Stocks Surging into Final Hour on Global Growth Optimism, China Stimulus, Technical Buying, Tech/Industrial Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.6 -8.5%

• Euro/Yen Carry Return Index 125.84 -.64%

• Emerging Markets Currency Volatility(VXY) 6.58 -.6%

• S&P 500 Implied Correlation 40.38 -6.53%

• ISE Sentiment Index 108.0 +16
  

• Total Put/Call .78 -20.4%

• NYSE Arms 1.35 +16.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 44.32 -2.17%
  

• America Energy Sector High-Yield CDS Index 551.0 +.73%

• European Financial Sector CDS Index 51.87 +.43%

• Italian/German 10Y Yld Spread 163.75 +4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 53.04 +.05%
  

• Emerging Market CDS Index 175.72 +1.15%
  

• iBoxx Offshore RMB China Corporate High Yield Index 167.52 +.02%

• 2-Year Swap Spread 10.0 -2.75 basis points

• TED Spread 36.75 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 4.25 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.73 +.03%

• 3-Month T-Bill Yield 1.53%-1.0 basis point

• Yield Curve .35+5.0 basis points

• China Iron Ore Spot 92.58 USD/Metric Tonne +.03%

• Citi US Economic Surprise Index -3.4 -.3 point

• Citi Eurozone Economic Surprise Index 33.40 +3.0 points

• Citi Emerging Markets Economic Surprise Index -10.9 +3.4 basis points

• 10-Year TIPS Spread 1.80 +1.0 basis point

• 5.0% chance of Fed rate cut at March 18th meeting, 11.0% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +19 open in Japan 

• China A50 Futures: Indicating +114 open in China

• DAX Futures: Indicating +21 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.8%

Sector Underperformers:

• 1) REITs -1.7% 2) Tobacco -1.6% 3) Utilities -1.4%

Stocks Falling on Unusual Volume: 

• IRM, REAL, WW and NVCR

Stocks With Unusual Put Option Activity:

• 1) FCEL 2) CTL 3) MUR 4) SIG 5) SKT

Stocks With Most Negative News Mentions:

• 1) SIG 2) DCO 3) GRUB 4) CTL 5) CGC

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.8%

Sector Outperformers:

• 1) Social Media +2.7% 2) Video Gaming +2.0% 3) Semis +1.8%

Stocks Rising on Unusual Volume:

• BTU, ENPH, FSLY, ARLP, AMD, AVLR, AIMT, COUP, HEI/A, GE, XBIT, HEI, PCTY, TTD, IIVI, ZEN, AAXN, PSN, SGRY, TLND, PTON, DT, AMBA, RCK, OXY, ZUO, WES, LITE, AXE and WDC

Stocks With Unusual Call Option Activity:

• 1) DRI 2) IEF 3) KNX 4) DVN 5) DXJ

Stocks With Most Positive News Mentions:

• 1) RCON 2) AMD 3) TSLA 4) TRNX 5) BA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -1.1% Below 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 50.8% of Issues Advancing, 46.5% Declining
• 144 New 52-Week Highs, 3 New Lows
• 64.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.2%
• Vix 13.5 -2.4%
• Total Put/Call .8 -18.4%
• TRIN/Arms 1.06 -89.3%

Thursday Watch

Evening Headlines

Bloomberg:    

• Hong Kong Rings in New Year With Tear Gas, Clashes in Downtown.

• U.S. Troops Fire Tear Gas at Protesters Outside Iraq Embassy.    

• Iran-Backed Iraq Militia Withdraws After U.S. Embassy Attack.

• Kim Jong Un Keeps World Guessing With New Year’s Speech Surprise.    

• China’s Tech Industry Straps in for More Turbulence After a Wild 2019.

• Australia Home Prices Notch Up Biggest 3-Month Gain in Decade.

• China Ramps Up Credit Support to Aid Economic Growth in 2020.

• PBOC Stresses Policy Flexibility as Economic Pressures Persist. 

• Mixed Start Seen as 2020 Trading Gets Underway. Traders eyed a cautious start on Thursday in Asia as they assessed the latest policy move by China’s central bank and awaited data on the country’s manufacturing sector. U.S. equity futures nudged higher. Activity is set to pick up as most global markets reopen from holiday closures on Jan. 1, though Japanese equities remain shut for the remainder of this week. The yuan showed little reaction after the People’s Bank of China said it will increase the supply of cheap funding to banks, a move of policy support in line with market expectations. Futures on the S&P 500 Index rose 0.1% as of 7:01 a.m. in Hong Kong. Australia’s S&P/ASX 200 Index was little changed.

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

• U.S. Stocks Rally to Cap Best Year Since 2013.

• Chill, It Might Not Be That Bad: The Optimist's Guide to 2020.

• Flying Cars, Hyperloops and the Other 2020 Tech Predictions That Didn’t Pan Out.

• Nasdaq Caps a $7 Trillion Decade With Its Best Rally In 10 Years.

