Bear Radar

Style Underperformer:

• Large-Cap Value +1.2%

Sector Underperformers:

• 1) Utilities -.5% 2) REITs -.5% 3) Tobacco unch.

Stocks Falling on Unusual Volume: 

• OMER, TRUP, LXFT, KMPR, SKT, MXL, GVA, BG, OHI and LAD

Stocks With Unusual Put Option Activity:

• 1) GRPN 2) FOSL 3) MNKD 4) OMER 5) AMJ

Stocks With Most Negative News Mentions:

• 1) TTPH 2) GLMD 3) OMER 4) CAR 5) CSRA

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.5%

Sector Outperformers:

• 1) Steel +6.1% 2) Social Media +3.0% 3) Road & Rail +2.5%

Stocks Rising on Unusual Volume:

• IEFA, DBVT, LAYN, FOSL, TWLO, CARB, WIX, SODA, CMG, SUM, YIN, CRTO, KBWB, NKTR, EFAV, MTCH, UGLD, BUFF, BIDU, OLED, BAND, ABMD, ZLAB, TLND, MOV, ACCO, IPG, PBYI, DBD, ABMD, SUM, OKTA, TRHC, DENN, UAA, FANG, BUFF, TAP, IO, HUBS and ZG

Stocks With Unusual Call Option Activity:

• 1) CREE 2) WSM 3) TWLO 4) TIF 5) NTAP

Stocks With Most Positive News Mentions:

• 1) BIDU 2) TGT 3) IPG 4) VIPS 5) KLAC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +20.7% Above 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 60.3% of Issues Advancing, 36.9% Declining
• 21 New 52-Week Highs, 58 New Lows
• 43.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.9%
• Vix 19.7 -21.0%
• Total Put/Call 1.15 +18.6%
• TRIN/Arms .57 -47.7%

Wednesday Watch

Evening Headlines

Bloomberg: 

• Japan’s Economy Misses Fourth-Quarter Forecasts. (video) Gross domestic product grew at an annualized rate of 0.5 percent in the three months ended Dec. 31 (estimate +1.0 percent), compared with a revised 2.2 percent in the previous quarter. Net exports, or shipments less imports, didn’t add or subtract anything from growth. Business spending rose 0.7 percent (estimate +1.1 percent) from the previous quarter. Private consumption increased 0.5 percent in the fourth quarter from the previous three months (estimate +0.4 percent).

• Singapore’s Economic Growth Misses Estimates. Gross domestic product rose at a seasonally adjusted, annualized rate of 2.1 percent from prior three months, trade ministry said Wednesday; Bloomberg survey median was 2 percent, while government’s previous projection was 2.8 percent. GDP expanded 3.6 percent in the fourth quarter from the same period in 2016; median estimate was for 2.9 percent.

• Baidu(BIDU) Plans U.S. IPO of Netflix-Like Unit as Sales Top Estimates.

• Stocks in Asia Mixed Ahead of Key U.S. CPI Data. Stocks in Asia were mixed as Japan retreated with the yen trading close to a five-month high and as investors keenly awaited the U.S. inflation report after the selloff in global stock and bond markets. Tokyo benchmarks fell as the yen extended a rally into a third day despite disappointing growth numbers. Shares rose in Hong Kong and Seoul. S&P 500 Index futures edged higher after the gauge climbed for a third day Tuesday. Assets seen as safe havens held onto advances as volatility lingers, albeit down from the extremely elevated levels reached last week. Japan’s Topix index lost 0.3 percent as of 10:38 a.m. in Tokyo, while the Nikkei 225 Stock Average fell 0.2 percent. Australia’s S&P/ASX 200 Index dipped 0.1 percent. The Kospi index rose 0.9 percent. Hong Kong’s Hang Seng Index rose 0.7 percent and the Shanghai Composite Index was little changed. S&P 500 futures rose 0.1 percent. The MSCI Asia Pacific Index was up less than 0.1 percent.

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

• What Correction? S&P 500 Drop Among Smallest in Postwar History.

• Corker May Reconsider Decision to Retire From Senate, Aide Says.

• U.S. Auto Loan Credit Scores Rise. Average credit scores on U.S. car loans rose to a six-year high in the fourth quarter, a report said Tuesday, a sign that lenders are raising their standards as more borrowers fall behind on their bills.

• Short Sellers’ Favorite Stock Bets Backfire. (video) Short sellers just got burned, badly. Under Armour Inc., the second-most targeted by short sellers among S&P 500 stocks, surged 17 percent Tuesday for the best performance in the benchmark index.

• Cohen's Point72 Seeks to Seal Employee's Discrimination Suit.

• Uber Quarterly Sales Rose 61% to $2 Billion Amid Heavy Loss.

Wall Street Journal:

• Israeli Police Recommend Charging Netanyahu With Bribery, Fraud. Police say prime minister received gifts from wealthy donors in return for favors.

• The Wall Street Journal Guide to the New Tax Law.

• Stock Market ‘Fear Index’ Faces Probe. Financial Industry Regulatory Authority looking into whether bets were placed on S&P 500 options to influence VIX futures.

