Stocks Reversing Slightly Higher into Final Hour on US Economic Data, Technical Buying, Short-Covering, Biotech/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 12.6 +1.3%

• Euro/Yen Carry Return Index 124.83 -.08%

• Emerging Markets Currency Volatility(VXY) 7.16 -.69%

• S&P 500 Implied Correlation 41.92 -5.0%

• ISE Sentiment Index 95.0 +15
  

• Total Put/Call 1.05 +25.0%

• NYSE Arms 1.48 +16.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.03 +1.48%
  

• America Energy Sector High-Yield CDS Index 550.0 +1.93%

• European Financial Sector CDS Index 59.20 +.91%

• Italian/German 10Y Yld Spread 158.50 +4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.13 +.52%
  

• Emerging Market CDS Index 203.63 +.84%
  

• iBoxx Offshore RMB China Corporate High Yield Index 167.88 -.02%

• 2-Year Swap Spread -1.0 -2.0 basis points

• TED Spread 34.5 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -12.25 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.63 +.04%
• 3-Month T-Bill Yield 1.55% -1.0 basis point

• Yield Curve .19 -3.0 basis points

• China Iron Ore Spot 84.20 USD/Metric Tonne +.06%

• Citi US Economic Surprise Index -1.4 +4.3 basis points

• Citi Eurozone Economic Surprise Index -16.30 -2.5 points

• Citi Emerging Markets Economic Surprise Index -27.30 -.1 basis point

• 10-Year TIPS Spread 1.64 -1.0 basis point
• 21.7% chance of Fed rate cut at Jan. 29th meeting, 36.7% chance of cut at March 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -12 open in Japan 
• China A50 Futures: Indicating -44 open in China

• DAX Futures: Indicating -13 open in Germany

Portfolio:

• Higher: On gains in my tech/biotech/medical sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value unch.

Sector Underperformers:

• 1) Retail -1.8% 2) Energy -1.3% 3) Telecom -.9%

Stocks Falling on Unusual Volume: 

• ECC, HD, CHEF, M and KSS

Stocks With Unusual Put Option Activity:

• 1) URBN 2) JWN 3) BKLN 4) TJX 5) BBBY

Stocks With Most Negative News Mentions:

• 1) I 2) M 3) KSS 4) CPE 5) WORK

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Biotech +2.2% 2) Gold & Silver +1.4% 3) Banks +1.0%

Stocks Rising on Unusual Volume:

• ATNX, KRTX, MDCO, LVGO, PGNY, DRNA, NTLA, EDIT, TBIO, AXSM, TCDA, ALLK, MED, CDLX, NVTA, ACIW, REZI, ARVN, GBT, GOSS, EVER, OKTA, ARWR, ALNY, CHWY, FSCT, BBIO, NOW, NJR, PLAN, WW, PFSI, INMD, DNLI, CSII, RPD, ABMD, AMD, EAF, OPTN, ARMK, EAF, OPTN, THC, QTWO, ELF, AQUA, NTRA, AVGO and APAM

Stocks With Unusual Call Option Activity:

• 1) MDCO 2) CCXI 3) LQD 4) DHR 5) GT

Stocks With Most Positive News Mentions:

• 1) MYOV 2) MDCO 3) CRSP 4) CREE 5) AVGO

Charts:

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

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +6.8% Above 100-Day Average
• 5 Sectors Rising, 6 Sectors Declining
• 48.2% of Issues Advancing, 48.7% Declining
• 106 New 52-Week Highs, 82 New Lows
• 57.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.8%
• Vix 12.7 +1.6%
• Total Put/Call 1.09 +29.8%
• TRIN/Arms 1.44 +13.4%

Tuesday Watch

Evening Headlines

Bloomberg:  

• Hundreds Trapped in Hong Kong Siege, Raising Fears of Crackdown.

• Hong Kong Violence Is Trickling Into Portfolios Outside Asia.

• China Says Mask Ban Ruling Challenges Its Rule: Hong Kong Update.

• U.S. Reverses Its Stance That West Bank Settlements Are Illegal.

• Asian Stocks Slip on Trade Paralysis; Bonds Dip. Asian stocks drifted lower at the open as investors continued to await signs of progress in U.S.-China trade negotiations. The dollar and Treasury yields stabilized after a retreat. Benchmarks in Tokyo, Sydney and Seoul dipped. Hong Kong futures slipped after violence in the city Monday. On Wall Street, stocks fluctuated, but ended up eking out gains. The dollar preserved a retreat after Federal Reserve Chairman Jerome Powell met with President Donald Trump and Treasury Secretary Steven Mnuchin on Monday to discuss the economy. Topics discussed included dollar strength and negative rates. U.S. stock futures were flat early Tuesday. Topix index fell 0.1% as of 9:06 a.m in Tokyo. Australia’s S&P/ASX 200 Index was flat. Kospi index fell 0.3%. Hang Seng Index contracts lost 0.3% earlier. Futures on the S&P 500 Index were little changed.  

