Stocks Lower into Final Hour on Profit-Taking, Yen Strength, Technical Selling, Networking/Restaurant Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.33 +1.37%

• Euro/Yen Carry Return Index 140.97 +.35%

• Emerging Markets Currency Volatility(VXY) 7.86 +.13%

• S&P 500 Implied Correlation 38.26 -10.10%

• ISE Sentiment Index 78.0 -25.0%
  

• Total Put/Call 1.06 -3.64%

• NYSE Arms 1.07 +41.14%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.14 -.26%
  

• America Energy Sector High-Yield CDS Index 369.0 -.52%

• European Financial Sector CDS Index 43.97 +.92%

• Western Europe Sovereign Debt CDS Index 3.96 n/a

• Asia Pacific Sovereign Debt CDS Index 12.67 -3.21%

• Emerging Market CDS Index 119.25 -1.0%
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.97 +.02%

• 2-Year Swap Spread 18.50 +.5 basis point

• TED Spread 31.5 +3.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -20.0 -2.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.26 +.12%
• 3-Month T-Bill Yield 1.38% unch.
  

• Yield Curve 52.25 -.25 basis point

• China Iron Ore Spot 490.50 CNY/100 Metric Tonnes n/a

• Citi US Economic Surprise Index 75.70 -1.4 points

• Citi Eurozone Economic Surprise Index 49.30 -.5 basis point

• Citi Emerging Markets Economic Surprise Index -3.30 unch.

• 10-Year TIPS Spread 1.98 +1.0 basis point
  
• 69.0% chance of Fed rate hike at March 21 meeting, 70.4% chance at May 2 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +45 open in Japan 
• China A50 Futures: Indicating +37 open in China

• DAX Futures: Indicating -35 open in Germany

Portfolio: 

• Slightly Lower: On losses in my medical/biotech sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.2%

Sector Underperformers:

• 1) Networking -1.2% 2) Homebuilders -.6% 3) Restaurants -.5%

Stocks Falling on Unusual Volume: 

• WATT, BCEI, ADTN and WTW

Stocks With Unusual Put Option Activity:

• 1) DDD 2) SWN 3) NRG 4) AABA 5) COTY

Stocks With Most Negative News Mentions:

• 1) WATT 2) ADTN 3) SYNT 4) ICPT 5) CTL

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth unch.

Sector Outperformers:

• 1) Oil Service +.6% 2) Shipping +.6% 3) Construction +.4%

Stocks Rising on Unusual Volume:

• GCAP, ATRA, QIWI, TIVO, AMGP, UCTT, CRSP, UEPS, RNP, SD, MGPI, IFN, DQ, PJT, SMG, ARD, AGU, CRC, IEP, RETA, TCX, PTLA, ROG, SSL and AZN

Stocks With Unusual Call Option Activity:

• 1) GGP 2) GPS 3) FLEX 4) XLV 5) COG

Stocks With Most Positive News Mentions:

• 1) GCAP 2) AVPL 3) PSMT 4) FDX 5) ILMN

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -34.6% Below 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 46.0% of Issues Advancing, 49.7% Declining
• 143 New 52-Week Highs, 4 New Lows
• 62.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.3%
• Vix 10.2 unch.
• Total Put/Call .89 -19.1%
• TRIN/Arms 1.06 +39.4%

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 66.75 unch. 

• Asia Pacific Sovereign CDS Index 13.0 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 74.18 +.2%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases

• None of note

Upcoming Splits

• (NEOG) 4-for-3

Other Potential Market Movers

• The German CPI report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly 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.

Stocks Slightly Higher into Final Hour on Economic Optimism, Oil Gain, Seasonality, Homebuilding/Telecom Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.15 -3.06%

• Euro/Yen Carry Return Index 140.58 +.15%

• Emerging Markets Currency Volatility(VXY) 7.82 -.51%

• S&P 500 Implied Correlation 38.48 +.03%

• ISE Sentiment Index 102.0 +18.6%
  

• Total Put/Call .95 unch.

• NYSE Arms .86 -40.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.38 +1.12%
  

• America Energy Sector High-Yield CDS Index 371.0 -.62%

• European Financial Sector CDS Index 43.55 -.07%

• Western Europe Sovereign Debt CDS Index 3.96 n/a

• Asia Pacific Sovereign Debt CDS Index 13.07 -1.28%

• Emerging Market CDS Index 120.04 -.42%
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.93 +.15%

• 2-Year Swap Spread 18.0 +.75 basis point

• TED Spread 26.75 +4.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -18.0 +41.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.18 +.20%
• 3-Month T-Bill Yield 1.38% -6.0 basis points
  

• Yield Curve 52.5 +.25 basis point

• China Iron Ore Spot 490.50 CNY/100 Metric Tonnes +.41%

• Citi US Economic Surprise Index 77.10 -1.8 points

• Citi Eurozone Economic Surprise Index 49.80 -.4 basis point

• Citi Emerging Markets Economic Surprise Index -3.30 -1.0 basis point

• 10-Year TIPS Spread 1.97 +2.0 basis points
  
• 69.0% chance of Fed rate hike at March 21 meeting, 71.0% chance at May 2 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +61 open in Japan 
• China A50 Futures: Indicating +65 open in China

• DAX Futures: Indicating +17 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/biotech sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long