Stocks Rising into Final Hour on US Economic/Earnings Outlook Optimism, Diminished Credit Angst, Crypto Bounce, Tech/Biotech Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 53.9 -3.3%
• BofA Private Credit Proxy Index 74.6 +.7% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .25 +1.0 basis point
• BofA Global Financial Stress Indicator .15 +10.0 basis points
• European Financial Sector CDS Index 59.4 -3.7%
• Emerging Market CDS Index 134.0 -3.1%
• Israel Sovereign CDS 82.8 -7.5% 
• Bloomberg Global Trade Policy Uncertainty Index 1.7 -.5

• Citi US Economic Surprise Index 39.0 +4.5 points

• Citi Eurozone Economic Surprise Index 26.3 -.3 point

• Citi Emerging Markets Economic Surprise Index 38.0 +8.2 points
• S&P 500 Current Quarter EPS Growth Rate YoY(488 of 500 reporting) +13.1% +n/a percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 322.61 +n/a:  Growth Rate +16.2% +n/a percentage points, P/E 21.3 -n/a
• S&P 500 Current Year Estimated Profit Margin 14.75% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +28.0% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 514.27 +n/a: Growth Rate +29.3% +n/a, P/E 28.9 +n/a
• Bloomberg US Financial Conditions Index .34 -13.0 basis points
• US Yield Curve 57.0 basis points (2s/10s) -1.0 basis point 
• Bloomberg Industrial Metal Index 172.1 +1.9% 
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 29.8% -.6 percentage point
• US Atlanta Fed GDPNow Q1 Forecast +3.0% unch.
• US 10-Year T-Note Yield 4.09% +3.0 basis points
• 1-Year TIPS Spread 4.05 +1.0 basis point

• Highest target rate probability for April 29th FOMC meeting: 87.3% (+2.9 percentage points) chance of 3.5%-3.75%. Highest target rate probability for June 17th meeting: 66.2%(+10.4 percentage points) chance of 3.5%-3.75%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +2,400 open in Japan 
• China A50 Futures: Indicating +37 open in China

• DAX Futures: Indicating +80 open in Germany

Portfolio:

• Slightly Higher: On gains in my transport/biotech/tech/industrial/consumer discretionary sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.5%

Sector Underperformers:

• 1) Shipping -.7% 2) Foods -.7% 3) Electric Vehicles -.7%

Stocks Falling on Unusual Volume: 

• AA, BF/B, AVTX, VG, FWONK, NN, STRA, ANF, COHR, MRX, DY, ALMU, RIGL, GTLB, AXTI, WBTN, TPB, DAKT and BATL

Stocks With Unusual Put Option Activity:

• 1) PPL 2) VISN 3) AEO 4) GTLB 5) SGML

Stocks With Most Negative News Mentions:

• 1) CSTE 2) CF 3) EYPT 4) FRMI 5) OXY

Sector ETFs With Most Negative Money Flow:

• 1) XLF 2) PSI 3) XLV 4) XLC 5) XLI

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.3%

Sector Outperformers:

• 1) AI/Innovation +2.9% 2) Software +2.4% 3) Alt Energy +2.2%

Stocks Rising on Unusual Volume:

• BW, NPT, DAWN, ALOY, ACEL, ANAB, COIN, GLXY, SSRM, DNTH, RYAM, PBF, NBIS, WIX, STVN, EYE, MSTR, BOX, FTK, BKKT, BMNR, SRAD, AMPX, CRDO, SHEN, PARR, HOOD, ROST, INGM, BRCB, SKM, APP, FA, INNV, AFRM, KALV, AUPH, ASTH, BETA, FIGR, INNV, ZM, RIOT, ROIV, STNE, INTA, AMD, SMCI, LYB, SNDK, PAGS, SRRK, SGHC, ETOR, BBVA, M, VIA, DINO, ERII, AGX, CLMT, ELE, SAN, PAR, MBUU, APGE, PLTR, RUN, CECO, ALAB, CRCL, GPGI, VNET, HOG, MPC, HNGE, MBUU, LASR, MEOH, MITK, BCAX, SLG, BILI, SPOT, SUNB, KLAR, DEI, TSLA, SGRY, SBS, EEFT, CSTM, BSAC, TSLX, XYZ, FLYW, WD, CRWD and DV

