Monday, February 10, 2020

Stocks Rising into Final Hour on China Stimulus Hopes, Short-Covering, Technical Buying, Tech/Homebuilding Sector Strength

 Broad Equity Market Tone:
  • Advance/Decline Line: Modestly Higher
  • Sector Performance: Mixed
  • Volume: Around Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 15.5 unch.
  • Euro/Yen Carry Return Index 124.19 -.37%
  • Emerging Markets Currency Volatility(VXY) 6.98 +.72%
  • S&P 500 Implied Correlation 37.3 +.7%
  • ISE Sentiment Index 97.0 +27
  • Total Put/Call .82 -14.6%
  • NYSE Arms 1.57 +6.1%
Credit Investor Angst:
  • North American Investment Grade CDS Index 45.80 -.35%
  • America Energy Sector High-Yield CDS Index 629.0 +.67%
  • European Financial Sector CDS Index 49.59 +.96%
  • Italian/German 10Y Yld Spread 136.25 +3.25 basis points
  • Asia Ex-Japan Investment Grade CDS Index 52.07 -1.8%
  • Emerging Market CDS Index 194.04 +2.23%
  • iBoxx Offshore RMB China Corporate High Yield Index 169.82 +.01%
  • 2-Year Swap Spread 3.75 -1.5 basis points
  • TED Spread 19.5 +1.5 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -7.25 -2.0 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 64.91 -.14%
  • 3-Month T-Bill Yield 1.56% unch.
  • Yield Curve .18 -2.0 basis points
  • China Iron Ore Spot 79.55 USD/Metric Tonne +1.89%
  • Citi US Economic Surprise Index 46.20 +.8 point
  • Citi Eurozone Economic Surprise Index -16.5 -7.0 points
  • Citi Emerging Markets Economic Surprise Index 24.9 +1.4 points
  • 10-Year TIPS Spread 1.65 -1.0 basis point
  • 31.9% chance of Fed April 29th meeting, 50.8% chance of cut at June 10th meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -30 open in Japan 
  • China A50 Futures: Indicating -75 open in China
  • DAX Futures: Indicating -13 open in Germany
Portfolio:
  • Slightly Lower: On losses in my index hedges and emerging market shorts
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:
  • Small-Cap Value -.1%
Sector Underperformers:
  • 1) Steel -2.4% 2) Oil Service -2.2% 3) Airlines -.9%
Stocks Falling on Unusual Volume: 
  • TSE, VSAT, MRO, UI, HCAT, RGS, SYNA, NTGR, TWTR, TNET, NWSA, ET, MTDR, PAA, FL, SKX, OLLI, LNG, MYGN, CQP, PAGP, HUBG, IRBT, SPT, TALO, CLR, TRGP, TWOU, NOV, ZGNX, PBH, ABMD, BOOT, BBBY, BHVN, MTW, COLL and ALEC
Stocks With Unusual Put Option Activity:
  • 1) MCK 2) DO 3) AAL 4) AVYA 5) UAA
Stocks With Most Negative News Mentions:
  • 1) I 2) BHVN 3) ACB 4) NKE 5) CVX
Charts:

Bull Radar

Style Outperformer:
  • Large-Cap Growth +.6%
Sector Outperformers:
  • 1) Tobacco +1.9% 2) Gold & Silver +1.7% 3) Computer Hardware +1.3%
Stocks Rising on Unusual Volume:
  • TCO, EPC, ADVM, WORK, DEAC, MAC, SPCE, ALEX, GNRC, LYFT, TPIC, CHGG, SGH and PETS
Stocks With Unusual Call Option Activity:
  • 1) FANG 2) MCK 3) TCO 4) UAA 5) WPX
Stocks With Most Positive News Mentions:
  • 1) VTVT 2) ADVM 3) LYFT 4) CNA 5) ROKU
Charts:

Morning Market Internals

NYSE Composite Index:

Sunday, February 09, 2020

Monday Watch

Today's Headlines
Bloomberg:
  • U.S. Stock Futures Drop as Virus Spreads; Yen Up. U.S. stock futures fell while haven assets nudged higher at the start of a week that may prove crucial in determining the trajectory of coronavirus cases, and in turn the prospects for a v-shaped economic recovery. With cases outside of China continuing to increase, investors will be monitoring whether the rate of change kicks up a gear. Futures on the S&P 500 Index declined about 0.5%, while Treasury futures climbed along with the yen and gold. Australia’s shares retreated and its bond yields fell. The yuan traded weaker than 7 per dollar offshore. Oil fell. On Friday, U.S. shares and Treasury yields fell Friday even after a strong monthly jobs report. Futures on the S&P 500 lost 0.5% as of 8:38 a.m. in Tokyo. The underlying gauge fell 0.5% on Friday. Futures on Japan’s Nikkei 225 dropped 0.5%. Hang Seng Index futures retreated 1.1% on Friday. Australia’s S&P/ASX 200 Index slid 0.5%.  
Wall Street Journal:
MarketWatch.com:
CNBC:
Zero Hedge:  
9to5Mac:
  • Apple(AAPL) analyst Ming-Chi Kuo is out with a new investor note today. Kuo says that Foxconn’s Zhengzhou plant is the most critical iPhone production site, focused on the iPhone 11 and iPhone SE 2/iPhone 9. This plant was scheduled to resume work on February 2nd, but has since been delayed by at least one week.Kuo stops short of making any actual shipment predictions in this investor note because “there are still many uncertainties.” He does warn, however, that there are risks of new product shipment delays and lower-than-expected iPhone sales due to the coronavirus outbreak.
John Hopkins University:
Night Trading
  • Asian indices are -1.25% to -.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 53.5 +.75 basis point.
  • China Sovereign CDS 36.75 +2.0 basis points.
  • Bloomberg Emerging Markets Currency Index 64.98 -.03%.
  • FTSE 100 futures n/a.
  • S&P 500 futures -.34%.
  • NASDAQ 100 futures -.45%.

Earnings of Note
Company/Estimate

Before the Open:
  • (AGN)/4.53
  • (CNA)/.93
  • (DO)/-.64
  • (L)/.72
After the Close:
  • (ELY)/-.23
  • (DVA)/1.66
  • (IIVI)/.36
  • (JCOM)/2.37
  • (MELI)/-.80
  • (XPO)/1.01
Economic Releases
  • None of note
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Bowman speaking, Australia Home Values report, (FDX) economic update and the BIO Investor Conference could also impact trading today.
Market Hours
Normal:
  • 9:30 am - 4:00 pm EST
BOTTOM LINE: Asian indices are lower, weighed down by technology 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.

Weekly Outlook

BOTTOM LINE: I expect US stocks to finish the week modestly lower on coronavirus fears, global growth concerns, oil weakness, European/Emerging Markets/US High-Yield debt angst, profit-taking and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.