Stocks Surging into Afternoon on US Economic Optimism, China Trade Deal Hopes, Oil Gain, Retail/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 13.4 -7.5%

• Euro/Yen Carry Return Index 124.65 -.56%

• Emerging Markets Currency Volatility(VXY) 6.78 -1.45%

• S&P 500 Implied Correlation 42.6 -2.2%

• ISE Sentiment Index 121.0 +43
  

• Total Put/Call .88 -20.0%

• NYSE Arms .79 -18.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.31 -2.18%
  

• America Energy Sector High-Yield CDS Index 651.0 +3.89%

• European Financial Sector CDS Index 55.52 -1.78%

• Italian/German 10Y Yld Spread 163.75 -2.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.21 -1.18%
  

• Emerging Market CDS Index 200.18 -1.88%
  

• iBoxx Offshore RMB China Corporate High Yield Index 167.88 -.29%

• 2-Year Swap Spread 1.75 +.25 basis point

• TED Spread 37.25 +2.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -13.25 -1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.62 +.24%
• 3-Month T-Bill Yield 1.52% -1.0 basis point

• Yield Curve .22 +1.0 basis point

• China Iron Ore Spot 87.97 USD/Metric Tonne +.81%

• Citi US Economic Surprise Index 7.5 +9.8 basis points

• Citi Eurozone Economic Surprise Index -5.8 -5.0 points

• Citi Emerging Markets Economic Surprise Index -23.0 -.1 basis point

• 10-Year TIPS Spread 1.70 +2.0 basis points
• 8.3% chance of Fed rate cut at Jan. 29th meeting, 21.6% chance of cut at March 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +206 open in Japan 
• China A50 Futures: Indicating +33 open in China

• DAX Futures: Indicating +17 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.9%

Sector Underperformers:

• 1) Gold & Silver -1.9% 2) Homebuilding -1.0% 3) Utilities +.3%

Stocks Falling on Unusual Volume: 

• KFY, CIEN, ALLK, KOD, GWRE, ICPT, ZM, PD and YEXT

Stocks With Unusual Put Option Activity:

• 1) BIG 2) GNW 3) ARQL 4) DVN 5) ULTA

Stocks With Most Negative News Mentions:

• 1) YEXT 2) CIEN 3) PD 4) UBER 5) ANTM

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.6%

Sector Outperformers:

• 1) Oil Service +3.3% 2) Retail +2.6% 3) Semis +1.7%

Stocks Rising on Unusual Volume:

• GCO, BIG, EPZM, DOMO, CLVS, ZUMZ, CC, ULTA, RCKT, FIZZ, PGNY, CLDR, MEI, GTHX, SAGE, IMMU, INMD, RLGY, WIFI, W, SGRY, GLDD, RST, SMTC, DOCU, ADPT, ALXN, BRP, GTES, TTD, REGI, VRS, MMM, BOOT, X, ESPR, URI, BHVN, PDCO, APA, CLH, SEM, FLS, KEYS, WDC, GNRC, ARWR, WPX, AA, RH, ACA, EVRI, MC, PLAB and MU

Stocks With Unusual Call Option Activity:

• 1) SGMS 2) ULTA 3) BIG 4) DOCU 5) ADM

Stocks With Most Positive News Mentions:

• 1) BIG 2) GCO 3) ZUMZ 4) RCKT 5) DOMO

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +2.3% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 76.6% of Issues Advancing, 29.0% Declining
• 129 New 52-Week Highs, 9 New Lows
• 58.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.2%
• Vix 13.6 -6.1%
• Total Put/Call .98 -10.9%
• TRIN/Arms .80 -17.5%

Friday Watch

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 64.75 -.25 basis point.

• China Sovereign CDS 39.25 -.25 basis point.

• Bloomberg Emerging Markets Currency Index  65.64 +.03%.
• FTSE 100 futures +.20%.

• S&P 500 futures +.14%.

• NASDAQ 100 futures +.16%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (BIG)/-.20
• (GCO)/1.08

After the Close:

• None of note

Economic Releases 
8:30 am EST

• Two-Month Payroll Net revisions for Nov. 
• The Change in Non-Farm Payrolls for Nov. is estimated to rise to 184K versus 128K in Oct.
• The Unemployment Rate for Nov. is estimated at 3.6% versus 3.6% in Oct.
• Average Hourly Earnings MoM for Nov. is estimated to rise +.3% versus a +.2% gain in Oct.
  

10:00 am EST

• Wholesale Trade Sales MoM for Oct.
• Univ. of Mich. Consumer Confidence for Dec. is estimated to rise to 97.0 versus 96.8 in Nov.
  

3:00 pm EST

• Consumer Credit for Oct. is estimated to rise to $16.0B versus $9.513B in Sept.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Canadian unemployment rate, (WWD) investor conference and the (SON) investor conference could also impact trading today.

