Stocks Sharply Lower into Final Hour on Coronavirus Fears, Global Growth Worries, Technical Selling, Tech/Commodity Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 17.1 +17.6%

• Euro/Yen Carry Return Index 124.56 -.39%

• Emerging Markets Currency Volatility(VXY) 6.64 +8.9%

• S&P 500 Implied Correlation 43.0 +4.0%

• ISE Sentiment Index 76.0 +9
  

• Total Put/Call 1.01 -7.0%

• NYSE Arms 1.82 -22.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 48.78 +4.37%
  

• America Energy Sector High-Yield CDS Index 628.0 +3.16%

• European Financial Sector CDS Index 54.75 +1.87%

• Italian/German 10Y Yld Spread 142.25 -14.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 58.0 +8.0%
  

• Emerging Market CDS Index 194.50 +.64%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.75 +.06%

• 2-Year Swap Spread 4.75 -1.0 basis point

• TED Spread 27.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -5.75 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.66 -.52%
• 3-Month T-Bill Yield 1.54% +1.0 basis point

• Yield Curve .19 -4.0 basis points

• China Iron Ore Spot 84.85 USD/Metric Tonne -5.76%

• Citi US Economic Surprise Index 4.8 -5.2 points

• Citi Eurozone Economic Surprise Index 42.80 -8.0 points

• Citi Emerging Markets Economic Surprise Index 12.6 +3.3 basis points

• 10-Year TIPS Spread 1.63 -4.0 basis points
• 12.2% chance of Fed rate cut at March 18th meeting, 21.5% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -203 open in Japan 
• China A50 Futures: Indicating -744 open in China

• DAX Futures: Indicating +31 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.5%

Sector Underperformers:

• 1) Oil Service -4.9% 2) Gaming -4.4% 3) Steel -4.2%

Stocks Falling on Unusual Volume: 

• ALB, NFLX, DFS, AXP, ALGN, ANTM, NCLH, MGM, INTC, SBUX, HGV, BKNG, SMPL, DAL, CVM, CCL, MGPI, ISRG, ARCH, HT, SCCO, HA, EPZM, SSP, LSCC, SWKS, AVGO, NVDA, UAL, HTZ, MU, EL, PBF, SKT, SLB, DK, TCO, PINS, HFC, ON, AAL, SCHN, LVS, OLED, RCL, PRNB, PSNL, FCX, CC, WYNN, HSC and ENPH

Stocks With Unusual Put Option Activity:

• 1) URBN 2) MAC 3) EWH 4) ASHR 5) DO

Stocks With Most Negative News Mentions:

• 1) WYNN 2) SALT 3) ARLP 4) LVS 5) NIO

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth -.7%

Sector Outperformers:

• 1) Homebuilders +.5% 2) Utilities -.1% 3) Foods -.2%

Stocks Rising on Unusual Volume:

• VIVO, DNLI, MRNA, BYND, NVRO, ACMR, ALEC and ARNC

Stocks With Unusual Call Option Activity:

• 1) FSCT 2) INO 3) GASL 4) LVS 5) VIXY

Stocks With Most Positive News Mentions:

• 1) ARNC 2) PFE 3) EOLS 4) HMST 5) MCBC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +19.4% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 16.0% of Issues Advancing, 82.3% Declining
• 67 New 52-Week Highs, 98 New Lows
• 66.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.6%
• Vix 17.7 +21.8%
• Total Put/Call 1.0 -8.3%
• TRIN/Arms 1.84 -21.4%

Monday Watch

Today's Headlines

Bloomberg:    

• U.S. Embassy in Baghdad Hit in Katyusha Rocket Attack.

• California Reports Infection as China Warns of Virus Spreading Fast.

• Behind the Global Race to Contain China’s Killer Bug.

• Hong Kong Protest Against Quarantine Facilities Turns Violent.

• Mapping the Coronavirus Outbreak Across the World.

• China Names HIV Drugs in Treatment Plan for New Virus.

• Latest News Updates on the Spreading Virus.  

• In Bid for Trump Trade Deal, EU Turns to Shellfish from Soybeans.

• Stock Futures, Oil Tumble; Yen Jumps on Virus Fear. Stock futures tumbled with crude oil and the yen jumped in early trading Monday as the impact of the deadly coronavirus escalated, with a rising death toll and the announcement of an unspecified extension to China’s lunar new year holiday. With no sign of the disease’s containment, traders rushed for havens and out of risk assets. Contracts on the S&P 500 Index fell more than 1% and Nikkei 225 futures dropped more than 1.5%. China’s yuan tumbled, and oil sank more than 2%. The moves come on a day with limited trading options in Asia, as markets are shut in locations including China, Hong Kong, South Korea and Australia, due to holidays. Treasury futures climbed. S&P 500 futures fell 1.1% as of 8:33 a.m. in Tokyo. The S&P 500 Index fell 0.9% Friday. Nikkei 225 futures fell 1.5% in Chicago. FTSE China A50 futures slid 1.9% earlier.

