Stocks Surging into Afternoon on China Trade Deal Hopes, Diminished Govt Shutdown Worries, Technical Buying, Homebuilding/Tech 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) 15.2 -4.5%

• Euro/Yen Carry Return Index 130.53 +.62%

• Emerging Markets Currency Volatility(VXY) 8.91 -.78%

• S&P 500 Implied Correlation 41.55 -1.8%

• ISE Sentiment Index 139.0 -1.42%
  

• Total Put/Call .78 -9.3%

• NYSE Arms .82 -32.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 65.50 -3.21%
  

• America Energy Sector High-Yield CDS Index 568.0 +.14%

• European Financial Sector CDS Index 89.88 -2.08%

• Italian/German 10Y Yld Spread 271.25 -6.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 78.57 -2.0%
  

• Emerging Market CDS Index 175.12 -1.82%
  

• iBoxx Offshore RMB China Corporate High Yield Index 156.70 +.17%

• 2-Year Swap Spread 13.5 unch.

• TED Spread 27.25 -2.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -8.5 +.5 basis point.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 68.25 +.36%
• 3-Month T-Bill Yield 2.43% +1.0 basis point

• Yield Curve 17.75 +.75 basis point

• China Iron Ore Spot 83.15 USD/Metric Tonne -1.81%

• Citi US Economic Surprise Index 15.20 -2.1 points

• Citi Eurozone Economic Surprise Index -77.6 -.7 point

• Citi Emerging Markets Economic Surprise Index -7.9 +.5 point

• 10-Year TIPS Spread 1.84 +2.0 basis points
• 0.0% chance of Fed rate hike at May 1st meeting, 1.1% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +86 open in Japan 
• China A50 Futures: Indicating +24 open in China

• DAX Futures: Indicating +8 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value +.9%

Sector Underperformers:

• 1) REITs -.6% 2) Gold & Silver -.4% 3) Education -.1%

Stocks Falling on Unusual Volume: 

• VRNS, CCXI, LABL, ALLK, NTGR, TAP, AAOI, ICPT, LTHM, TTWO, MOH, EOLS, GSKY and OHI

Stocks With Unusual Put Option Activity:

• 1) AET 2) MDCO 3) CVNA 4) IRM 5) UA

Stocks With Most Negative News Mentions:

• 1) VRNS 2) LABL 3) TTWO 4) GILD 5) AAOI

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.4%

Sector Outperformers:

• 1) Homebuilders +4.8% 2) Steel +4.2% 3) Robotics +2.6%

Stocks Rising on Unusual Volume:

• IEFA, ELLI, PKW, MIME, CLPS, CHGG, CVNA, UAA, COTY, EA, NOBL, OMF, IGV, UA, PYX, BFR, JLL, TROX, TENB, TRU, FTA, IPGP, TNDM, ODFL, PCMI, OMF, BHF, BZH, RAMP, MAT, RNG, GPRE, SSYS, BRKR, SONO, TPX, ARCC, MIDD, WWD, SE, QNST, ATVI and CTRL

Stocks With Unusual Call Option Activity:

• 1) CVNA 2) SSYS 3) UA 4) CZR 5) FLEX

Stocks With Most Positive News Mentions:

• 1) JLL 2) MIME 3) CHGG 4) WWW 5) SYMC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +16.0% Above 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 70.6% of Issues Advancing, 26.9% Declining
• 55 New 52-Week Highs, 7 New Lows
• 40.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 55.5%
• Vix 16.3 -3.9%
• Total Put/Call .67 -22.1%
• TRIN/Arms .84 -29.8%

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 79.75 -1.25 basis points. 

• China Sovereign CDS 56.25 -1.0 basis points.

• Bloomberg Emerging Markets Currency Index 68.0 unch.

• FTSE 100 futures -.12%.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.25%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (IPGP)/1.41
• (JLL)/4.84
• (MLM)/1.78
• (TAP)/.79
• (STE)/1.25
• (UAA)/.04

After the Close:

• (ATVI)/1.29
• (AKAM)/1.00
• (GRPN)/.13
• (OXY)/1.16
• (TEX)/.47
• (TRIP)/.28
• (TWLO)/.04

Economic Releases
6:00 am EST

• The NFIB Small Business Optimism Index for Jan. is estimated to fall to 103.0 versus 104.4 in Dec. 

10:00 am EST

• JOLTS Job Openings for Dec. are estimated to fall to 6,846 versus 6,888 in Nov.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell speaking, Australia Home Loans report, weekly US retail sales reports, Goldman Tech/Internet Conference, Stifel Transport/Logistics Conference and the (OLN) investor day could also impact trading today.

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

Stocks Slightly Higher into Final Hour on Less European Debt Angst, China Trade Deal Hopes, Short-Covering, Transport/Medical Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 16.24 +3.31%

• Euro/Yen Carry Return Index 129.39 +.18%

• Emerging Markets Currency Volatility(VXY) 8.95 +.34%

• S&P 500 Implied Correlation 41.88 +4.44%

• ISE Sentiment Index 141.0 +29.4%
  

• Total Put/Call .81 -19.8%

• NYSE Arms 1.36 +33.33%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.83 +.39%
  

• America Energy Sector High-Yield CDS Index 569.0 +3.45%

• European Financial Sector CDS Index 91.79 -1.01%

• Italian/German 10Y Yld Spread 278.0 -9.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 80.15 -.38%
  

• Emerging Market CDS Index 179.42 +1.48%
  

• iBoxx Offshore RMB China Corporate High Yield Index 156.44 +.07%

• 2-Year Swap Spread 13.5 -1.0 basis point

• TED Spread 29.75 -4.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -9.0 -1.25 basis points.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 68.0 -.52%
• 3-Month T-Bill Yield 2.42% +1.0 basis point

• Yield Curve 17.0-.25 basis point

• China Iron Ore Spot 87.28 USD/Metric Tonne -1.02%

• Citi US Economic Surprise Index 17.30 +.2 point

• Citi Eurozone Economic Surprise Index -78.3 +1.8 points

• Citi Emerging Markets Economic Surprise Index -8.4 +2.0 points

• 10-Year TIPS Spread 1.82 -1.0 basis point
• 0.0% chance of Fed rate hike at May 1st meeting, 1.1% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +107 open in Japan 
• China A50 Futures: Indicating +35 open in China

• DAX Futures: Indicating -15 open in Germany

Portfolio:

• Higher: On gains in my tech/biotech/medical/retail/industrial sector longs and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 75% Net Long