Friday Watch

Night Trading 

• Asian equity indices are unch. to +.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 64.75 +.25 basis point.
• China Sovereign CDS 43.75 +.25 basis point.
• China Iron Ore Spot 104.75 USD/Metric Tonne -.34%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.81 -.16%.
• Bloomberg Emerging Markets Currency Index 36.13 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 97.5 -.2%.
• US 10-Year Yield 4.17% n/a.
• Japan 30-Year Yield 3.40% n/a. 
• Volatility Index(VIX) futures 18.34 -1.1%.
• Euro Stoxx 50 futures -.53%. 
• S&P 500 futures +.23%.
• NASDAQ 100 futures +.25%.

Morning Preview Links

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

Stocks Modestly Lower into Final Hour on Rising Long-Term Rates, Year-End Positioning, Technical Selling, Tech/Alt Energy Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 50.0 unch.
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .26 unch.
• BofA Global Financial Stress Indicator -.28 +1.0 basis point
• European Financial Sector CDS Index 54.2 -.02%
• Emerging Market CDS Index 124.3 -.4%
• Bloomberg Global Trade Policy Uncertainty Index 2.2 -.1

• Citi US Economic Surprise Index 14.4 +6.1 points

• Citi Eurozone Economic Surprise Index 32.6 +.1

• Citi Emerging Markets Economic Surprise Index 30.6 +1.5 points 
• S&P 500 Current Quarter EPS Growth Rate YoY(16 of 500 reporting) +32.8% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 310.36 +.10:  Growth Rate +15.3% +.1 percentage point, P/E 22.2 unch.
• S&P 500 Current Year Estimated Profit Margin 13.50% unch.
• 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 484.65 +.19: Growth Rate +18.0% +.1 percentage point, P/E 32.8 -.1
• Bloomberg US Financial Conditions Index .77 unch.
• US Yield Curve 69.0 basis points (2s/10s) +1.75 basis points 
• Bloomberg Industrial Metal Index 163.4 -.7% 
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 28.8% unch.
• US Atlanta Fed GDPNow Q4 Forecast +3.0% unch. 
• US 10-Year T-Note Yield 4.17% +5.0 basis points
• 1-Year TIPS Spread 2.29 -4.0 basis points

• Highest target rate probability for March 18th FOMC meeting: 49.9% (+.8 percentage point) chance of 3.5%-3.75%. Highest target rate probability for April 29th meeting: 45.2%(-.1 percentage point) chance of 3.25%-3.5%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +450 open in Japan 
• China A50 Futures: Indicating -19 open in China

• DAX Futures: Indicating +200 open in Germany

Portfolio:

• Slightly Lower: On losses in my consumer discretionary/tech/industrial sector longs
• Disclosed Trades: None
• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.4%

Sector Underperformers:

• 1) Computer Services -1.3% 2) Gold & Silver -.9% 3) Digital Health -.9%

Stocks Falling on Unusual Volume: 

• LB, NCDL, CCAP, IDR, AFJK, QXO, PSLV and CORT

Stocks With Unusual Put Option Activity:

• 1) XME 2) CORT 3) BTBT 4) CCIR 5) SIRI

Stocks With Most Negative News Mentions:

• 1) CORT 2) WDC 3) NIO 4) NEM 5) CPNG

Sector ETFs With Most Negative Money Flow:

• 1) XBI 2) PPA 3) ARKK 4) VHT 5) VGT

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.2%

Sector Outperformers:

• 1) Nuclear +.4% 2) Biotech +.4% 3) unch.

Stocks Rising on Unusual Volume:

•  AXSM, ONDS, UMAC, DJT, PSNY, APLD, AFJK, PHVS, NKE, LPTH, HYMC and PVLA

Stocks With Unusual Call Option Activity:

• 1) AMLP 2) VNDA 3) EU 4) EVLV 5) PRMW 

Stocks With Most Positive News Mentions:

• 1) VNDA 2) NKE 3) AMRN 4) ONDS 5) ANGH

Sector ETFs With Most Positive Money Flow:

• 1) XLF 2) XLP 3) SOXX 4) SIL 5) XLC

Charts:

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

Friday'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 Release 

9:45 am EST

• Final S&P Global US Manufacturing PMI reading for Dec. 

10:00 am EST

• Construction Spending MoM for Oct. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The weekly MBA Mortgage Applications report and Fed's weekly balance sheet report could also impact global trading on Friday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -50.8% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 14.4 -3.2
• 10 Sectors Declining, 0 Sectors Rising
• 27.1% of Issues Advancing, 70.3% Declining 
• TRIN/Arms .83 -12.6%
• Non-Block Money Flow -$102.3M
  
• 32 New 52-Week Highs, 34 New Lows
• 59.8% (-3.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 57.2 -4.4

Polymarket:

• Supreme Court Rules in Favor of Trump's Tariffs? 30.0% -1.0 percentage point
• Will there be another US government shutdown by January 31st? 28.0% +2.0 percentage points
• Will China invade Taiwan by end of 2026? 12.0% -1.0 percentage point
• US-Venezuela military engagement by Jan. 31st 24.0% unch.

Other:

• Bloomberg Global Risk-On/Risk-Off Index 97.8 -.3%
• US High-Yield Tech Sector OAS Index 423.75 -5.5 basis points
• Bloomberg Cyclicals/Defensives Index 265.25 +.1%
• Morgan Stanley Growth vs Value Index 159.7 +.1%
• CNN Fear & Greed Index 47.0 (NEUTRAL) -3.0
• 1-Day Vix 8.5 -16.1%
  
• Vix 14.7 +2.4%
  
• Total Put/Call .90 +8.4%