Thanks for reading my Diary today.

Outta here to spend time with family.

Enjoy the evening.

Be safe.

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* Where it stops, no one knows

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I have covered my entire short (SPY) and (QQQ) common - converting the position into longer-dated short calls with a touch of premium - with no change in exposure on a delta adjusted basis.

12/27/23, 13:06:00 PM ET

skeptcl

Slightly better than expected

Auction Out

Treasury Auction Results

• $58 bln 5-year Treasury note auction:

• Auction results:
• Average results of previous 12 auctions:

• High yield: 3.801% (When-Issued: 3.815%)
• Bid-to-cover: 2.50
• Indirect bid: 70.6%
• Direct bid: 15.4%

• High yield: 4.091%
• Bid-to-cover: 2.52
• Indirect bid: 68.3%
• Direct bid: 18.4%

Yields on Treasuries continue to plummet today - providing terra firma for equities: 

* 2 Year Note -5 bps

* 10 Year Note -9 bps

* Long Bond -8 bps

* At 1:25 pm

* The ODTE tail wags the market dog...

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Repeating for emphasis: 

* At the end of 2021 the herd/consensus was bullish. 2022 was a disaster in the markets.

* At the end of 2022 (following the twelve month downtrend) the herd/consensus was bearish. Stocks ripped higher in 2023.

* Today, at the end of 2023 (following the twelve month uptrend) the herd/consensus is bullish. 

Instead of recency bias, perhaps we should look at wildly bullish sentiment indicators (e.g., Fear/Greed, put/call ratios, surveys). 

Or even more relevant, we might look at signs of speculation that typically are associated with market tops - like (MARA) and (COIN) ?

This morning's equity market seems to be benefitting once again from seasonal bullish updrift and that is part of the Santa Claus rally.

Yields are not a heavy influence nor are they any kind of negative and that is a very mild benefit to the bulls.

They are also cheered by the fact that regional and community banks continue to move up, helping to further the broadening of the market and keeping the breadth positive.

Bulls have control of the ball. Let's see if they want to move it along and the biggest problem would be to fumble it away, but as I say, it looks like a kind of internal technical drift.

The geopolitical headlines, particularly around the Red Sea are simmering up. The Houthis seem to be benefitting from the fact that Saudi Arabia has asked the U.S. to be easy in the counter strikes less the Houthis go all out on the Saudi refiners and the like. That, it is thought, gives the Houthis a sense that they can be a little more aggressive on their side without fear of major retaliation from the U.S.

In any case, it is not having an immediate impact on the market nor is it forcing a kind of flight to safety.

In the meantime, stay close to the newsticker and please stay safe.

Arthur

11:00 am sector performance:

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At 10:40 am:Breadth

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Biggest Movers

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Heat Map

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I'm on a research call that began at 11 am.

Radio silence for about 45 minutes.

I have covered my (PFE) short for a small gain.

I pressed my Apple (AAPL) and Microsoft (MSFT) shorts.

I continue to pick at big pharma - (BMY) and (JNJ) .

A tradable selloff might be in front of us now.

Ludacris.

From Arthur Cashin: 

There were no earthquakes on Wall Street during Tuesday's post-Christmas session, but there was some rumbling and the herd of bulls kept moving as the year-end Santa Claus rally looked to be in place. Nothing truly thunderous but, nevertheless, a pretty solid commitment across the board. We mentioned some of that in this late morning update:

12.26.23 LATE MORNING UPDATE - The market is trading in a semi-holiday pattern with relatively light volume, and from a rather narrow range. We'll look to see if they decide to try to press the bet as we move into the afternoon, but for now they are undisturbed by anything geopolitical and somewhat unstimulated from what they are seeing here. The yields are not having much of an effect on the equity markets. So, stay alert and stay safe.