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

Stocks Reversing Slightly Higher into Afternoon on China Trade Deal Optimism, Less European/Emerging Markets/US High-Yield Debt Angst, Technical Buying, Tech/Homebuilding 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) 14.7 -.54%

• Euro/Yen Carry Return Index 125.28 +.09%

• Emerging Markets Currency Volatility(VXY) 6.89 -.43%

• S&P 500 Implied Correlation 43.9 -4.4%

• ISE Sentiment Index 78.0 +1
  

• Total Put/Call .96 -4.0%

• NYSE Arms .92 +15.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.39 -.73%
  

• America Energy Sector High-Yield CDS Index 626.0 +.14%

• European Financial Sector CDS Index 56.53 +.93%

• Italian/German 10Y Yld Spread 166.5 +6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.9 -.31%
  

• Emerging Market CDS Index 205.03 +.11%
  

• iBoxx Offshore RMB China Corporate High Yield Index 168.36 -.03%

• 2-Year Swap Spread 1.5 unch.

• TED Spread 35.0 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -11.5 +.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.62 +.24%
• 3-Month T-Bill Yield 1.53% unch.

• Yield Curve .21 +1.0 basis point

• China Iron Ore Spot 86.26 USD/Metric Tonne -.33%

• Citi US Economic Surprise Index -2.3 +1.9 basis points

• Citi Eurozone Economic Surprise Index -.8 -1.7 points

• Citi Emerging Markets Economic Surprise Index -22.9 -.1 basis point

• 10-Year TIPS Spread 1.68 -1.0 basis point
• 12.3% chance of Fed rate cut at Jan. 29th meeting, 26.6% chance of cut at March 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +15 open in Japan 
• China A50 Futures: Indicating +17 open in China

• DAX Futures: Indicating +23 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.1%

Sector Underperformers:

• 1) Biotech -1.1% 2) Education -.9% 3) Energy -.4%

Stocks Falling on Unusual Volume: 

• BIG, FFIV, ALXN, ALLK, EAF, KOD, OMER, APLS, ESTC and SAGE

Stocks With Unusual Put Option Activity:

• 1) FLEX 2) EAF 3) ETSY 4) DG 5) SAGE

Stocks With Most Negative News Mentions:

• 1) ALXN 2) FFIV 3) CC 4) ETSY 5) PCG

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.2%

Sector Outperformers:

• 1) Gold & Silver +1.6% 2) Homebuilders +1.1% 3) Shipping +1.0%

Stocks Rising on Unusual Volume:

• ACAD, TLYS, PDCO, RH, CCXI, VRNT, CHWY, DTIL, PRVB, GTT, GSX, RYTM, CDNA, MEI, RTLR, WCC, GBT, GIII, WORK, AXE, PLNT, REZI, HQY and AXNX

Stocks With Unusual Call Option Activity:

• 1) PTI 2) XME 3) ACAD 4) MDLZ 5) SIG

Stocks With Most Positive News Mentions:

• 1) PDCO 2) HOV 3) DLTH 4) AZZ 5) ACAD

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -7.8% Below 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 49.5% of Issues Advancing, 47.5% Declining
• 53 New 52-Week Highs, 16 New Lows
• 57.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.8%
• Vix 14.7 -.3%
• Total Put/Call .93 -7.0%
• TRIN/Arms .89 +11.3%

Thursday Watch

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 65.0 -.75 basis point.

• China Sovereign CDS 39.5 +.75 basis point.

• Bloomberg Emerging Markets Currency Index  65.49 +.03%.
• FTSE 100 futures +.11%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.11%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AZZ)/.56
• (BF/B)/.52
• (DG)/1.38
• (JILL)/.10
• (KR)/.49
• (SIG)/-1.09
• (TIF)/.85
• (TD)/1.74

After the Close:

• (COO)/3.27
• (CRWD)/-.12
• (KFY)/.81
• (OKTA)/-.12
• (ULTA)/2.14
• (ZUMZ)/.60

Economic Releases
7:30 am EST

• Challenger Job Cuts YoY for Nov.
  

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 215K versus 213K the prior week.
• Continuing Claims are estimated to rise to 1660K versus 1640K prior.
• The Trade Deficit for Oct. is estimated at -$48.6B versus -$52.5B in Sept.
  

10:00 am EST

• Factory Orders for Oct. are estimated to rise +.3% versus a -.6% decline in Sept.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Quarles speaking, Eurozone retail sales report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Goldman Sachs Auto Conference, BofA Merrill Solar/Alt Energy Symposium, (WFC) analyst meeting, (WMB) analyst day, (EW) investor day and the (BIIB) Aducanumab Phase 3 Topline results could also impact trading today.

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