Stocks Modestly Higher into Afternoon on US Economic "Soft-Landing" Hopes, Diminished China Economy Fears, Year-End Window Dressing, Tech/Gambling Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Most Sectors Rising
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.5 +.9%
• DJIA Intraday % Swing .24% -40.0%
  
• Bloomberg Global Risk On/Risk Off Index 55.1 +.1%

• Euro/Yen Carry Return Index 168.2 -.6%

• Emerging Markets Currency Volatility(VXY) 8.1 +1.3%

• CBOE S&P 500 Implied Correlation Index 19.1 +2.4% 

• ISE Sentiment Index 156.0 +18.0
  

• Total Put/Call .81 -25.7%

• NYSE Arms .82 -43.1% 
• NYSE Non-Block Money Flow -$29.7M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 55.68 +.52%
  

• US Energy High-Yield OAS 334.85 +1.34%
• Bloomberg TRACE # Distressed Bonds Traded 261 -2
  

• European Financial Sector CDS Index 67.44 +.03% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 207.02 -.59%
  

• Italian/German 10Y Yld Spread 166.0 basis points +7.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 90.90 +.18%
  

• Emerging Market CDS Index 165.74 +.09%
• Israel Sovereign CDS 106.88 -3.5%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.09 +.27%

• 2-Year SOFR Swap Spread -18.25 basis points -1.25 basis points
  

• TED Spread 23.0 basis points +.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -1.75 +2.75 basis points
  
• MBS  5/10 Treasury Spread 143.0 +4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 967.0 -1.0 basis point
  
• Avg. Auto ABS OAS 78.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.77 -.01%
• 3-Month T-Bill Yield 5.38% unch.
  

• China Iron Ore Spot 138.90 USD/Metric Tonne +.19%
• Dutch TTF Nat Gas(European benchmark) 33.10 euros/megawatt-hour -6.8%

• Citi US Economic Surprise Index 10.4 -2.7 points

• Citi Eurozone Economic Surprise Index -40.6 -.2 point

• Citi Emerging Markets Economic Surprise Index 15.4 -.5 point
• S&P 500 Current Quarter EPS Growth Rate YoY(17 of 500 reporting) +13.5% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 243.07 +.09:  Growth Rate +11.6% unch., P/E 19.7 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.04% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +0.0% -0.0 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 288.77 +.14: Growth Rate +35.4% +.1 percentage point, P/E 30.5 unch.
  
• Bloomberg US Financial Conditions Index n/a
  
• Bloomberg Euro-Zone Financial Conditions Index .24 -136.0 basis points
  
• US Yield Curve -43.25 basis points (2s/10s) +2.0 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +2.26% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 69.2% +2.0 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.02% unch.: CPI YoY +3.32% unch.
  
• 10-Year TIPS Spread 2.17 unch.
  
• Highest target rate probability for March 20th FOMC meeting: 74.1%(+.2 percentage point) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 74.0%(+1.8 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -29 open in Japan 
• China A50 Futures: Indicating +34 open in China

• DAX Futures: Indicating +180 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -.4%
  

Sector Underperformers:

• 1) Gold & Silver -1.6% 2) Energy -1.1% 3) Oil Service -.9%

Stocks Falling on Unusual Volume: 

• RIOT, GSBD, BTDR, EWTX, MARA, LOPE, GFI, HUT and NEO
  

Stocks With Unusual Put Option Activity:

• 1) ACI 2) ASHR 3) PENN 4) FXI 5) TLRY
  

Stocks With Most Negative News Mentions:

• 1) NEO 2) LOPE 3) SKIN 4) CHPT 5) GDHG
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%
  

Sector Outperformers:

• 1) Electric Vehicles +1.9% 2) Social Media +1.3% 3) Gambling +1.1%

Stocks Rising on Unusual Volume:

• ALT, BILI, BMEA, VIPS, PLL, SATS, PENN, SRRK, JKS, FUTU, ARM, ZTO, LTHM, GOGO, WB, LI, RILY, XPEV, DQ, LSPD, JD and BIDU
  

Stocks With Unusual Call Option Activity:

• 1) CAH 2) HLT 3) SILV 4) FITB 5) BAX

Stocks With Most Positive News Mentions:

• 1) DOYU 2) CING 3) FKWL 4) NXU 5) ATUS
  

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:

• None of note
  

After the Close: 

• None of note
  

Economic Releases

9:45 am EST

• The MNI Chicago PMI for Dec. is estimated to fall to 50.0 versus 55.8 in Nov.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The German CPI report, US Baker Hughes Rig Count, CFTC speculative positioning reports and the (RNG) annual meeting 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 -30.1% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 15.5 -9.8
  
• 4 Sectors Declining, 7 Sectors Rising
• 47.9% of Issues Advancing, 49.2% Declining 
• TRIN/Arms .81 -43.8% 
• Non-Block Money Flow -$39.9M
  
• 105 New 52-Week Highs, 6 New Lows
• 67.6%(+.7%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 71.0 unch.
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 55.5 +.9%
• Bloomberg Cyclicals/Defensives Pair Index 141.7 -.42%
  
• Russell 1000: Growth/Value 18,393.3 +.07%
• CNN Fear & Greed Index 77.0 (Extreme Greed) -2.0
• 1-Day Vix 8.5 +3.5%
  
• Vix 12.6 +1.4%
  
• Total Put/Call .78 -28.4%

Thursday Watch

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 90.75 unch.

• China Sovereign CDS 59.75 unch.
  
• China Iron Ore Spot 139.4 USD/Metric Tonne -1.34%.

• Bloomberg Emerging Markets Currency Index 41.79 +.02%.
• Bloomberg Global Risk-On/Risk Off Index 55.3 +.4%.
  
• Bloomberg US Financial Conditions Index n/a.
  
• Volatility Index(VIX) futures 13.96 -.24%.
• Euro Stoxx 50 futures +.28%.

• S&P 500 futures +.08%.

• NASDAQ 100 futures +.12%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.