MarketWatch.com:

• How Wall Street’s ‘fear gauge’ is being rigged, according to one whistleblower.

Fox News:

• Second judge rules against Trump administration on ending DACA. (video)

CNBC:

• Barely anyone is paying the taxes they owe on their bitcoin gains. (video)

• Most important inflation report in a decade could be a dud.

• Total US household debt soars to record above $13 trillion.

• Apple(AAPL) CEO: We can make a 'significant contribution' in health care. (video)

• Chipotle(CMG) shares rally after burrito chain taps Taco Bell CEO to be its new chief.

• Stocks making the biggest moves after hours: Baidu, Fossil, Chipotle & more.

• White House reportedly considering Mester for Fed vice chair.

• Financials are a buy, says Barclays analyst. (video)

• Trump weighs tariffs, quotas on US steel, aluminum imports.

Zero Hedge: 

• Declassified: Comey Had Secret Russia Meeting With Obama Amid "Unmaskings".

• "We Are Doomed": Boston Dynamics Teaches Terrifying Robodog New Tricks. (video)

• Mass Exodus Begins: 1000s Flee Venezuela's Socialist Starvation Across Bridge To Colombia.

• Your Facebook(FB) Data Is Creepy As Hell...

• Renaissance Tumbles Despite Correctly Predicting Market Correction.

• Seattle To Remove Massive Spying Network After Public Backlash.

• WTI/RBOB Drop After Bigger Than Expected Crude Build. (graph)

• Powell Saves Stocks But Crude, Cryptos, & Yield Curve Sink. (graph)

Night Trading 

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 73.25 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 13.75 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 75.19 +.07%.

• FTSE 100 futures +.20%.

• S&P 500 futures +.04%.

• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BG)/1.29

• (DPS)/1.16

• (FLIR)/.55

• (HLT)/.45

• (TAP)/.57

• (SODA)/.80

• (MZOR)/-.07

• (SUM)/.25

• (WYN)/1.35

• (A)/.58

• (AMAT)/.98

• (ABX)/.21

• (CF)/-.08

• (CSCO)/.59

• (H)/.22

• (MRO)/.02

• (MAR)/1.00

• (NTAP)/.91

• (SPWR)/.09

• (WMB)/.23

Economic Releases

8:30 am EST

• The CPI MoM for January is estimated to rise +.3% versus a +.1% gain in December.

• The CPI Ex Food & Energy MoM for January is estimated to rise +.2% versus a +.3% gain in December.

• Retail Sales Advance MoM for January is estimated to rise +.2% versus a +.4% gain in December.

• Retail Sales Ex Autos MoM for January is estimated to rise +.5% versus a +.4% gain in December.

• Retail Sales Ex Autos and Gas for January is estimated to rise +.3% versus a +.4% gain in December.

• Real Avg. Weekly Earnings YoY for January.

10:00 am EST

• Business Inventories for December are estimated to rise +.3% versus a +.4% gain in November.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +2,672,700 barrels versus a +1,895,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +1,390,800 barrels versus a +3,414,000 barrel gain the prior week. Distillate inventories are estimated to rise by 72,700 barrels versus a +3,926,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.7% versus a +4.4% gain prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Industrial Production report, Eurozone GDP report, weekly MBA Mortgage Applications report, Leerink Swann Healthcare Conference and the BofA Insurance 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 day.

Stocks Reversing Higher into Final Hour on Stable Long-Term Rates, Short-Covering, Technical Buying, Retail/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 25.02 -2.3%

• Euro/Yen Carry Return Index 138.59 -.39%

• Emerging Markets Currency Volatility(VXY) 8.77 -2.66%

• S&P 500 Implied Correlation 44.67 -4.94%

• ISE Sentiment Index 103.0 -11.2%
  

• Total Put/Call .97 +5.43%

• NYSE Arms .92 +51.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.23 +.94%
  

• America Energy Sector High-Yield CDS Index 408.0 +2.54%

• European Financial Sector CDS Index 56.45 +4.1%

• Italian/German 10Y Yld Spread 133.50 +5.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 13.70 +2.2%

• Emerging Market CDS Index 134.45 +2.61%
  

• iBoxx Offshore RMB China Corporate High Yield Index 147.42 +.01%

• 2-Year Swap Spread 25.5 -2.5 basis points

• TED Spread 24.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -32.0 +3.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.15 +.04%
• 3-Month T-Bill Yield 1.59% +2.0 basis points
  

• Yield Curve 73.50 -5.0 basis points

• China Iron Ore Spot 76.60 USD/Metric Tonne +.98%

• Citi US Economic Surprise Index 43.30 -.2 point

• Citi Eurozone Economic Surprise Index 38.60 -.9 point

• Citi Emerging Markets Economic Surprise Index .4 -.6 point

• 10-Year TIPS Spread 2.06 -1.0 basis point
  
• 100.0% chance of Fed rate hike at May 2 meeting, 100.0% chance at June 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -39 open in Japan 
• China A50 Futures: Indicating -8 open in China

• DAX Futures: Indicating +41 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long