Stocks Reversing Slightly Higher into Final Hour on Stable Long-Term Rates, Bargain-Hunting, Technical Buying, Transport/Alt Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 18.7 -.9%

• Euro/Yen Carry Return Index 133.63 -.11%

• Emerging Markets Currency Volatility(VXY) 10.19 -.2%

• S&P 500 Implied Correlation 44.64 +2.67%

• ISE Sentiment Index 88.0 +14.3%
  

• Total Put/Call .86 -9.47%

• NYSE Arms .80 +27.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.19 -.21%
  

• America Energy Sector High-Yield CDS Index 705.0 +.33%

• European Financial Sector CDS Index 102.54 +2.75%

• Italian/German 10Y Yld Spread 294.0 +3.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.42 +.97%

• Emerging Market CDS Index 219.95 +1.12%
  

• iBoxx Offshore RMB China Corporate High Yield Index 146.76 -.85%

• 2-Year Swap Spread 17.75 -.25 basis point

• TED Spread 29.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -25.25 +2.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.88 -.04%

• 3-Month T-Bill Yield 2.39% unch.

• Yield Curve 22.75 -.5 basis point

• China Iron Ore Spot 62.18 USD/Metric Tonne -.19%

• Citi US Economic Surprise Index -1.4 -.6 point

• Citi Eurozone Economic Surprise Index -63.70 +.5 point

• Citi Emerging Markets Economic Surprise Index -6.60 +3.1 points

• 10-Year TIPS Spread 1.92 -5.0 basis points

• 78.4% chance of Fed rate hike at Jan. 30th meeting, 89.7% chance at March 20th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +103 open in Japan 

• China A50 Futures: Indicating +52 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

• Slightly Lower: On losses in my biotech/industrial sector longs

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.7%

Sector Underperformers:

• 1) Gold & Silver -1.9% 2) Defense -1.7% 3) Insurance -.8%

Stocks Falling on Unusual Volume: 

• HIIQ, UTX, GTHX, BKE, TS, RTRX, X, PLT, STLD, HALO and WRE

Stocks With Unusual Put Option Activity:

• 1) NOG 2) AKS 3) DKS 4) NLY 5) FOSL

Stocks With Most Negative News Mentions:

• 1) IGCC 2) HIIQ 3) MGTI 4) NKTR 5) AQUA

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value unch.

Sector Outperformers:

• 1) Shipping +2.3% 2) Airlines +1.6% 3) Alt Energy +1.2%

Stocks Rising on Unusual Volume:

• SAVE, ADUS, CORR, JKS, ZYME, MXIM, CBRL, SE, FMS, RUN, DEO, LN, PEB, W, FMX, TGT, AET, PCG, ENV, DKS, IIPR, PAGS, NVRO, PDCO and BERY

Stocks With Unusual Call Option Activity:

• 1) AA 2) AXTA 3) UHS 4) BSX 5) UNH

Stocks With Most Positive News Mentions:

• 1) SAVE 2) BXG 3) CBRL 4) M 5) CVS

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -1.2% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 37.8% of Issues Advancing, 59.1% Declining
• 15 New 52-Week Highs, 156 New Lows
• 25.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.5%
• Vix 18.9 unch.
• Total Put/Call .98 +3.2%
• TRIN/Arms .74 +17.5%

Tuesday Watch

Evening Headlines

Bloomberg:       

• Deep in the Data, China's Bank Funding Squeeze Is Easing Off.

• Asia Stocks Post Muted Gains; Treasuries Steady. Stocks in Asia eked out modest gains Tuesday after beaten-down tech shares led the strongest session for U.S. stocks in two weeks. The dollar steadied alongside Treasuries as President Donald Trump discussed plans for further China tariff increases in the absence of a trade deal. Equity benchmarks rose in Japan and Australia, and futures in Hong Kong pointed higher, while U.S. contracts slipped. Apple Inc. suppliers will be closely watched after Trump said the company’s iPhones could be hit by new tariffs. Earlier, the S&P 500 Index recovered from the worst week in a month as investors speculated a strong start to the holiday season will keep U.S. economic growth on track. West Texas crude traded above $51 a barrel, after recouping some of Friday’s 7 percent plus slide. Japan’s Topix index rose 0.5 percent as of 9:12 a.m. in Tokyo. Australia’s S&P/ASX 200 Index climbed 0.1 percent. South Korea’s Kospi index added 0.1 percent. Hong Kong’s Hang Seng Index futures rose 0.2 percent. S&P 500 futures fell 0.4 percent.  