The volume did stay relatively light, but the bulls were pretty much unflinching as they took them through midday and hung on into the afternoon. They were helped from several quarters. Energy stocks moved up as the oil prices moved higher. More threats about the Red Sea shipping put a bid under oil and the energy sector. It was straight out of the late-Yale Hirsch's handbook about the Santa Claus rally being in the final five trading days of the year and into the first couple of days of the next year. Tuesday's action looked like it came right out of that handbook. We will have to wait and see if they decide to continue on. Global equity markets were pretty much closed or in holiday-mode. We will have to wait and see how they look today.

Let's start there. Overnight, global equity markets are attempting to readjust after the semi-holiday session that many of them had yesterday and, once again, we beg your indulgence.

My crystal set is not working perfectly. So, take some of these estimates with a large grain of salt. Japan closed up about 380 points in the Dow. Mainland China saw gains more modest, up about 180 Dow points and Hong Kong, which reopened after Boxing Day with a bit of a roar was up about 500 Dow points. India closed up about 220 points in the Dow. As we go to press, European markets are showing relatively modest gains. Right now, London is trading up the equivalent of about 170 Dow points. Germany is even more modest, trading up about 150 Dow points and Paris is more modest still, up about 40 Dow points.

The U.S. calendar is also quite modest as befits it being a holiday season. At midmorning, we get the Richmond Fed Index and in late morning, we get the Survey of Business Uncertainty and very late morning, we get result of a two-year floating rate auction and at 1:00 p.m., we get to see how the five-year note auction went. So, as we say, rather holiday-like. That having been said, things in the Red Sea appear to be heating up.

There was a rather large multiple drone attack on some U.S. warships, which they apparently successfully fended off. It is not spilling into a major change in things like oil, although the government announced that they will be buying back some oil to start to refill the Strategic Petroleum Reserve.

I guess they want to buy them quite at the bottom and decided to step in now that oil has begun to tick up. I guess they are afraid the train may leave the station without them. So, you know the current drill. With geopolitics being important, stay close to the newsticker. Keep your seatbelt fastened.

Stay very nimble and alert, but most of all, try to stay safe and see if the Jolly Old Elf can keep the Santa Claus Rally steaming along.

At 8:57 am:

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Upside

- (FWBI) +115% (announces streamlining of clinical pipeline with non-binding term sheet to sell Niclosamide IBD Program)
- (CYTK) +55% (announces positive result from SEQUOIA-HCM, the Pivotal Phase 3 Clinical Trial of Aficamten in patients with Obstructive Hypertrophic Cardiomyopathy)
- (HOTH) +40% (announces expansion of FDA cleared First-In-Human Clinical Trial For Cancer Patients of HT-001 at University of Miami)
- (CHRS) +35% (announces FDA approval of UDENYCA ONBODY, a novel delivery system for pegfilgrastim-cbqv)
-NKGN +33% (announces clearance of clinical trial application by Health Canada for SNK01 NK Cell Therapy to treat Alzheimer's Disease)
- (OPT) +21% (to receive $35M commitment and additional $50M funding)
- (RPHM) +15% (Tang Capital discloses nearly 10% stake, submits non-binding takeover proposal at $1.80/shr plus CVR)
- (MTNB) +9.7% (demonstrates in vivo Biological Activity and Disease Improvement in Two Inflammatory Disease Models with Oral LNC-Delivered Small Oligonucleotides)
- (NMTC) +9.6% (COO Volker discloses buy of 75K shares at $1.40/shr on 12/21)
- (FUSN) +8.5% (Raymond James Raised FUSN to Strong Buy from Outperform, price target: $15)
-ACNT +8.4% (announces sale of Specialty Pipe & Tube for $55M in all-cash deal)
- (XAIR) +8.0% (Phase 1 Study Clears Cohort 1 in Patients with Advanced Relapsed or Refractory Unresectable Primary or Metastatic Cutaneous or Subcutaneous Solid Tumors)
- (BTBT) +5.2% (announces to double size of its bitcoin mining fleet during 2024)

Downside

- (IOVA) -22% (US FDA placed a clinical hold on the IOV-LUN-202 trial (non-small cell cancer) due to reported Grade 5 (fatal) serious adverse event)
- (NTES) -3.9% (weakness from China video game regulator rules)
- (HOLI) -2.1% (announces end of "Go-Shop" period under Merger Agreement with Ascendent Capital Partners)

I took a small trading short rental on the NY Times suit against (MSFT) .

