Bull Radar

Style Outperformer:

• Small-Cap Value -.20%

Sector Outperformers:

• 1) Coal +1.22% 2) Oil Service +.89% 3) I-Banks +.68%
  

Stocks Rising on Unusual Volume:

• STT, LIFE, SNE, GEO, MS, ROC and RIMM

Stocks With Unusual Call Option Activity:

• 1) GD 2) COF 3) MNST 4) SPLS 5) PATH
  

Stocks With Most Positive News Mentions:

• 1) NFLX 2) TSN 3) OSIS 4) GEO 5) LIFE

Charts:

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

Friday Watch

Night Trading

• Asian equity indices are -.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 106.0 -4.0 basis points.

• Asia Pacific Sovereign CDS Index 87.75 unch.

• FTSE-100 futures +.01%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.16%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (PGR)/.34

• (STT)1.00

• (PH)/1.12

• (MMR)/-.13

• (STI)/.61

• (SLB)/1.07

• (GE)/.43

• (JCI)/.51

• (MS)/.27

• (COL)/.89

• (ED)/.73 

Economic Releases
9:55 am EST

• Univ. of Mich. Consumer Confidence for January is estimated to rise to 75.0 versus 72.9 in December.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The UK retail sales report and the (DPZ) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Surging into Final Hour on Debt Ceiling Hopes, Diminishing Global Growth Fears, Short-Covering, Healthcare/Homebuilding Sector Strength

Broad Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• VIX 13.48 +.45%

• ISE Sentiment Index 159.0 +80.68%

• Total Put/Call .78 -10.34%

• NYSE Arms 1.45 +22.89%

Credit Investor Angst:

• North American Investment Grade CDS Index 87.20 -1.72%

• European Financial Sector CDS Index 132.55 -.22%

• Western Europe Sovereign Debt CDS Index 99.64 -.19%

• Emerging Market CDS Index 211.58 -1.28%

• 2-Year Swap Spread 14.75 +2.25 bps

• TED Spread 22.5 -.25 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -16.0 +1.75 bps

Economic Gauges:

• 3-Month T-Bill Yield .08% unch.

• Yield Curve 161.0 +4 bps

• China Import Iron Ore Spot $145.40/Metric Tonne unch.

• Citi US Economic Surprise Index 5.20 +1.9 points

• 10-Year TIPS Spread 2.53 +3 bps

Overseas Futures:

• Nikkei Futures: Indicating +310 open in Japan

• DAX Futures: Indicating -1 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg: 

• Euro Area Seen Stalling as Draghi’s Pessimism Shared: Economy. The euro-area economy won’t return to growth until the next quarter as a recovery in Italy is delayed and France continues to shrink, according to a survey of economists. Gross domestic product in the 17-nation currency region will stay unchanged in the three months through March, before rising 0.1 percent and 0.2 percent in the second and third quarters, the median forecast in a Bloomberg News monthly survey showed. GDP probably fell 0.4 percent last year and will decline 0.1 percent in 2013, economists said. 
• Japan Seeks Deeper U.S. Ties as Obama Envoy Warns on Island Spat. Japan’s new foreign minister visits the U.S. today in a bid to strengthen ties with the Obama administration, which is concerned that its Asian ally’s territorial dispute with China will disrupt regional stability. Fumio Kishida meets with Secretary of State Hillary Clinton today in Washington, in the highest-level meeting between the two countries since Prime Minister Shinzo Abe took office last month. Abe is boosting defense spending in response to China’s increasingly assertive claims to islands in the East China Sea. The conflict has damaged a $340 billion trade relationship and prolonged Japan’s recession, while stoking U.S. concerns of an escalating confrontation.
• China’s Stocks Fall for Second Day, Led by Industrial Companies. China’s stocks fell for a second day, led by financial and industrial companies, after valuations reached the highest level since May. Gross domestic product and industrial output data are due to be released tomorrow. The Shanghai Composite Index (SHCOMP) dropped 1.1 percent to 2,284.91 at the close, while the CSI 300 Index (SHSZ300) lost 0.9 percent to 2,552.76. The Shanghai index slid 0.7 percent yesterday on concerns shares are overbought.
• Americans’ Economic Outlook Fell in January to Three-Month Low. Americans’ economic outlook deteriorated in January to a three-month low as paychecks began reflecting higher taxes. The gap between positive and negative expectations widened to minus 7 this month from zero in December as the share saying the U.S. economy is improving dropped to the lowest since September, according to the Bloomberg Consumer Comfort Index. The weekly measure declined to minus 35.5, the weakest since Oct. 7, from minus 34.4 in the prior period. 
• Rio(RIO) CEO Albanese Steps Down as $14 Billion Writedown Looms. Rio Tinto Group (RIO), the second-biggest mining company, will take about $14 billion of writedowns for failed deals in aluminum and coal led by Chief Executive Officer Tom Albanese, who departs after almost six years in charge.