• China Eases Squeeze, Global Growth Weakens, Fed Debate: Eco Day.  

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

• Alan Greenspan Says Look to Sweden to Solve U.S. Entitlement Problem.  

• Stocks Are Starting to Favor the Optimists.   

• Battered Bitcoin Miners May Start Shutting Down.

Wall St. Journal:

• Chinese Scientist Claims First Genetically Modified Babies.

• President Expects to Move Ahead With Boost on China Tariffs.

• U.S. Weighs Extending Troop Deployment at Border.

• Haley Calls Russia Reckless in Tense Standoff With Ukraine.

• Oil’s Fall Threatens U.S. Shale Drillers.

MarketWatch.com:

• These 22 stocks are in bear territory, but analysts expect them to roar back.

• Project Syndicate: Four reasons to expect a ceasefire in U.S.-China trade war.

• Bitcoin carnage resumes with another 10% skid.

Fox News:   

• GOP senator hits Ocasio-Cortez for comparing border caravan to Nazi Germany.

CNBC:         

• Trump suggests US could slap 10% tariffs on iPhones and laptops imported from China.

• United Technologies plans to separate into 3 companies.

• 'Corporate greed at its worst': Ohio officials slam GM's move out of an area Trump pledged to revive.

• After-hours buzz: AAPL, GM & more.  

• Loxo(LOXO), Bayer drug for cancers driven by rare mutation wins US approval.

• Veteran trader says market bounce may be the bottom.

Zero Hedge:     

• Don't Panic About The Plunging Put/Call Ratio, Kolanovic Says.

• Watch What Happens When A Baby That Is Addicted To A Cellphone Has It Taken Away.

• Ukraine Deploys Reservists To 10 Border Provinces As President Warns Of "Russian Invasion".

• How Guccifer 2 Planted "Fake Russian Fingerprints" On 'Leaked' DNC Docs.

• "Unhappy" Trump Blasts GM Over Plant Closures, Tells Company To Stop Making Cars In China.

• Trump Proposes Worldwide 'Truth' Network To Counter CNN's "Unfair, False" Reporting.

• Futures, Yuan, Apple Tumble After Trump Says "Highly Likely" Will Move Ahead With China Tariff Boost.

• Stocks Bounce On Biggest Short Squeeze In A Month.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 96.25 -1.5 basis points. 

• Asia Pacific Sovereign CDS Index 10.25 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 66.93 +.04%.

• FTSE 100 futures +1.31%.

• S&P 500 futures -.32%.

• NASDAQ 100 futures -.45%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (CBRL)/1.91

• (EV)/.83

• (HIBB)/.16

After the Close:

• (CENT)/.09

• (NTNX)/-.27

• (CRM)/.50
  

Economic Releases

9:00 am EST

• The FHFA House Price Index MoM for September is estimated to rise +.4% versus a +.3% gain in August.

• The S&P CoreLogic CS 20-City MoM for September is estimated to rise +.2% versus a +.09% gain in August.

10:00 am EST

• The Conference Board Consumer Confidence Index for November is estimated to fall to 135.8 versus 137.0 in October.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bostic speaking, Fed's George speaking, Fed's Evans speaking, MS Senate Run-Off Election, Eurozone Consumer Confidence report, weekly US retail sales reports, $40B 5Y T-Note auction, Jefferies Energy Conference, BofA Merrill Consumer/Retail Conference, Scotiabank Mining Conference, CSFB Industrials Conference, (UNH) investor conference, (ALK) investor day and the Piper Jaffray Healthcare Conference could also impact trading today.

BOTTOM LINE:  Asian indices are modestly higher, boosted by technology and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.