Wednesday Watch

Evening Headlines

Bloomberg:

• U.S. Presses China for Stable Yuan as Trade Talks Progress.  

• Trump Says He’s in ‘No Rush’ for Nuclear Deal With North Korea’s Kim.

• Asia Stocks Gain as Profits Buoy U.S.; Yuan Climbs. Asian stocks climbed after positive earnings sentiment helped boost U.S. equities, while Treasuries pushed higher as trade concerns lingered. The yuan extended gains amid a report the U.S. is asking China to keep its currency stable as part of the negotiations. Shares in South Korea and Hong Kong led the region, with the MSCI Asia Pacific Index trading at the highest since early October. Earlier, the S&P 500 Index rose after profit at Walmart Inc. lifted retailers and home builders got a push from higher housing activity. Still, gains were modest as worries remained the trade truce will end March 1 without a deal, leading to fresh tariffs. The yen slipped after Japan’s trade deficit came in wider than expected. The MSCI Asia Pacific Index gained 0.6 percent as of 9:33 a.m. in Hong Kong. Japan’s Topix index advanced 0.5 percent. Hang Seng Index gained 0.7 percent. South Korea’s Kospi rose 0.9 percent. Australia’s S&P/ASX 200 Index slid 0.2 percent. The S&P 500 Index rose 0.2 percent on Tuesday. Futures were flat. 

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

• Oil Extends Winning Streak on Saudi Supply Cuts, Trade Optimism.

• Trump Seeks to Take Back Funds From California Rail Project.

Wall St. Journal:

• Groceries and Toys Drive Strong Holiday Results for Walmart.

• Baseball Is One of America’s Hottest Sports.

• Customers Hunt for Crypto Exchange’s Missing Millions.

• In Rebuke to U.S., Germany Considers Letting Huawei In. 

• North Korea’s Kim Purges Wealthy Elite and Critics of Outreach to U.S.

Fox News:

• Ex-FBI boss McCabe reveals the 'one thing' that stood out from game-changing Flynn conversation.

• Covington student's legal team goes after Washington Post in 1st lawsuit.

CNBC:

• The next big market catalyst will be what the Fed says about its balance sheet this week.
  

• After-hours buzz: Devon Energy, Concho Resources, Cadence Design & more.
  

• Hedge funds load back up on Facebook shares — these are their favorite stocks.
  

Zero Hedge:

• "I’m Committing Professional Suicide": CBS Star Reporter Admits "Mostly Liberal" Journalists Are Now "Political Activists".

• Smollett Pleaded No Contest In 2007 To Providing False Information To Law Enforcement.

• More Than 200 Million In Path Of Major Winter Storm Sweeping Across The US.

• Stocks Hit Session Highs After Trump Says March 1 Not A "Magical Date" For China Deal.

• Citi Ready To Replace "Tens Of Thousands" Of Call-Center Workers With Robots.

• Anti-EU Salvini Set To Emerge As Biggest Winner In EU Parliament Elections.

• FBI Crime Lab Investigating 'Racist Letter' In Smollett Case.

• Mester, "Magic" Lift S&P To Overbought As "Puzzling" Gold Surge Accelerates.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 73.25 -2.75 basis points. 

• China Sovereign CDS 52.0 -2.0 basis points.

• Bloomberg Emerging Markets Currency Index 68.23 +.05%.

• FTSE 100 futures -.06%.

• S&P 500 futures unch.

• NASDAQ 100 futures +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (ADI)/1.28

• (CVS)/2.07

• (OC)/1.27

• (SINA)/.89

• (WB)/.76

• (WWW)/.49

After the Close:

• (A)/.73

• (ALB)/1.47

• (CAR)/.33

• (CAKE)/.62

• (CPRT)/.51

• (FLS)/.58

• (JACK)/1.28

• (NTES)/2.44

• (RGR)/.79

• (SNPS)/.94

• (VMI)/1.90

• (VIPS)/1.26

Economic Releases

2:00 pm EST

• FOMC Meeting Minutes from for Jan. 30.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Australian Wage Data report, weekly US retail sales reports, weekly MBA Mortgage Applications report, Citi Industrials Conference, Barclays Industrial Select Conference and the (RDWR) analyst meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by technology and industrial 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 Higher into Final Hour on China Trade Deal Hopes, Earnings Optimism, Oil Gain, Financial/Gaming 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) 14.68 -1.5%

• Euro/Yen Carry Return Index 130.39 +.26%

• Emerging Markets Currency Volatility(VXY) 8.83 -.23%

• S&P 500 Implied Correlation 40.71 -.44%

• ISE Sentiment Index 100.0 +6.38%
  

• Total Put/Call .82 +3.8%

• NYSE Arms 1.09 +57.97%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.05 -2.12%
  

• America Energy Sector High-Yield CDS Index 542.0 -.26%

• European Financial Sector CDS Index 81.71 -3.1%

• Italian/German 10Y Yld Spread 268.25 -1.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 73.61 -1.81%
  

• Emerging Market CDS Index 171.56 -.43%
  

• iBoxx Offshore RMB China Corporate High Yield Index 157.77 +.26%

• 2-Year Swap Spread 12.0 -1.75 basis points

• TED Spread 26.50 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -11.0 -3.75 basis points.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 68.22 +.36%
• 3-Month T-Bill Yield 2.42% unch.

• Yield Curve 14.75 unch

• China Iron Ore Spot 86.0 USD/Metric Tonne +.14%

• Citi US Economic Surprise Index -18.30 +5.3 points

• Citi Eurozone Economic Surprise Index -74.90 +4.8 points

• Citi Emerging Markets Economic Surprise Index -8.2 +3.7 points

• 10-Year TIPS Spread 1.88 +1.0 basis point
• 0.0% chance of Fed rate hike at May 1st meeting, .1% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +100 open in Japan 
• China A50 Futures: Indicating +106 open in China

• DAX Futures: Indicating +18 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.1%

Sector Underperformers:

• 1) Telecom -3.0% 2) Video Gaming -.6% 3) Steel -.1%

Stocks Falling on Unusual Volume: 

• UNIT, PCMI, MIDD, WLK, CLR, SCI, RDFN, HEAR and ONCE

Stocks With Unusual Put Option Activity:

• 1) TRGP 2) ASNA 3) AET 4) UNIT 5) RIOT

Stocks With Most Negative News Mentions:

• 1) WIN 2) NCS 3) PZZA 4) WTW 5)CNSL

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%

Sector Outperformers:

• 1) Gold & Silver +4.2% 2) Gaming +2.0% 3) Alt Energy +1.5%

Stocks Rising on Unusual Volume:

• EHIC, ORBK, ICPT, HMI, TSEM, KRA, MANU, KLAC, FTAI, YETI, AXNX, PFSI, WST, YNDX, NBLX, CNMD, DQ, JKS, IBUY, AMN, WMT, CBLK, IVC, NBL, USAC, JELD, OSTK, AAWW, TEX, TRGP, NAVI, SLCA, TTD, SPXC and ANET

Stocks With Unusual Call Option Activity:

• 1) UNIT 2) RIOT 3) ICPT 4) CIEN 5) GT

Stocks With Most Positive News Mentions:

• 1) GPC 2) WMT 3) ICPT 4) KRA 5) WBT

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -5.6% Below 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 58.2% of Issues Advancing, 38.8% Declining
• 75 New 52-Week Highs, 7 New Lows
• 47.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 58.9%
• Vix 15.3 +2.6%
• Total Put/Call .78 -1.27%
• TRIN/Arms 1.21 +75.4%