• Middle East Stock Markets Fall as Coronavirus Spreads.    

• Oil Slumps as Fears Grow Over Impact of Deadly Virus.

• Hemp Prices Plunge as CBD Demand Falls Short: Cannabis Weekly.  

• Drug Stocks Slide as Never-Ending Political Worry Gathers Steam.

Wall Street Journal:

• Elizabeth Warren Meets an Irate Dad.

• U.S. Hospitals Aren’t Ready for the Coronavirus.

• Apple(AAPL) Was Headed for a Slump. Then It Had One of the Biggest Surges Ever.

• The Pharmacist Is Out: Supermarkets Close Pharmacy Counters.

• Europe’s Banking Regulator Paves the Way for Bank Mergers.

• China Urges Calm Over Virus During ‘Critical Period’.

• State Attorneys General to Meet With Justice Officials to Coordinate on Google(GOOG) Probe.

• The Hidden Factor Making Junk Bonds Less Risky.

• The Tax Increases to Come.

• China’s Censorship Helps Spread the Virus.

• Phones That Can Read Your Mind.

MarketWatch.com:

• Apple earnings: A year after holiday misfire, Apple is worth twice as much.

Fox News:

• TRENT ENGLAND: Here’s how Elizabeth Warren wants to silence Middle America.

CNBC:

• How coronavirus is beginning to hit China’s economy.

• Boeing’s 777X completes maiden flight, a milestone for company struggling from Max crashes.

• Sanders leads New Hampshire Democratic primary less than three weeks out.

• Fifth US case of coronavirus confirmed in Arizona, health officials say.

• After virus scare, markets look to Fed rate policy to keep stock rally going.

Zero Hedge: 

• Crude Crashes As Asia Trading Opens; Stocks Slump, Gold Jumps, Yuan Dumps.

• 5 Million Potential Carriers Have Left Wuhan As Coronavirus Appears To Mutate Into "More Transmissable" Form.

• Fresh Rocket Attack Scores Direct Hit On US Embassy In Baghdad.

• Did China Steal Coronavirus From Canada And Weaponize It?

• Sweden And Its Welfare State In Crisis.

• Third Coronavirus Infection Confirmed In California As Wuhan Mayor Expects “1000 Or So” New Cases.

• Kobe Bryant Dies In Helicopter Crash.

• CDC Calls CoV "Serious Emerging Public Health Threat", Confirms 5th US Case.

• Obama Called Trump "Fascist Who Can't Be Allowed Into White House"

• N95 Virus Masks Sell Out Across The U.S.

• Italians Head To Polls In Regional Vote That Could Topple The Government.

• The 'Golden Age Of Plastic'? Banks Are Quietly Raising Credit Limits For Freespending Borrowers.

• Yale Cancels Prestigious Art History Course For Being "Too White".

• "Racist" Trump Supporters Should Lose Their Vote, Says NBC. Guess Who Decides They're "Racist"?

• A New 'Greenwashed' Road To Serfdom.

Business Insider:

• The Wuhan coronavirus could blow up the game China's been playing with its economy for years.

• Iran's military knew it accidentally shot down a passenger plane moments after it happened, and a stunning new report details how it was covered up — even from Iran's president.

Night Trading

• Asian indices are -2.0% to -1.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 53.75 +.25 basis point.

• China Sovereign CDS 37.5 +1.0 basis point.

• Bloomberg Emerging Markets Currency Index 65.99 -.02%.

• FTSE 100 futures n/a.

• S&P 500 futures -.9%.

• NASDAQ 100 futures -1.3%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (DHI)/.91

• (S)/-.04

After the Close:

• (BRO)/.27

• (FFIV)/2.42

• (GGG)/.39

• (JNPR)/.57

• (PKI)/1.33

• (RMBS)/.25

• (SANM)/.70

• (WHR)/4.27

Economic Releases
10:00 am EST

• New Home Sales MoM for Dec. is estimated to rise to 731K versus 719K in Nov.

10:30 am EST

• Dallas Fed Manufacturing Activity for Jan. is estimated to rise to -1.6 versus -3.2 in Dec.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German IFO Business Climate Index, $40B 2Y T-Note auction and the $41B 5Y T-Note auction could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are lower, weighed down by transportation and commodity 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 week.