8%
• Non-Block Money Flow -$66.7M
  
• 175 New 52-Week Highs, 20 New Lows
• 68.8% (+2.0%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 64.5 -.2

Polymarket:

• Supreme Court Rules in Favor of Trump's Tariffs? 32.0% +5.0 percentage points
• Will there be another US government shutdown by January 31st? 30.0% +3.0 percentage points
• Will China invade Taiwan by end of 2026? 13.0% unch.
• US strikes Iran by June 30th 88.0% +5.0 percentage points

Other:

• Bloomberg Global Risk-On/Risk-Off Index 101.1 -1.3%
• US High-Yield Tech Sector OAS Index 420.25 +1.75 basis points
• Bloomberg Cyclicals/Defensives Index 265.0 -1.5%
• Morgan Stanley Growth vs Value Index 155.9 -2.9%
• CNN Fear & Greed Index 51.0 (Moved to NEUTRAL from GREED) -5.0
• 1-Day Vix 10.5 -2.2%
  
• Vix 17.6 +9.8%
  
• Total Put/Call .78 -11.4%