Wall Street Journal:

• Algeria Hostages' Fate Uncertain. The Algerian army attempted to take control of the gas field where suspected Islamic militants are holding foreign hostages, the site's operator BP PLC said Thursday, amid unconfirmed news reports that there had been casualties in the operation. British Prime Minister David Cameron only found out about the military operation after it was under way, a spokesman for Mr. Cameron said Thursday afternoon. 
• GOP Weighs Short-Term Debt-Limit Increase. House Budget Chairman Paul Ryan (R., Wis.) on Thursday said Republicans are discussing whether to support a short-term increase in the nation's borrowing authority, possibly linking the debt ceiling to future talks aimed at reaching a major deficit deal. Mr. Ryan, speaking to reporters at a Republican retreat at the Kingsmill Resort in Williamsburg, said lawmaker are reviewing options for dealing with the trio of fiscal deadlines in the next three months: the debt ceiling, automatic across-the-board spending cuts and the expiration of a temporary measure funding government operations.
• WSJ/NBC Poll Shows Continuing Support for NRA. According to the poll, the NRA enjoys 41% positive approval rating, with a 34% negative rating. That compares with 41% positive and 29% negative in January 2011.

Fox News: 

• Does White House plan enlist doctors in gun control fight? A few lines in President Obama's sprawling gun control plan are stirring accusations from conservatives that the administration is trying to enlist doctors in a national campaign against owning firearms. The easy-to-miss language was part of Obama's package of executive actions and legislative proposals that includes a new assault-weapons ban and universal background checks. The provision on doctors, though, has begun to generate just as much controversy. "The idea that your doctor would ask you if you have firearms in your house as part of an examination of your health is repugnant," National Rifle Association President David Keene told Fox News on Thursday, accusing the administration of trying to "demonize firearms" by implying that owning them is a "health problem." 

Zero Hedge:

• Bank Of America(BAC) Earnings Plagued By Legacy Countrywide Woes Offset By $900 Million In Loan Loss Reserve Releases. 
• Citi(C) Down 4% On Top- And Bottom-Line Miss.
• Initial Claims Drop To 5-Year 'Old Normal' Lows On Seasonal Shenanigans. (graphs)
• Biggest Philly Fed Miss In 7 Months Ignored As Fed Injects Reserves Via Repo. 
• How Many Central Banks Does It Take To Generate 1% GDP Growth In 5 Years?

Business Insider:

• Algeria Launches Ruthless Attack To End Hostage Standoff. 
• The Bullish Case Vs. The Bearish Case In One Huge Slide. 
• Meet Denis McDonough, The Bare-Knuckle Staffer Who Is Set To Become Obama's New Chief Of Staff. 
• Tim Geithner Has Allowed Zombie Money To Drive The Markets, And This Poses Gargantuan Risk.

Reuters:

• Oil higher on Algerian incident, supportive U.S. data. Oil prices rose on Thursday as the attack on an Algerian gas facility reinforced concerns about geopolitical risk to supply in the region, while upbeat U.S. economic data also supported petroleum futures. Brent March crude rose 80 cents to $110.48 a barrel by 11:50 a.m. EST (1650 GMT), having traded from $109.45 to $110.89. 
• Housing starts climb to highest rate since June 2008. Groundbreaking to build new homes accelerated in December to its fastest pace in over four years.
• Fed Concerned About Overheated Markets on Bonds. Federal Reserve officials are voicing increased concern that record-low interest rates are overheating markets for assets from farmland to junk bonds, which could heighten risks when they reverse their unprecedented bond purchases. Investors have been snapping up riskier assets since the Fed boosted its bond buying to reduce long-term borrowing costs after cutting its overnight rate target close to zero in December 2008. Enthusiasm for speculative-grade bonds is at unprecedented levels, driving a Credit Suisse index that tracks the yield on more than 1,500 issues to a record-low 5.9 percent last week.

Telegraph:

• Britain has more debt than the eurozone, says Germany's Wolfgang Schaeuble. Germany's finance minister Wolfgang Schaeuble has said that the problem of high indebtedness is not limited to the crisis-hit eurozone and that the situation in Britain and the US is worse.

Expansion:

• Spain to raise sales tax on healthcare products to 21% from 10% following a ruling from the EU court.

Xinhua:

• NDRC Official Says 'Can't Relax' on Inflation Risks. Keeping consumer prices basically stable is an important target for macro controls, citing a National Development and Reform Commission official.

Bear Radar

Style Underperformer:

• Large-Cap Value +.21%

Sector Underperformers:

• 1) Banks -.30% 2) Airlines -.25% 3) Gold & Silver -.20%
  

Stocks Falling on Unusual Volume:

• COT, LEAP, SYZM, HK, COLM, NTI, WSM, THRX, NTCT, ROLL, AMBA, HLF, NGG, CVI, VFC, C, EOPN, USNA, CYBX, UNXL, BAC and FET

Stocks With Unusual Put Option Activity:

• 1) CBS 2) HYG 3) AMAT 4) FAST 5) TRIP
  

Stocks With Most Negative News Mentions:

• 1) COLM 2) YUM 3) C 4) BA 5) FAST
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.59%

Sector Outperformers:

• 1) Homebuilders +1.53% 2) Hospitals +1.49% 3) Semis +1.07%
  

Stocks Rising on Unusual Volume:

• CBS, ASML, INFN, KLAC, FITB, NUS, CYMI, PRIM and HAIN

Stocks With Unusual Call Option Activity:

• 1) WMB 2) KLAC 3) EBAY 4) CAG 5) TIVO
  

Stocks With Most Positive News Mentions:

• 1) JNPR 2) CCL 3) A 4) FITB 5) CI

Charts:

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