Stocks With Unusual Call Option Activity:

• 1) ETN 2) PBF 3) INV 4) SABR 5) BW 

Stocks With Most Positive News Mentions:

• 1) EOLS 2) ACEL 3) SWIM 4) DAWN 5) ANAB

Sector ETFs With Most Positive Money Flow:

• 1) IGV 2) KRE 3) XLP 4) XLU 5) COPX

Charts:

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

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (BJ)/.93
• (BURL)/4.75
• (CIEN)/1.17
• (KR)/1.20
• (SSYS)/.06
• (TTC)/.65
• (VSCO)/2.52 
• (JD)/.70 

After the Close: 

• (COO)/1.03
• (COST)/4.55
• (GAP)/.46
• (GWRE)/.77
• (MRVL)/.79
• (SWBI)/.04
• (USAR)/-.06 

Economic Release 

7:30 am EST

• Challenger Job Cuts for Feb. 

8:30 am EST

• The Import Price Index MoM for Jan. is estimated to rise +.3% versus a +.1% gain in Dec.
• The Import Price Index ex Petrol MoM for Jan. is estimated to rise +.5% versus a +.4% gain in Dec.
• The Export Price Index MoM for Jan. is estimated to rise +.2% versus a +.3% gain in Dec.
• 4Q Non-Farm Productivity is estimated to rise +1.8% versus a +4.9% rise in 3Q.
• 4Q Unit Labor Costs is estimated to rise +2.0% versus a -1.9% decline in 3Q.
• Initial Jobless Claims for last week is estimated to rise to 215K versus 212K the prior week.
• Continuing Claims is estimated to rise to 1848K versus 1833K prior. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bowman speaking, weekly EIA natural gas inventory report, Fed's weekly balance sheet report, Jefferies CONEXPO, (MTSI) annual meeting, (TDG) annual meeting, BofA CEO Conference and the Morgan Stanley Tech/Media/Telecom Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• Volume Running -2.4% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 14.7 +3.1
• 3 Sectors Declining, 8 Sectors Rising
• 62.7% of Issues Advancing, 34.6% Declining 
• TRIN/Arms 1.04 +38.7%
• Non-Block Money Flow +$111.8M
  
• 54 New 52-Week Highs, 13 New Lows
• 63.6% (+.9%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.9 +1.2

Polymarket: 

• How long will the DHS shutdown last? 30+ days 87.0% +10.0 percentage points
• Will China invade Taiwan by end of 2026? 11.0% unch.
• Trump announces end of military operations against Iran by March 31st 40% -14.0 percentage points
• Will Iran close the Strait of Hormuz by March 31st? 81% +22.0 percentage points 

Other:

• Bloomberg Global Risk-On/Risk-Off Index 98.1 +.7%
• US High-Yield Tech Sector OAS Index 534.25 -23.0 basis points
• Bloomberg Cyclicals/Defensives Index 249.0 +.9%
• Morgan Stanley Growth vs Value Index 138.4 +1.0%
• CNN Fear & Greed Index 38.0 (FEAR) +7.0
• 1-Day Vix 13.7 -32.5%
  
• Vix 20.8 -11.5%
  
• Total Put/Call .80 -15.8%

Wednesday Watch

Night Trading 

• Asian equity indices are -3.75% to -2.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 73.5 +.25 basis point.
• China Sovereign CDS 46.5 +.5 basis point.
• China Iron Ore Spot 98.4 USD/Metric Tonne -.62%. 
• Gold 5,172.4 USD/t oz. +1.0%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.86 +.2%.
• Bloomberg Emerging Markets Currency Index 35.74 -.11%.
• Bloomberg Global Risk-On/Risk Off Index 94.72 -2.8%.
• US 10-Year Yield 4.06% unch.
• Japan 30-Year Yield 3.36% +1.0 basis point. 
• Volatility Index(VIX) futures 22.7 +2.5%.
• Euro Stoxx 50 futures -.02%. 
• S&P 500 futures -.46%.
• NASDAQ 100 futures -.65%.

Morning Preview Links

BOTTOM LINE: Asian indices are sharply lower, weighed down by technology and financial shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon.  The Portfolio is 25% net long heading into the day.