* Beginning year inflows move into the largest market caps
While it was The Same Old Song today, I would observe that, in extreme haste to getting money to work, the normal beginning of the year inflows into the market were committed in the largest market capitalizations.
I base this on some of the observations I made on breadth in my Diary and on Mikey's comment of the differential between the equal-weighted index and the market-cap weighted index.  
It is noteworthy that the CNN Fear & Greed Index closed at 97 today.
At least to me!
Thanks for reading and enjoy the evening.

The close is being buoyed by a nearly $4 billion buy program.

Like several large cap stocks, FedEx (FDX) had a remarkable intraday turn from the morning (and for no apparent reason).
Check out the chart.
I have been steadily adding to this name over the last week.

It seems that I am one of the only ones that are concerned about market breadth.

We seem back to chasing some of last year's winners - FANG and banks.

* The relentless climb of 2019 is being followed through on the first day of the trading year

"You're sweet as a honey bee
But like a honey bee stings
You've gone and left my heart in pain
All you left is our favorite song
The one we danced to all night long
It used to bring sweet memories
Of a tender love that used to be.

Now it's the same old song
But with a different meaning
Since you been gone
It's the same old song
But with a different meaning
Since you been gone."

- The Four Tops, It's The Same Old Song
Freudian playground that it was, Motown habitually but without open acknowledgement released singles whose titles commented on the artists' circumstances. Thus, Diana Ross left The Supremes to the tune of "Someday We'll Be Together," while David Ruffin's first single after leaving the Temptations (a move of which the Motown organization did not approve) was "My Whole World Ended (The Moment You Left Me)."
The most cynical of all these juxtapositions was "It's The Same Old Song," the immediate follow-up to the Four Tops' first big hit, "I Can't Help Myself (Sugar Pie Honey Bunch)." Those titles amount to nothing less than a confession, for the former is nothing less than a remake of the latter - same melody, same beat, damn near the same Saxophone solo, Motown pundits have made mock of the similarity for years.
Which may leave me as a majority of one here (with regard to the criticism), because I've always thought that Motown's main production team of Holland-Dozier-Holland were just being honest. There's an eminent justification for it, too: "The Same Old Song" is a better record. If it's the same Sax solo, its bigger and brighter here; if the melody hardly varies, the bass line is bolder, the drums kick just a hair harder and there's nothing quite as thrilling on "I Can't Help Myself, as "It'sThe Same Old Song's" vibes part. Its probably a toss-up between the two lead vocals (and one reason these records were bigger hits than previous Tops efforts was the greater degree to which Levi Stubbs was now featured). The lyrics are a big improvement over the cloying "sugar pie, honey bunch/You know that I love you" (even if they do begin "You're sweet as a honey bee.)" Or maybe it's just like the song says: "I keep hearing the part that used to touch our heart."

The market is simply the same old song - with the relentless climb of 2019 being followed through on the first day of the trading year.

I have spent a lot of time observing breadth data today.
Mikey makes a good point here - which seems to indicate a typical chase of last year's winners:

badgolfer22

I will note that the spx equal weight index is down .25pct while the spx mkt cap weighted is up.37pct.

Regular readers of my Diary know I sometimes post things that replicate the theme of the "Tell Me Something I Don't Know" segment on MSNBC's "Hardball with Chris Matthews."

So ... "Tell me something I don't know, Dougie."

What percentage of options expire worthless?

A reasonable amount, as it turns out - but perhaps not as much as many think!

On cue, the NYSE breadth just turned negative.

Russell breadth is negative.

Share volume market breadth turns negative.

Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names."
- Bob Farrell
Has anyone noticed that market breadth is only flat today?

Source: ZeroHedge

After recently moving from large-sized to medium-sized in late December, I reduced modestly my Alphabet (GOOGL) and Amazon (AMZN) positions further on today's advance.
Still medium-sized.

I can't remember ever seeing the CNN Fear and Greed Index at 96!

I am frankly surprised that gold continues as strong considering the strength in equities.
That said, not reducing my large-sized (GLD) .

* For now, Isaac Newton's First Law of Motion remains in place
* But don't lose sight of Newton's Third Law!

