Today's Headlines

Bloomberg:

• China Credit Growth Exceeds Estimates as Funding Remains Buoyant. China’s broadest gauge of new credit and an index of loan growth both exceeded projections, signaling that a government push against leverage hasn’t crimped lending.
• How China's Debt Crackdown Could Start Weighing on the Economy. (video) China’s sweeping deleveraging push is poised to inflict more pain next year. Authorities tightening funding in financial markets and reining in excessive borrowing will likely deal a blow to investment in infrastructure and property, while soaring corporate funding costs may damp business expansion. That could add to headwinds facing an economy expected to grow at the slowest pace in more than a quarter century next year, complicating the balancing act for policy makers who want to defuse the country’s debt bomb without derailing the expansion. Six charts show how the purge will pressure the economy:
• Chinese Regulator Cracks Down on Booming Hedge-Fund Industry.
• Trump to Direct NASA to Send Astronauts Back to Moon and to Mars. President Donald Trump on Monday will direct the National Aeronautics and Space Administration to send American astronauts back to the moon and eventually to Mars, shifting the agency’s mission from the study of Earth and a longer-range plan to explore Mars.

Wall Street Journal:

• The Future Is Bumpy: High-Tech Hedge Fund Hits Limits of Robot Stock Picking. Voleon is among investors deploying machine learning, a technology in which computers develop trading strategies. It’s harder than it sounds.
• FDA Plans New Medical-Device Approval Processes. Move would speed products’ entry to the U.S. market, mirroring the desires of industry, President Trump.

MarketWatch.com:

• 18 small-cap stocks that analysts expect to rise at least 50% in 2018.
• Analysts expect these large-cap U.S. stocks to rise at least 25% in 2018.

Fox News:

• Port Authority explosion suspect: What we know about Akayed Ullah. (video)
• Trump accusers band together, seek congressional probe of 'sexual misconduct'. (video)

CNBC:

• UBS: Cryptocurrencies like bitcoin are ‘the bubble to end all bubbles’. (video)
• Celgene(CELG) CEO: New therapies for a certain type of cancer boost survival rates 10-fold.
• The charts are pointing to a Santa Claus rally for small caps. (video)
• A top VC explains which technologies will change society the most in 10 years.
• Manufacturing CEO survey shows record high optimism on prospect of tax reform.
• Bitcoin smells like a bubble to CNBC advisor council.
• Bluebird(BLUE) could be on the way to a cure for sickle cell disease. (video)

Zero Hedge:

• Times Square Terrorist Planned Attack For Years, Told Police "Motive Was Revenge".
• Moment Of Port Authority Explosion Caught On Tape. (video)
• Interactive Brokers Allows Long-Only Bitcoin Futures Trading (At 50% Margin).
• Treasury Forecasts Tax Reform Will Lead To Longest Period Without Recession In History.
• Greenwald: The U.S. Media Just Suffered Its Most Humiliating Debacle in Ages.
• Pentagon Disses Trump, Will Allow Transgender People To Enlist In Military.
• WTI-Brent Crude Spread Snaps After Forties Pipeline Closure For "Weeks, Not Days". (graph)
• Near Record 5.6 Million Americans Were Hired In October, Most In Over 16 Years. (graph)

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.1%

Sector Underperformers:

• 1) Foods -.5% 2) Education -.5% 3) Homebuilders -.5%

Stocks Falling on Unusual Volume: 

• ONCE, ATNX, JUNO and SGEN

Stocks With Unusual Put Option Activity:

• 1) BX 2) STZ 3) GME 4) URBN 5) K

Stocks With Most Negative News Mentions:

• 1) VMI 2) DNR 3) KMB 4) UPS 5) FLS

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.4%

Sector Outperformers:

• 1) Social Media +1.9% 2) Telecom +1.5% 3) Oil Service +1.3%

Stocks Rising on Unusual Volume:

• ARGX, BLUE, BPMC, RIOT, HYGS, CSIQ, XENT, NSH, EGOV, DQ, BMRN, IMKTA, ECH, VRX, IYZ, MMLP, NTG, DGII, NEWR, TGP, VECO, OSTK, GLPG, ASML, CTL, PRO, TLRD, CVRR and NSH

Stocks With Unusual Call Option Activity:

• 1) SBGI 2) LLY 3) STZ 4) STLD 5) GBT

Stocks With Most Positive News Mentions:

• 1) BLUE 2) BPMC 3) SPWR 4) BMRN 5) LITE

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -12.3% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 55.1% of Issues Advancing, 41.7% Declining
• 96 New 52-Week Highs, 15 New Lows
• 61.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.8%
• Vix 9.7 +.9%
• Total Put/Call .81 -14.7%
• TRIN/Arms .70 +35.4%

Monday Watch

Today's Headlines

Bloomberg:

• China Audit Finds Provinces Faked Data and Borrowed Illegally. China found some local governments inflated revenue levels and raised debt illegally in a nationwide audit, a setback for Beijing in its bid to boost the credibility of economic data after a run of scandals. Ten cities, counties or districts in the Yunnan, Hunan and Jilin provinces, as well as the southwestern city of Chongqing, inflated fiscal revenues by 1.55 billion yuan ($234 million), the National Audit Office said in a statement on its website dated Dec. 8.

