Stocks Falling Substantially into Afternoon on Regulation/Tax Hike Fears, Diminished Vaccine Optimism, Forced Selling, Tech/Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 34.9 +15.5%
• Bloomberg Global Risk On/Risk Off Index 1,001.0 -358.0 points

• Euro/Yen Carry Return Index 131.50 +.56%

• Emerging Markets Currency Volatility(VXY) 10.3 -1.05%

• S&P 500 Implied Correlation 54.3 +3.0%

• ISE Sentiment Index 117.0 -20.0 points
  

• Total Put/Call .88 +15.8%

• NYSE Arms .73 -51.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 55.98 +1.31%
  

• US Energy High-Yield OAS 520.43 +.07%

• European Financial Sector CDS Index 63.30 +1.17%

• Italian/German 10Y Yld Spread 116.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 62.60 +.1%
  

• Emerging Market CDS Index 173.40 +.58%
  

• iBoxx Offshore RMB China Corporate High Yield Index 185.51 -.03%

• 2-Year Swap Spread 8.0 +.25 basis point

• TED Spread 15.75 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.5 +.5 basis point
  
• MBS  5/10 Treasury Spread  68.0 +1.0 basis point
  
• IHS Markit CMBX BBB- 6 73.0 -.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 62.11 +.14%
• 3-Month T-Bill Yield .05% unch.
  

• Yield Curve 93.0 +4.0 basis points
  

• China Iron Ore Spot 153.40 USD/Metric Tonne +.52%

• Citi US Economic Surprise Index 65.30 +2.5 points

• Citi Eurozone Economic Surprise Index 128.2 +29.6 points
  

• Citi Emerging Markets Economic Surprise Index 65.40 +10.9 points

• 10-Year TIPS Spread 2.12 +1.0 basis point
• 100.0% chance of no change at April 28th meeting, 100.0% chance of no change at June 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +122 open in Japan 
• China A50 Futures: Indicating -107 open in China

• DAX Futures: Indicating -19 open in Germany

Portfolio:

• Slightly Lower: On losses in my energy/tech/industrial sector longs
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 25% Net Long
  

Morning Market Internals

NYSE Composite Index:

• Volume Running +32.8% Above 100-Day Average 
• 1 Sector Rising, 10 Sectors Declining
• 42.8% of Issues Advancing, 53.9% Declining
• 45 New 52-Week Highs, 2 New Lows
• 83.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.9% 
• Bloomberg Global Risk-On/Risk-Off Index 1,311.0 -50.0 points
• Vix 30.5 +.8%
• Total Put/Call .75 -1.3%
• TRIN/Arms .52 -65.6%

Friday Watch

Night Trading 

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 62.0 -.75 basis point.

• China Sovereign CDS 31.75 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 61.99 -.05%.
• Bloomberg Global Risk-On/Risk Off Index 1,410.0 +51.0 points.
• Volatility Index(VIX) futures 30.3 -.31%.
• FTSE 100 futures -.22%.

• S&P 500 futures -.22%.

• NASDAQ 100 futures -.34%.

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BMI)/.43
• (BAH)/.83
• (CAT)/1.49
• (CVX)/.08
• (CHD)/.52
• (CL)/.76
• (LLY)/2.40
• (GNTX)/.50
• (HON)/2.00
• (JCI)/.41
• (LHX)/3.10
• (LYB)/1.33
• (PSX)/-.99
• (SAP)/1.56
• (WY)/.48
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• The 4Q Employment Cost Index is estimated to rise +.5% versus a +.5% gain in 3Q.
• Personal Income for Dec. is estimated to rise +.1% versus a -1.1% decline in Nov. 
• Personal Spending for Dec. is estimated to fall -.4% versus a -.4% decline in Nov.
• The PCE Core MoM for Dec. is estimated to rise +.1% versus unch. in Nov.
  

9:45 am EST

• The MNI Chicago PMI for Jan. is estimated to fall to 58.5 versus 59.5 in Dec. 
  