• Five Things You Need to Know to Start Your Day. 

• Hong Kong Siege, Powell Meets Trump, Delhi’s Dirty Air: Eco Day.

• Ken Fisher Loses $67 Million as Chicago Police Fund Pulls.  

• Warren Calls Out Blackstone for ‘Shameless’ Profits From Housing.

• Ex-Hedge Fund Trader Gets 40 Months for Mismarking Scheme.  

• Bitcoin Close to Sounding Sell Alarm as Recent Rally Cools.

Wall Street Journal:

• Beijing’s Secrets of Xinjiang.

• America’s Inner-City Cartels.

• Hong Kong Police, Protesters Strain to End Standoff.

• TikTok Looking at Ways to Shake Off Its Ties to China.

• Iran’s Revolutionary Guard Threatens Action Against Protesters.

Fox News:

• Official's testimony on Trump-Ukraine call conflicts with top diplomat's story.

• House Dem blasts hearings, says it reminds him of 'third-world nations'.

• Epstein accuser: I sat in Clinton's seat on jet, saw bedroom floor made of mattress.

MarketWatch.com:    

• Chick-fil-A will stop donating to the Salvation Army and Fellowship of Christian Athletes — and people are furious.  

• This ratio suggests the U.S. stock market will take a ‘brief pause’ then climb higher, analyst says.  

• Cannabis stocks are a sea of red as selloff stretches to sixth straight day.

CNBC:

• FedEx blasts New York Times tax cut article, challenges publisher to debate.

• Goldman sees the economy surprising in 2020 and these stocks benefiting from the rebound.

• Criminal charges expected this week against Epstein guards.

• Stocks making the biggest moves after hours: ServiceNow, Alliance Data, AMC Entertainment & more.

Zero Hedge:

• Schiff Leaked Disinfo To Politico As Part Of 'Impeachment Scheme', Lawsuit Claims. 

• 'The Horowitz Report Is Coming, The Horowitz Report Is Coming' - Lindsay Graham Signals Early Dec. Release.

• Going Down Swinging: "World's Most Bearish Hedge Fund" Loses 75% Of Its Assets After Worst Year On Record.

• Civil Unrest Is Now The 'New Normal' Out There.

• How Many People Must Die To Fix The Planet?

• Kanye: "Protect Your Kids From Being Indoctrinated By Hollywood & The Media"

• Japan Dumps Most Treasuries In History As Israel's 2019 Buying Spree Continues.

• Pompeo Issues Historic Policy Reversal: Israeli West Bank Settlements 'Not Illegal'.

• Stocks & Bonds Bid, Dollar Skids As Powell-Pontification Trumps Trade-Pessimism.

Business Insider:

• Pete Buttigieg is facing criticism for an Instagram photo of him posing at the Berlin Holocaust memorial.

• Apple is holding a surprise event in NYC next month, and it sounds like it will be all about apps and games.

Yahoo News: 

• Chick-fil-A to end donations to Christian charities. (video)

Telegraph: 

• Next crash will hit Europe much harder than financial crisis, warns Moody's. 

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 64.0 +.25 basis point.

• China Sovereign CDS 38.5 +.5 basis point.

• Bloomberg Emerging Markets Currency Index  65.57 -.16%.

• FTSE 100 futures +.05%.

• S&P 500 futures -.12%.

• NASDAQ 100 futures -.11%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ARMK)/.69

• (DY)/.72)

• (HD)/2.53

• (JKS)/.80

• (KSS)/.86

• (MDT)/1.28

• (TJX)/.66 

• (TDG)/5.28

After the Close:

• (URBN)/.57

Economic Releases
8:30 am EST

• Housing Starts for Oct. is estimated to rise to 1320K versus 1256K in Sept.

• Building Permits for Oct. is estimated to fall to 1385K versus 1387K in Sept.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Trade Balance report, weekly US retail sales reports, House Impeachment Hearings, Stifel Healthcare Conference, RBC Tech/Internet/Media/Telecom Conference, Cowen Industrial/Tech Summit, Scotiabank Transport/Industrials Conference, (QCOM) analyst day, (GIL) analyst day and the (COP) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by finacial and industrial shares in the region. I expect US stocks to open mixed and rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.