Monday, December 31, 2018

Stocks Higher into Final Hour on China Trade Deal Hopes, Technical Buying, Bargain-Hunting, Biotech/Gaming Sector Strength

 Broad Equity Market Tone:
  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Mixed
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 26.6 -6.1%
  • Euro/Yen Carry Return Index 130.53 -.48%
  • Emerging Markets Currency Volatility(VXY) 9.73 +.1%
  • S&P 500 Implied Correlation 50.26 unch.
  • ISE Sentiment Index 65.0 -31.6%
  • Total Put/Call 1.02 +32.5%
  • NYSE Arms 1.33 -22.7%
Credit Investor Angst:
  • North American Investment Grade CDS Index 87.79 -.66%
  • America Energy Sector High-Yield CDS Index 802.0 -.84%
  • European Financial Sector CDS Index 109.09 -2.59%
  • Italian/German 10Y Yld Spread 250.0 unch.
  • Asia Pacific Sovereign Debt CDS Index 11.75 unch.
  • Emerging Market CDS Index 208.08 -.30%
  • iBoxx Offshore RMB China Corporate High Yield Index 151.80 +.45%
  • 2-Year Swap Spread 16.5 +2.0 basis points
  • TED Spread 42.75 +1.5 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap 2.50 +1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 67.06 +.257%
  • 3-Month T-Bill Yield 2.35% -2.0 basis points
  • Yield Curve 19.75 -.75 basis point
  • China Iron Ore Spot 71.12 USD/Metric Tonne +1.6%
  • Citi US Economic Surprise Index -23.8 -5.9 points
  • Citi Eurozone Economic Surprise Index -71.8 +1.5 points
  • Citi Emerging Markets Economic Surprise Index -10.6 -2.9 points
  • 10-Year TIPS Spread 1.71 -3.0 basis points
  • 2.0% chance of Fed rate hike at March 20th meeting, 4.0% chance at May 1st meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -209 open in Japan 
  • China A50 Futures: Indicating -15 open in China
  • DAX Futures: Indicating n/a open in Germany
Portfolio: 
  • Higher: On gains in my tech/biotech/retail/medical/industrial sector longs
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:
  • Mid-Cap Growth -.3%
Sector Underperformers:
  • 1) Tobacco -1.9% 2) Oil Service -1.2% 3) Homebuilding -1.0%
Stocks Falling on Unusual Volume: 
  • BTI, WTW and CWH
Stocks With Unusual Put Option Activity:
  • 1) AET 2) DISH 3) DF 4) CLR 5) WTW
Stocks With Most Negative News Mentions:
  • 1) IGCC 2) PCG 3) FIT 4) MGI 5) AQUA
Charts:

Bull Radar

Style Outperformer:
  • Large-Cap Growth +.9%
Sector Outperformers:
  • 1) Medical Equipment +1.4% 2) Biotech +1.3% 3) Networking +1.2%
Stocks Rising on Unusual Volume:
  • GOOS, BTO, LMRK, SA, OPRX, ZYME, APU, CRSP, BITA, HRTX, IMKTA, VMW, BST, GLOP, IGV, KRP, TQQQ, VONG, TBPH, TCP, BIP, NTLA, BIB, OKTA, DOMO and KYN
Stocks With Unusual Call Option Activity:
  • 1) LEN 2) DXJ 3) USB 4) TWTR 5) SYMC
Stocks With Most Positive News Mentions:
  • 1) GOOS 2) IIVI 3) AMZN 4) DIS 5) KORS
Charts:

Morning Market Internals

NYSE Composite Index:

Sunday, December 30, 2018

Monday Watch

Today's Headlines
Bloomberg:      
  • Asian Stocks May Get Relief After Trump, Xi Talk. Asian stocks may get some relief Monday from recent wild swings after U.S. President Donald Trump reported “big progress” in trade talks with his Chinese counterpart. U.S. futures opened higher. Trading will be thin with major markets in Japan and China closed and shortened sessions elsewhere on the last day of 2018. Futures on the S&P 500 Index jumped and Australian shares gained at the start, while Hong Kong futures tipped a firmer open after Trump said in a tweet that negotiations were “moving along very well” toward a comprehensive deal and Chinese state media cited Xi Jinping saying he believed both sides wanted “stable progress.” U.S. stocks halted a two-day rally Friday as thin trading added to already-volatile markets, though the S&P 500 Index held onto its first weekly gain in a month. Treasuries, which rose on Friday, won’t be trading because of the holiday in Japan. Australia’s S&P/ASX 200 Index rose 0.7 percent as of 10:22 a.m. in Sydney. Hong Kong’s Hang Seng Index futures climbed 0.3 percent. S&P 500 futures rose 0.8 percent.
Zero Hedge:      
Night Trading
  • Asian indices are +.25% to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 96.75 -.75 basis point.
  • Asia Pacific Sovereign CDS Index 11.75 unch.
  • Bloomberg Emerging Markets Currency Index 66.95 +.10%.
  • FTSE 100 futures +.39%.
  • S&P 500 futures +.58%.
  • NASDAQ 100 futures +.83%.

Earnings of Note
Company/Estimate
Before the Open:
  • None of note
After the Close:
  • None of note
Economic Releases
10:30 am EST
  • The Dallas Fed Manufacturing Activity report for December is estimated to fall to 15.0 versus 17.6 in November.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China Manufacturing PMI report could also impact trading today.
BOTTOM LINE: Asian indices are modestly higher, boosted by commodity and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the week.