• Gold’s December Rally Stays Alive to Seal Best Year Since 2010.

• 2020 U.S. Economy Field Guide: Five Key Things to Watch.

• Indexing Was Huge in 2019 But the Real Money Was in Index Stocks.

Wall Street Journal:

• Protesters Retreat From U.S. Embassy Site in Iraq.

• Tech That Will Change Your Life in 2020.

• What to Know Before Resolving to Eat Less Meat.

• FDA to Ban All E-Cigarette Pod Flavors Except Tobacco, Menthol.

• In California, New Year Brings New Regulations for Businesses.

• Hong Kong Protesters Demand New Year’s Resolution.

• China’s Monetary Policy Eases Into the New Year.

• Latin America’s ‘Oasis’ Descends Into Chaos.

• The Iranians Escalate in Baghdad.

• Hospitals Merged. Quality Didn’t Improve. 

• Google AI Beats Doctors at Breast Cancer Detection—Sometimes.

• Jobs and Inflation: The Great Trade-Off, Demystified.

Fox News:

• Photos show what remains after Iran-backed militants stormed US Embassy in Baghdad.

MarketWatch.com: 

• These 2 stocks dominated S&P 500 returns in 2019 — and the decade.

• Dow industrials in 2020 will hit 32,000, predicts Trump’s trade adviser Peter Navarro.  

• Secure Act includes one critical tax change ‘that will send estate planners reeling'.  

• Here are the best and worst Dow and S&P 500 stocks of 2019.  

• These are the 20 best-performing stocks of the past decade, and some of them will surprise you.  

• These 10 S&P 500 stocks were lousy in 2019, but they could return 40% or more in 2020.  

• Disney(DIS) Stock Rose to New Heights as Investors Bought Its Streaming Vision in 2019.

CNBC:

• Stocks post best annual gain in 6 years with the S&P 500 surging more than 28%.

• North Korean leader Kim Jong Un warns of ‘shocking’ action, new strategic weapon.

• A bunch of people in tech are setting resolutions to spend less time using tech.

• Microsoft(MSFT) wraps up its best year since 2009.

• The stock market boomed in 2019. Here’s how it happened.

• New year begins, jobless claims and manufacturing data: 3 things to watch for on Thursday.

• Oil surges nearly 35% in 2019 and hedge funds are betting on more gains next year.

• Americans are flocking to these 10 cities where jobs are plentiful and salaries are rising.

• Don’t look now, but Goldman Sachs is saying the economy is nearly recession-proof.

• Why Apple(AAPL) could become a $400 stock in 2020.

Zero Hedge:

• 6 Reasons For Optimism In 2020.

• DiGenova: Comey And Brennan Were 'Coup Leaders'.

• A Third Of 18-34 Year Olds Live With Their Parents And Other 2019 Housing Market Highlights, In Charts.

• Baltimore City Breaks Murder Record Of The Century.

• Giuliani Says Ukraine Corruption Came From 'Highest Levels Of Obama Administration'; Wants To Testify, Try Case.

• de Blasio's New York: Former Rikers Inmates Using Taxpayer-Funded Debit Cards To Buy Liquor, Tobacco.

• 2020's Key Global Events: A Calendar For The Year Ahead.

• 2019 Greatest Hits: The Most Popular Articles Of The Past Year And A Look Ahead.

• Germany Aims To Close All Nuclear Plants By 2022.

• US Records Slowest Population Growth In Century As Births Decline.

• "No More Transit Risk": Ukraine & Russia Ink Landmark Gas Transit Deal, Hammering European Gas Prices.

• The New Colonization: China Is Building Enormous Self-Sustaining Chinese Cities All Over The African Continent.

• Watch: Apache Gunships Attempt To Disperse Iraqi Mob As Kataib Hezbollah Flags Erected Over Embassy Walls.

• A Decade In Tech.

• We Were Warned About The Deep State, But Refused To Listen.

• America's Top New Year's Resolutions For 2020.

• California's Woke Legislation For 2020: Students Can't Be Suspended.

Business Insider:

• These were the biggest automotive stories of the 2010s.

• THE GLOBAL 5G LANDSCAPE: An inside look at leading 5G markets, key players, and how they are defining the future of connectivity.

• How 5G and the IoT will transform telecoms, enterprise, government, and consumer tech.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 53.0 -.25 basis point.

• China Sovereign CDS 3125 +.25 basis point.

• Bloomberg Emerging Markets Currency Index  66.72 +.01%.

• FTSE 100 futures n/a.

• S&P 500 futures +.25%.

• NASDAQ 100 futures +.33%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• None of note

After the Close:

• (JEF)/.25

• (LNDC)/-.06

• (RECN)/.31

Economic Releases  
8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 220K versus 222K the prior week.

• Continuing Claims are estimated to fall to 1680K versus 1719K prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI report and the weekly Bloomberg Consumer Comfort Index could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are slightly higher, boosted by industrial and technology 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.