• Small Banks, Big Worry. Beijing's wealth management clampdown will hit them disproportionately hard.

• Stocks in Asia Nudge Higher on Economy Optimism. Stocks in Asia made modest gains at the open after U.S. labor market figures lifted optimism in global growth, though trading promises to remain subdued as traders wind down going into the holiday season. Equity benchmarks advanced in Tokyo, closing on this year’s highs, and Seoul, while futures on Hong Kong markets signaled a firmer start. Data showed hiring increased by more than forecast in November and the unemployment rate held at a 17-year low paved the way for another U.S. interest-rate increase this week. The S&P 500 Index and Dow Jones Industrial Average closed at all-time highs on Friday in light volume. The dollar held on to last week’s gains as President Donald Trump prepares to give a closing argument for the proposed tax reform on Wednesday. Bitcoin futures began trading in Chicago, while the spot price gyrated. The Topix index added 0.2 percent as of 9:18 a.m. in Tokyo. The Nikkei 225 Stock Average gained 0.2 percent. Australia’s S&P/ASX 200 Index fluctuated. South Korea’s Kospi index rose less than 0.1 percent.

• Five Things You Need to Know to Start Your Day. (video)

• Investors Told to Brace for Steepest Rate Hikes Since 2006. (video)

Wall Street Journal: 

• Bitcoin Futures Launch Stokes Fears of Manipulation, Hacks, Glitches. Cboe’s new bitcoin futures are set to start trading Sunday evening.

• Mideast Tensions Simmer in Wake of U.S. Shift in Israel Policy. U.S. decision to recognize Jerusalem as Israel’s capital prompts protest in Beirut.

• Electric-Vehicle Bulls Shake Up Metals Markets. Fear of missing out is driving investors into rare metals used in electric vehicles, but some wonder how the rally might end.

• Obamacare’s Individual Mandate: On Its Way Out, or Already Gone? Some experts say with many people already exempt from the individual mandate, the impact of undoing it might not be so bad.

Fox News:

• Post reporter Trump wants fired for 'bad tweet' resigned from paper in 2010 after similar incident. (video)

• 'Stain on America!' Trump denounces 'Fake News Media' after string of major reporting errors exposed. (video)

CNBC:

• 'Bitcoin crash’ among significant market risks in 2018, says Deutsche Bank. (video)

• PayPal's(PYPL) Levchin on bitcoin: 'I'm still trying to figure it out'.

• Trump makes direct appeal for Roy Moore with impassioned robo-call: 'We need that seat'.

• Tech's recent weakness is a 'temporary speed bump' – Bespoke's Paul Hickey calls for new highs. (video)

• Ascension and Providence-St. Joseph's Health are in deal talks, may create the largest hospital chain in the US.

Zero Hedge: 

• Pentagon To Undergo First Ever Audit After Decades Of Sloppy Accounting And Missing Trillions.

• Strzok-Gate And The Mueller Cover-Up.

• CBOE Website Crashes As Futures Trading Begins; Bitcoin Price Squeezed 10% Higher.

• All You Need To Know About Today's Bitcoin Futures Contract.

• Chicago Woman Who Filmed Brutal Kidnapping And Torture Of Disabled Teen Sentenced To Community Service.

• 49 Countries Have Violated Sanctions On North Korea.

Business Insider:

• Retail stocks have been crushing the market against all odds — and traders are betting on more gains.

• We asked a top hedge-fund recruiter what it takes to get a senior-level job these days.

• An undercover blogger lived a double life for 2 years in ISIS-occupied Iraq to document the group's atrocities — here's his story.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 72.5 -.25 basis point.

• Asia Pacific Sovereign CDS Index 14.25 unch.

• Bloomberg Emerging Markets Currency Index 73.03 +.04%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.16%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (CASY)/1.40

• (NX)/.29

Economic Releases   
10:00 am EST

• JOLTS Job Openings for October.
  

Upcoming Splits

• (NSP) 2-for-1
  

Other Potential Market Movers

• The Japan CPI report, $24B 3Y T-Note auction, $20B 10Y T-Note auction and the HSBC Real Estate Conference 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 week.

Weekly Outlook

• Wall St. Week Ahead by Reuters. 
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on tax reform hopes, yen weakness, seasonal strength, buyout speculation, short-covering and economic optimism. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.