Stocks Substantially Lower into Final Hour on Global Growth Fears, Mueller Probe Worries, Earnings Jitters, Energy/Healthcare Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 21.8 +5.5%

• Euro/Yen Carry Return Index 133.18 -.72%

• Emerging Markets Currency Volatility(VXY) 9.97 -.89%

• S&P 500 Implied Correlation 49.85 +1.6%

• ISE Sentiment Index 107.0 +8.08%
  

• Total Put/Call 1.04 -12.6%

• NYSE Arms 1.29 +57.32%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.06 +2.58%
  

• America Energy Sector High-Yield CDS Index 668.0 -.30%

• European Financial Sector CDS Index 102.74 +2.61%

• Italian/German 10Y Yld Spread 268.75 +1.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 9.71 +3.63%

• Emerging Market CDS Index 198.57 +.23%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.60 +.01%

• 2-Year Swap Spread 14.75 +.25 basis point

• TED Spread 37.75 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -9.5 -3.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.66 -.49%

• 3-Month T-Bill Yield 2.42% +1.0 basis point

• Yield Curve 15.50 +.5 basis point

• China Iron Ore Spot 68.10 USD/Metric Tonne -.13%

• Citi US Economic Surprise Index -7.3 -3.1 points

• Citi Eurozone Economic Surprise Index -76.20 -32.6 points

• Citi Emerging Markets Economic Surprise Index -1.5 -2.1 points

• 10-Year TIPS Spread 1.83-1.0 basis point

• 74.3% chance of Fed rate hike at Jan. 30th meeting, 83.2% chance at March 20th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -114 open in Japan 

• China A50 Futures: Indicating +26 open in China

• DAX Futures: Indicating -20 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.5%

Sector Underperformers:

• 1) Oil Service -3.5% 2) Healthcare Providers -3.2% 3) Drugs -2.6%

Stocks Falling on Unusual Volume: 

• JNJ, MDCO, SHOP, LASR, HIIQ, COST, ADBE, KBR, UNFI, CLVS and CVRR

Stocks With Unusual Put Option Activity:

• 1) GPRO 2) JNK 3) ETFC 4) JNJ 5) AET

Stocks With Most Negative News Mentions:

• 1) JNJ 2) WBA 3) CSCO 4) CDEV 5) PCE

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value -.5%

Sector Outperformers:

• 1) Steel +.7% 2) Papers +.4% 3) Social Media +.2%

Stocks Rising on Unusual Volume:

• BEL, KANG, XPO, WPM, RAMP, SMAR, GMS, MTLS, OXM, DORM, DOOO, TCP, CWST, ZS, SEE, PRMW, CIEN, BID, FTSV, LE, ECOL, STRA, GLPI, NUE and GOL

Stocks With Unusual Call Option Activity:

• 1) KEY 2) NLSN 3) MYL 4) JNJ 5) COST

Stocks With Most Positive News Mentions:

• 1) XPO 2) NUE 3) CIEN 4) SEE 5)LSCC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +8.8% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 40.7% of Issues Advancing, 56.7% Declining
• 14 New 52-Week Highs, 410 New Lows
• 21.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.4%
• Vix 21.3 +3.3%
• Total Put/Call 1.09 -8.4%
• TRIN/Arms .95 +15.9%

Friday Watch

Night Trading 

• Asian equity indices are -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 92.5 unch. 

• Asia Pacific Sovereign CDS Index 9.5 unch.

• Bloomberg Emerging Markets Currency Index 66.90 -.12%.

• FTSE 100 futures -.75%.

• S&P 500 futures -.59%.

• NASDAQ 100 futures -.78%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• None of note

After the Close:

• None of note

Economic Releases

8:30 am EST

• Retail Sales Advance MoM for November are estimated to rise +.1% versus a +.8% gain in October.

• Retail Sales Ex Autos MoM for November are estimated to rise +.2% versus a +.7% gain in October. 

• Retail Sales Ex Autos and Gas for November are estimated to rise +.4% versus a +.3% gain in October.

9:15 am EST

• Industrial Production MoM for November is estimated to rise +.3% versus a +.1% gain in October.

• Manufacturing Production for November is estimated to rise +.3% versus a +.3% gain in October.

• Capacity Utilization is estimated to rise to 78.6% versus 78.4% in October.
  

9:45 am EST

• Preliminary Markit US Manufacturing PMI for Dec. is estimated to fall to 55.0 versus 55.3 in November.

• Preliminary Markit US Services PMI for Dec. is estimated to fall to 54.6 versus 54.7 in September.

10:00 am EST

• Business Inventories for October are estimated to rise +.6% versus a +.3% gain in September.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Retail Sales report, Bloomberg Dec. US Economic Survey, (STWD) investor day, (CNC) investor day and the (MET) investor outlook could also impact trading today.

BOTTOM LINE:  Asian indices are lower, weighed down by technology and financial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon.  The Portfolio is 25% net long heading into the day.

Stocks Reversing Lower into Final Hour on Global Growth Worries, Earnings Jitters, Technical Selling, Retail/Transport Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 21.2 -1.2%

• Euro/Yen Carry Return Index 134.23 +.28%

• Emerging Markets Currency Volatility(VXY) 10.11 -.1%

• S&P 500 Implied Correlation 48.86 -.95%

• ISE Sentiment Index 93.0 +3.33%
  

• Total Put/Call 1.22 +28.4%

• NYSE Arms .97 +21.25%

Credit Investor Angst:

• North American Investment Grade CDS Index 76.85 -1.93%
  

• America Energy Sector High-Yield CDS Index 669.0 -3.03%

• European Financial Sector CDS Index 100.12 -2.55%

• Italian/German 10Y Yld Spread 267.25 -5.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 9.55 -2.45%

• Emerging Market CDS Index 198.04 -2.07%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.60 -.02%

• 2-Year Swap Spread 14.50 +.5 basis point

• TED Spread 36.5 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -6.25 +5.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.99 -.12%
• 3-Month T-Bill Yield 2.41% -1.0 basis point

• Yield Curve 15.0 +1.25 basis points

• China Iron Ore Spot 66.83 USD/Metric Tonne +.59%

• Citi US Economic Surprise Index -4.2 +3.1 points

• Citi Eurozone Economic Surprise Index -43.60 +.4 point

• Citi Emerging Markets Economic Surprise Index .7 unch.

• 10-Year TIPS Spread 1.84 unch.
• 75.5% chance of Fed rate hike at Jan. 30th meeting, 84.3% chance at March 20th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -131 open in Japan 
• China A50 Futures: Indicating +1 open in China

• DAX Futures: Indicating -32 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech sector longs and index hedges

• Disclosed Trades: None

• Market Exposure: 50% Net Long