10:00 am EST

• Pending Home Sales MoM for Dec. is estimated to fall -.5% versus a -2.6% decline in Nov. 
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German GDP/Unemployment reports could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Higher into Final Hour on Earnings Optimism, Dollar Weakness, Technical Buying, Transport/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 28.2 -24.1%
• Bloomberg Global Risk On/Risk Off Index 1,529.0 +540.0 points

• Euro/Yen Carry Return Index 130.88 +.31%

• Emerging Markets Currency Volatility(VXY) 10.5 +.7%

• S&P 500 Implied Correlation 51.9 +3.7%

• ISE Sentiment Index 140.0 +15.0 points
  

• Total Put/Call .74 +1.37%

• NYSE Arms 1.89 +600.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.65 -.36%
  

• US Energy High-Yield OAS 519.03 -1.49%

• European Financial Sector CDS Index 62.57 +.07%

• Italian/German 10Y Yld Spread 118.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 62.53 +1.79%
  

• Emerging Market CDS Index 171.40 -1.72%
  

• iBoxx Offshore RMB China Corporate High Yield Index 185.56 +.04%

• 2-Year Swap Spread 7.75 -.25 basis point

• TED Spread 15.75 +1.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -5.0 -.5 basis point
  
• MBS  5/10 Treasury Spread  67.0 +.25 basis point
  
• IHS Markit CMBX BBB- 6 73.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 62.12 +.28%
• 3-Month T-Bill Yield .05% -2.0 basis points
  

• Yield Curve 89.0 -2.75 basis points
  

• China Iron Ore Spot 152.95 USD/Metric Tonne -6.86%

• Citi US Economic Surprise Index 62.80 -4.8 points

• Citi Eurozone Economic Surprise Index 98.6 +7.6 points
  

• Citi Emerging Markets Economic Surprise Index 54.50 +.4 point

• 10-Year TIPS Spread 2.11 +5.0 basis points
• 100.0% chance of no change at April 28th meeting, 100.0% chance of no change at June 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +273 open in Japan 
• China A50 Futures: Indicating +42 open in China

• DAX Futures: Indicating +22 open in Germany

Portfolio:

• Higher: On gains in my energy/biotech/medical/tech/industrial sector longs
  

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

• Market Exposure: Moved to 75% Net Long
  

Bear Radar

 Style Underperformer:

• Small-Cap Value -.2%

Sector Underperformers:

• 1) Retail -8.1% 2) Telecom -2.4% 3) Shipping -1.6%

Stocks Falling on Unusual Volume: 

• PBH, ASO, GATX, RAD, LEVI, BC, MTH, SEER, MSGN, CALX, SPCE, CRSR, VGAC, ZYXI, LGF/B, CHRS, GO, TER, DISCA, KIDS, CPB, SJM, SDC, UNFI, DDS, M, CAKE, BIG, IRM, MDLA, EBIX, WHR, KR, SOL, FLWS, HZO,  BGS, TR, VIAC, SKT, CVM, KODK, MAC, SRNE, KOSS, FIZZ, LUMN, AXDX, VIR, IRBT, PETS, GME, FOSL and BBBY
  

Stocks With Unusual Put Option Activity:

• 1) GNUS 2) LB 3) ASHR 4) FIZZ 5) AAL
  

Stocks With Most Negative News Mentions:

• 1) BBBY 2) GSX 3) TRIT 4) BIG 5) SIRI
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +2.5%

Sector Outperformers:

• 1) Airlines +4.5% 2) Gold & Silver +3.9% 3) Road & Rail +3.9%

Stocks Rising on Unusual Volume:

• SGRY, PSAC, AFG, REAL, PTC, SLM, LB, HAFC, CONN, ABMD, AOS, AAL, NOW, BKNG, DYN, ATHA, ABT, OUT, BPOP, RHP, SRG, CVLT, HLT and DBI
  

Stocks With Unusual Call Option Activity:

• 1) GLUU 2) THO 3) VIRT 4) SLV 5) CHEF

Stocks With Most Positive News Mentions:

• 1) HAFC 2) ABMD 3) NOW 4) CMCSA 5) GFF
  

Charts:

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