Monday, December 02, 2019

Stocks Falling into Final Hour on China Trade Deal Concerns, Yen Strength, Profit-Taking, Tech/REIT Sector Weakness

 Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 14.0 +10.9%
  • Euro/Yen Carry Return Index 125.34 +.08%
  • Emerging Markets Currency Volatility(VXY) 6.81 -.29%
  • S&P 500 Implied Correlation 43.85 +8.6%
  • ISE Sentiment Index 75.0 +3
  • Total Put/Call .98 unch.
  • NYSE Arms .74 -53.4%
Credit Investor Angst:
  • North American Investment Grade CDS Index 51.11 +2.37%
  • America Energy Sector High-Yield CDS Index 621.0 +.16%
  • European Financial Sector CDS Index 57.08 +.97%
  • Italian/German 10Y Yld Spread 163.25 +4.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 64.38 +.04%
  • Emerging Market CDS Index 206.10 +1.02%
  • iBoxx Offshore RMB China Corporate High Yield Index 168.41 +.11%
  • 2-Year Swap Spread 2.0 +2.0 basis points
  • TED Spread 33.75 -.5 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -18.0 -3.5 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 65.30 +.27%
  • 3-Month T-Bill Yield 1.57% unch.
  • Yield Curve .22 +6.0 basis points
  • China Iron Ore Spot 86.30 USD/Metric Tonne -.12%
  • Citi US Economic Surprise Index 8.7 -4.4 basis points
  • Citi Eurozone Economic Surprise Index -3.40 +5.5 points
  • Citi Emerging Markets Economic Surprise Index -25.90 +1.2 basis points
  • 10-Year TIPS Spread 1.66 +3.0 basis points
  • 16.1% chance of Fed rate cut at Jan. 29th meeting, 26.7% chance of cut at March 18th meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -329 open in Japan 
  • China A50 Futures: Indicating -40 open in China
  • DAX Futures: Indicating +40 open in Germany
Portfolio:
  • Lower: On losses in my industrial/retail/tech/biotech sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:
  • Small-Cap Growth -1.1%
Sector Underperformers:
  • 1) Internet -1.6% 2) Networking -1.3% 3) REITs -1.2%
Stocks Falling on Unusual Volume: 
  • CNST, GSHD, BPMC, ARWR, OLLI, TTD, ROKU, APA and MTEM
Stocks With Unusual Put Option Activity:
  • 1) XLB 2) MAT 3) SIG 4) WDAY 5) APA
Stocks With Most Negative News Mentions:
  • 1) AQMS 2) LXRX 3) APA 4) ROKU 5)ADT
Charts:

Bull Radar

Style Outperformer:
  • Large-Cap Value -.4%
Sector Outperformers:
  • 1) Steel +2.4% 2) Gold & Silver +.6% 3) Energy +.2%
Stocks Rising on Unusual Volume:
  • KOD, RVNC, PBYI, DRNA, CLVS, CDLX, EVER, SCPL, ICPT, FIXX, EIX, AQUA, ZUMZ, GBT, SKT and PGNY
Stocks With Unusual Call Option Activity:
  • 1) NLOK 2) XLB 3) FOSL 4) OLED 5) APC
Stocks With Most Positive News Mentions:
  • 1) GEVO 2) IHRT 3) DENN 4) ULTA 5) ORLY
Charts:

Morning Market Internals

NYSE Composite Index:

Sunday, December 01, 2019

Monday Watch

Today's Headlines
Bloomberg:    
  • Stocks Set for Muted Start; Treasury Futures Dip. Stocks in Asia were set for a muted start to December as investors weighed data on China’s economy that showed a bright spot for manufacturing and the latest news on the trade front. Australian bond yields rose. S&P 500 futures edged up and contracts pointed marginally higher in Tokyo and Hong Kong. The S&P 500 Index dipped on Friday. On U.S.-China trade: the Global Times reported that China’s government wants tariffs to be rolled back as part of the phase one trade deal with the U.S. Oil recovered a sliver of Friday’s slide after Iraq said OPEC and its allies will consider deeper production cuts. Futures on the S&P 500 rose 0.1% as of 8:05 a.m. in Tokyo. The underlying gauge slipped 0.4% on Friday. Futures on Japan’s Nikkei 225 added 0.2%. Hang Seng Index futures rose 0.2%. Australia’s S&P/ASX 200 Index advanced 0.1%.   
Wall Street Journal:
MarketWatch.com:
Barron's:
  • Had bullish commentary on (IBM), (SU), (SKT) and (GOOS).
Zero Hedge:           
Night Trading
  • Asian indices are +.25% to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 64.50 unch.
  • China Sovereign CDS 38.50 -.5 basis point.
  • Bloomberg Emerging Markets Currency Index 65.14 +.01%.
  • FTSE 100 futures +.16%.
  • S&P 500 futures +.29%.
  • NASDAQ 100 futures +.32%.

Earnings of Note
Company/Estimate

Before the Open:
  • (DSX)/.02
After the Close:
  • (COUP)/.06
Economic Releases
10:00 am EST
  • The ISM Manufacturing Index for Nov. is estimated to rise to 49.2 versus 48.3 in Oct.
  • The ISM Prices Paid Index for Nov. is estimated to rise to 47.0 versus 45.5 in Oct.
  • The ISM Employment Index for Nov. is estimated to rise to 48.3 versus 47.7 in Oct.
  • Construction Spending MoM for Oct. is estimated to rise +.3% versus a +.5% gain in Sept.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Eurzone PMI report, USTR report on France's digital tax, RBA meeting, Goldman Sachs Industrials Conference, Wells Fargo TMT Summit, Citi Basic Materials Conference and the CSFB Tech/Media/Telecom Conference could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the week.

Weekly Outlook

BOTTOM LINE: I expect US stocks to finish the week modestly higher on China trade deal hopes, fewer global growth concerns, earnings optimism, technical buying, seasonal strength and short-covering. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.