Stocks Slightly Lower into Final Hour on Profit-Taking, Technical Selling, Yen Strength, Financial/Defense Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.75 +.21%

• Euro/Yen Carry Return Index 136.99 -.42%

• Emerging Markets Currency Volatility(VXY) 7.90 +.64%

• S&P 500 Implied Correlation 16.28 unch.

• ISE Sentiment Index 102.0 -.32%
  

• Total Put/Call .88 +4.76%

• NYSE Arms .82 -39.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.67 -1.71%
  

• America Energy Sector High-Yield CDS Index 371.0 -.59%

• European Financial Sector CDS Index 48.18 -2.69%

• Western Europe Sovereign Debt CDS Index 3.96 +4.91%

• Asia Pacific Sovereign Debt CDS Index 15.26 -1.1%

• Emerging Market CDS Index 185.32 unch.
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.50 +.01%

• 2-Year Swap Spread 17.5 -.5 basis point

• TED Spread 16.75 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -46.25 +3.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.24 +.60%
• 3-Month T-Bill Yield 1.29% +2.0 basis points
  

• Yield Curve 59.5 +1.0 basis point

• China Import Iron Ore Spot $65.17/Metric Tonne +4.27%

• Citi US Economic Surprise Index 55.70 -4.1 points

• Citi Eurozone Economic Surprise Index 54.40 -.2 basis point

• Citi Emerging Markets Economic Surprise Index 14.20 -.5 point

• 10-Year TIPS Spread 1.88 unch.
  
• 100.0% chance of Fed rate hike at Jan. 31 meeting, 100.0% chance at March 21 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -77 open in Japan 
• China A50 Futures: Indicating -24 open in China

• DAX Futures: Indicating -19 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth unch.

Sector Underperformers:

• 1) Papers -.9% 2) Semis -.5% 3) I-Banks -.5%

Stocks Falling on Unusual Volume: 

• GES, BZUN, COLL, HPE, HPQ, ICHR and IRBT

Stocks With Unusual Put Option Activity:

• 1) LCI 2) GNC 3) SRPT 4) HPQ 5) ILG

Stocks With Most Negative News Mentions:

• 1) IRBT 2) BLMN 3) OTEX 4) EE 5) BONT

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.2%

Sector Outperformers:

• 1) Steel +2.1% 2) Telecom +1.5% 3) Oil Service +1.4%

Stocks Rising on Unusual Volume:

• TMUSP, RIOT, PDFS, GME, AXTA, UPLD, CERN, DE, FFIC, DQ, CRSP, UEPS, CPRT, IDT, TIVO, TRIL, VRS, DK, NVMI, CAVM, SBS, XON, TRIP, BMA, PANW, VERI, XON and VRS

Stocks With Unusual Call Option Activity:

• 1) AXTA 2) ITB 3) GME 4) FAST 5) SCHW

Stocks With Most Positive News Mentions:

• 1) CERN 2) GME 3) DE 4) CP 5) CUB

Charts:

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

Market Internals

NYSE Composite Index:

• Volume Running -8.6% Below 100-Day Average

• 5 Sectors Rising, 5 Sectors Declining

• 53.5% of Issues Advancing, 42.8% Declining

• 149 New 52-Week Highs, 23 New Lows

• 60.2% of Issues Above 200-day Moving Average

• Average 14-Day RSI 50.1%

• Vix 9.6 -1.0%

• Total Put/Call .85 +1.2%

• TRIN/Arms .86 -36.1%

Wednesday Watch

Night Trading 

• Asian equity indices are +.50% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 77.0 -1.5 basis points. 

• Asia Pacific Sovereign CDS Index 15.50 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 72.83 +.04%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DE)/1.43

• (RMAX)/.51

• (SFL)/.27

Economic Releases 

8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 240K versus 249K the prior week.

• Continuing Claims are estimated to rise to 1880K versus 1860K prior.

• Durable Goods Orders for October are estimated to rise +.3% versus a +2.0% gain in September.

• Durables Ex Transports for October are estimated to rise +.5% versus a +.7% gain in September.

• Cap Goods Orders Non-Defense Ex-Air for October are estimated to rise +.6% versu sa +1.7% gain in September.

10:00 am EST

• Final Univ. of Mich. Consumer Sentiment for November is estimated to rise to 98.0 versus 97.8 in October.

2:00 pm EST

• FOMC Meeting Minutes.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Australia Construction Orders report, weekly Bloomberg Consumer Comfort Index and weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by industrial and technology 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.

Morning Market Internals

NYSE Composite Index:

• Volume Running +3.7% Above 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 70.6% of Issues Advancing, 26.1% Declining
• 165 New 52-Week Highs, 14 New Lows
• 59.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.9%
• Vix 10.0 -6.2%
• Total Put/Call .73 -19.8%
• TRIN/Arms 1.24 +7.5%