"This is the time of the year that everyone loves to make predictions about what the new year will bring for the market. That has never been something I am fond of doing. I have, however, looked back at the few times I have done it. And I got it wrong each and every time. Therefore I will not be doing one of those "prediction new year" columns."
- Divine Ms M

"There will be plenty of predictions about what 2020 holds for the stock market, but the course of action is to deal with what is in front of us today and not worry about what could happen months from now."
- Rev Shark
After 2019 - a year in which the market's advance defied nearly every strategist's expectations - it is natural for many to reject the notion that there is any value-added contribution to a market projection. I read this view, increasingly, on our site (see Divine's and Rev's quotes made this morning and chronicled above) as well as in our Comments Section and elsewhere.
Rather, price momentum (and the charts) are seen by most as the investors' and traders' friend - and that it is foolhardy to anticipate an inflection point in the relentless market advance.
This view (from those that worship at the altar of price momentum), as I have consistently written, can be a most profitable short term trading approach to the markets and (as I also have written) should not be rejected out of hand. After all (to paraphrase Isaac Newton's First Law), "Every object will remain at rest or in uniform motion in a straight line unless compelled to change its state by the action of an external force."

In other words, a trend in motion tends to stay in motion.
However, my experience remains that in the short term the market is a voting machine - but in the long run it is a weighing machine.
Though I trade often, my principal charge is as an investor - with a time frame between months and years and not hours and days.
As to my more ursine projections and my Surprises for 2020, I plan to deliver them in the next week or so. It is filled with anti-momentum ideas and food for thought that will no doubt continue to be met up with the ire of the momentum crowd.
To this observer, investing is about assessing reward vs. risk. According to Benjamin Graham and other value investors, when stock prices exceed an assessment of "fair market value" the margin of safety is diminished (and vice versa).
It is important to recognize that, in this backdrop of market enthusiasm, to never forget Isaac Newton's Third Law which states, "For every action (force) in nature there is an equal and opposite reaction."
At some point (probably not too far in the future) the nonstop move which took us up consistently from the October 3 low (of (SPY) $284.82) could produce a less orderly elevator ride back down - perhaps just at a time when most investors and traders have grown much more comfortable (e.g., CNN Fear & Greed above 90) and, also, just at the peak of criticism of the ever dwindling ursine crowd.
As always, the timing of that inflection point remains uncertain.

"Eurozone manufacturers reported a dire end to 2019, with output falling at a rate not exceeded since 2012. The survey is indicative of production falling by 1.5% in the fourth quarter, acting as a severe drag on the wider economy... Firms grew somewhat more optimistic about the year ahead, a return to growth remains a long way off given that new order inflows continued to fall at one of the fastest rates seen over the past seven years.... Firms sought to reduce inventory levels and cut headcounts as a result, focusing on slashing capacity and lowering costs. Such cost-cutting was again also evident in further steep falls in demand for machinery, equipment and production-line inputs... Only households provided any source of improved demand in December, underscoring how the consumer sector has helped keep the economy out of recession in recent months. The ability of the wider economy to avoid sliding into a downturn in the face of such a steep manufacturing contraction remains a key challenge for the eurozone as we head into 2020."

- Chris Williamson, Chief Economist at IHS Markit
In the face of uniform optimism about Europe, the data still mattas...
Eurozone Manufacturing down from 46.9 to 46.3:

Here are some more worrisome charts...

Germany remains the weak link with Italy showing the sharpest deceleration in nearly seven years:

* 51 ideas form Safal Niveshak.

* Ten electric vehicles to watch.

* The ebook revolution never came.

Here is your "Marijuana Moment."

Note that Illinois' Lieutenant Governor purchased the first recreational cannabis products on the first day of legalized sales for that state.

Beneficiaries include (CRLBF) , (HRVSF) and (GTBIF) .

Danielle DiMartino Booth discusses weakening world trade volumes:

• The merchandise trade gap surprised by narrowing more than expected in November with exports gaining .7% and imports declining 1.3%; expect fourth-quarter GDP estimates to increase, further reducing recession probabilities in 2020
• World trade volumes are a strong proxy for US multinational companies' overseas profits; early indications suggest the downside in world trade volumes risks manifesting in downside to U.S. foreign profits as early as the upcoming fourth quarter earnings season
• World trade volumes will need to gain momentum after the mid-month trade truce signing to render the current 'less bad' data 'strong'; South Korean December exports validate the 'less bad' meme with semiconductor sales down only 17.7% YoY, the best in eight month

"Honey, do these jeans look good on me?" Show of hands, gentlemen, how many of you have been on the receiving end of this loaded question? Let's scan the room...uh huh...yeah...that's what we thought. All of you. When your better half has lobbed this conspicuous yes-or-no question in your direction without warning, it is our hope that you took a moment to digest the inquiry and chose your response wisely. Because there is only one right answer - unless you like sleeping on the couch, boys. This decade and the one to come, the answer is always 'yes.'

