Morning Market Internals

NYSE Composite Index:

• Volume Running -.9% Below 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 14.8% of Issues Advancing, 83.4% Declining
• 2 New 52-Week Highs, 73 New Lows
• 10.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.8%
• Vix 33.0 +8.6%
• Total Put/Call .84 -22.2%
• TRIN/Arms 1.89 +825.0%

Thursday Watch

Evening Headlines

Bloomberg:          

• U.S.-China Trade Talks to Take Place in Beijing in Early Jan. 

• Asia Stocks Jump on Biggest U.S. Rally Since 2009. Asian stocks climbed on Thursday after the biggest rally in U.S. equities since 2009 offered relief from this month’s wrenching global market downturn. Japanese benchmarks jumped about 4 percent at the open and Australian shares advanced more than 1 percent as trading resumed after holidays there. Korean stocks were flat, however, and U.S. futures dipped, suggesting the follow-through from the blow-out session on Wall Street -- where key indexes climbed about 5 percent or more -- has limits. Crude oil prices built on gains of more than 8 percent overnight. Ten-year Treasury yields are holding around 2.80 percent. Some 99 percent of S&P 500 members finished in the green, the Dow Jones Industrial Average jumped more than 1,050 points for its biggest-ever point gain. The MSCI Asia Pacific Index rose 1.1 percent as of 9:08 a.m. in Tokyo. Japan’s Topix gained 3.9 percent and the Nikkei 225 rose 3.8 percent. Futures on the S&P 500 Index dipped 0.2 percent. The underlying gauge rose 4.96 percent at the close in New York, after falling within two points of a bear market earlier in the session. The Nasdaq 100 surged 6.2 percent and the Dow Jones Industrial Average rallied 1,086 points. Futures on the FTSE China A50 climbed 1.2 percent earlier. Kospi dropped 0.3 percent.  

• U.S.-China Trade Talks, Fed Pause Cause, Shutdown Risks: Eco Day.

• Here Are Three Crazy Market Statistics on a Wild Day of Trading.  

• Battered Apple Poised to Lead FAANGs in 2019, Munster Says.   

• Closing the Books on Tech’s Deceptively Good Year.  

• Insider Stock Buying Surges to 8-Year High.

Wall St. Journal:

• Obama’s Racial Preferences Made Schools Dangerous.

• ETFs, Mutual Funds See Sudden Drop in Money Flowing In.

• Behind the Market Action: Herdlike Behavior of Computerized Trading.

• Crypto Craze Drew Them In; Fraud, in Many Cases, Emptied Their Pockets.

• Holiday Sales Strongest in Years.

MarketWatch.com:

• Mark Hulbert: Still looks like a stock-market correction, not something worse.

• These 8 stocks are investment newsletter gurus’ picks for the market rebound they expect in 2019.

• Ivan Martchev: No bear market for stocks in 2019 because economy, earnings will keep expanding.

• Stocks are ‘close enough to a bottom’ for investors to step in: Guggenheim’s Minerd.

Fox News:

• Trump defends Syria pullout plan during surprise visit to US troops in Iraq.

CNBC:   

• Dow rallies 1,000 points, logging its biggest single-day point gain ever.

• Finally, signs of a Santa Claus rally come to Wall Street.

• Retail is having its best holiday season in 6 years.

• Apple’s(AAPL) newest iPhones are attracting more Android users than last year, survey shows.

Zero Hedge:   

• Oil Soars Most In 2 Years After Russian Reassurance, Stock Surge.

• Mystery Solved: Trump Surprises Troops In Iraq With First Visit As Commander-In-Chief.

• Insider Stock Purchases Surge To 8 Year High.

• US Team To Travel To China In January For Trade Talks.

• Liberal Billionaire Apologizes For "Russian Bot" Disinfo Campaign Tied To Hamilton 68.

• Why Stocks Are Soaring: A Massive, $64 Billion Buy Order.

• Pension Panic Sparks Biggest Dow Point Rise In History.

Night Trading 

• Asian equity indices are +1.0% to +1.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 98.75 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 11.75 unch.

• Bloomberg Emerging Markets Currency Index 66.69 +.08%.

• FTSE 100 futures +.86%.

• S&P 500 futures -.33%.

• NASDAQ 100 futures -.38%.

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

• Initial Jobless Claims for last week are estimated to rise to 216K versus 214K the prior week.

• Continuing Claims are estimated to fall to 1675K versus 1688K prior.

9:00 am EST

• The FHFA House Price Index MoM for Oct. is estimated to rise +.3% versus a +.2% gain in Sept.

10:00 am EST

• New Home Sales for November are estimated to rise to 566K versus 544K in Oct.

• Conference Board Consumer Confidence for December is estimated to fall to 133.7 versus 135.7 in November.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Industrial Profits report, Japan Trade Balance report, $32B 7Y T-Note auction and the Bloomberg weekly Consumer Comfort Index could also impact trading today.

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

Stocks Soaring into Final Hour on Bargain-Hunting, Short-Covering, Technical Buying, Tech/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 32.49 -9.93%

• Euro/Yen Carry Return Index 131.06 +.33%

• Emerging Markets Currency Volatility(VXY) 9.60 unch.

• S&P 500 Implied Correlation 45.95 -6.09%

• ISE Sentiment Index 138.0 +50.0%
  

• Total Put/Call 1.12 -14.5%

• NYSE Arms .56 -73.58%

Credit Investor Angst:

• North American Investment Grade CDS Index 91.11 -3.96%
  

• America Energy Sector High-Yield CDS Index 821.0 +2.06%

• European Financial Sector CDS Index 114.65 +.21%

• Italian/German 10Y Yld Spread 258.0 unch.
  

• Asia Pacific Sovereign Debt CDS Index 11.75 +.23%

• Emerging Market CDS Index 213.58 -.82%
  

• iBoxx Offshore RMB China Corporate High Yield Index 151.0 +.02%

• 2-Year Swap Spread 13.5 -1.75 basis points

• TED Spread 41.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -1.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.63 -.09%

• 3-Month T-Bill Yield 2.43% +5.0 basis points

• Yield Curve 18.5 +3.25 basis points

• China Iron Ore Spot 70.46 USD/Metric Tonne +1.12%

• Citi US Economic Surprise Index -15.4 +.9 point

• Citi Eurozone Economic Surprise Index -73.80 +3.7 points

• Citi Emerging Markets Economic Surprise Index -4.4 +.5 point

• 10-Year TIPS Spread 1.77 -1.0 basis point

• 13.9% chance of Fed rate hike at March 20th meeting, 19.0% chance at May 1st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +601 open in Japan 

• China A50 Futures: Indicating +27 open in China

• DAX Futures: Indicating n/a open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts

• Market Exposure: Moved to 100% Net Long