Beauty is and always has been in the eyes of the beholder. This cliché applies equally to the U.S. economy. Consider Monday's advance report on the U.S. goods trade balance for November. The merchandise trade gap narrowed to $63.2 billion, much more than the $68.7 billion forecasted, catching every economist surveyed by Bloomberg off guard.

Econ 101 math acts as a reflex for upgrades to U.S. growth numbers. In November's case, it was a 0.7% gain in exports combined with a 1.3% drop in imports. QI's favored GDP trackers at Macroeconomic Advisers proceeded to raise their fourth-quarter growth estimate to 2.5%, well north of the consensus'1.6%. Note that only two of the 61 economists Bloomberg surveys had GDP pegged at 2.5% or higher. Today, the entire distribution will shift right, further reducing recession probabilities.

Does the November trade data look good on fourth-quarter GDP? The answer is a resounding 'yes.'

For perspective, as discussed in past Feathers, declining imports reflect weakness, not strength, in domestic demand. The November import data put the quarter-over-quarter annualized rate (blue line) at a -15.2% through the quarter's first two months, worse than any quarter in the 2015-16 industrial recession and on par with the Great Recession.

Investors will nonetheless cheer GDP being upgraded. World trade figures (the sum of exports plus imports depicted on today's orange line), lag U.S. data by one month, but show a relapse underway in the fourth quarter. After three straight quarterly contractions from 2018's fourth quarter to 2019's second quarter, the third-quarter bounce was not sustained as 2019 drew to a close.

The fresh U.S. advance trade report reinforces the downside risk for November's world trade volume due out in the next few weeks. Total U.S. goods trade (red line and also the aggregate of exports plus imports) is declining at a 10.9% quarter-over-quarter annualized rate through the quarter's first two months, a fifth consecutive contraction and a cycle low. Closing the circle, goods exports (yellow line) are running at a -4.0% annualized quarterly rate, their fifth drop in the last six quarters.

World trade volume proxies global economic activity and provides a useful benchmark for U.S. multinational profits earned overseas. Recall from Tuesday's Feather that all of Corporate America's $130 billion profit gain from year-end 2015 through 2019's third quarter was accounted for by higher foreign earnings. We've illustrated the level of U.S. foreign corporate profits in the green shaded area above. Since the 1991 inception of the world trade series, the correlation with foreign earnings is 0.96 (for levels only).

Foreign earnings accounted for a cycle-high 26.2% of total U.S. corporate profits in 2019's third quarter. A peaking foreign profit share follows a consistent late business cycle pattern. The rollover in world trade suggests we'll see a hit to foreign profits as soon as the upcoming fourth quarter earnings season.

In the meantime, with a phase one trade deal set to be signed in 13 days and a bottoming in new export orders from both IHS Markit and ISM, the short-term view for investors is encouraging, at least in qualitative fashion.

As for the quantitative, we'll need better than 'less bad' to sustain the euphoria. South Korea, Asia's fourth-largest economy and the first major market to report trade figures each month, is a case in point. On Wednesday, the global bellwether reported that December exports fell 5.2% from a year earlier, besting the forecasted 6.0% decline and nearly half the past six months' average rate of decline.

Most encouragingly, exports to China, which takes in a fourth of what South Korean exports, grew by 3.3%, the first plus-sign in 14 months. Finally, overseas sales of semiconductors, the country's biggest export only fell 17.7% year-over-year, the shallowest decline in eight months. Today's parade of global PMI releases will shed further light, especially the forward-looking backlogs indexes.

The reliance on foreign profits to prop up corporate income in recent years means the last vestige of fundamental support to the U.S. stock market is at risk. Ergo, a sustained turnaround in world trade would begin to justify valuations as opposed to record rates of Fed money printing and GDP math that flatters growth for the wrong reasons.