Here's what we're anticipating for 2024.

Crude oil takes a drop in the last 30 minutes:

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* Happy holidays to all as we move to the top of 2023's home stretch with only a furlong to go!

* Investor sentiment grows more stretched to the optimistic side -- the S&P Short-Range Oscillator is now way overbought (at 7.57% v. 6.54%) as favorable economic and market outcomes remain the consensus view:

"I saw a beggar leaning on his wooden crutch

He said to me, "You must not ask for so much"

And a pretty woman leaning in her darkened door

She cried to me, "Hey, why not ask for more?"

- Leonard Cohen, "Bird on the Wire" 

* 54 years ago this week... I was there, but nothing seemed to change, the bad times stayed the same:

"Sometimes I feel, sometimes I feel,
Like I've been tied to the whippin' post.
Tied to the whippin' post, tied to the whippin' post.
Good Lord, I feel like I'm dyin'"

- Allman Brothers, "Whipping Post" 

"The stock market will do whatever it has to do to embarrass the greatest people to the greatest extent possible."

- Wally Deemer

"Workin' on our night moves Trying to lose the awkward teenage blues Workin' on our night moves In the summertime And oh the wonder Felt the lightning And we waited on the thunder Waited on the thunder."

- Bob Seger, "Night Moves"

This daily Futures feature is like inside baseball. I try to show you and write about what I believe thoughtful hedge fund managers are looking at when they awake -- let's call it our normal routine -- setting the stage for their strategy for the day. The market is a complicated mosaic and the more info you have, the better trader and investor you will be!

The market (and money) never sleeps -- and neither do I, it appears! I have previously described the importance that overnight futures trading hold for me here. It is a guidepost to my strategy in the regular trading session. Moreover, the overnight/early morning futures hold opportunities as they are (1) inefficient, though liquid and (2) it seems fear and greed are often exaggerated outside the regular trading session. I frequently try to capture those efficiencies by trading actively both in the pre- and after-market sessions.

Here are brief observations I wanted to highlight and provide a summary of overnight price movements in various asset classes:

* Stock futures rebounded throughout most of the overnight session, though the range was remarkably narrow. S&P futures peaked at +5 and bottomed at -3. Nasdaq futures peaked at +28 and bottomed at -12. At 6:38 a.m. ET, S&P futures were -1 and Nasdaq futures were +2.

And...

* Commodities are mixed to lower. Brent crude is down $0.54 to $80.53.

* The S&P Short-Range Oscillator remains largely overbought at 7.57% vs. 6.54%

* The VIX increased to 13.02 (+0.03).

* The U.S. dollar is stronger against the yen but lower (for second day in a row) vs. the sterling and euro.

* Treasury yields are little changed overnight; as I've mentioned, we may be at the point that lower rates will hurt equities (we will see)! The 2-Year Treasury yield is unchanged at 4.287% and the 10-Year is -2 basis points at 3.87%. Over there, the yield on the 10-Year U.K. Gilt bond is -5 basis points.

* Overnight, the inversion of the 2s/10s Treasuries curve is at -42. Real rates remain quite elevated; the 10-year is still about 1.7 (again in real terms).

* Gold is up $9 at $2,079 after the recent spate of volatility.

* Bitcoin is still on a roll, +$1,000 to $43.1k.

Here is a synopsis of some of my columns I believe were important, or in the event you were out for the day and/or did not read my Diary. The principal intent is to review the logic of my market moves and other factors:

Merry Christmas Comments on Real Money Pro

Longs and Shorts, Updated

Meet Me in Luckenbach

No Inflation?

Chart of the Day -- Eight Is Great (from BeSpoke)

Here were yesterday's trades:

* Purchased (BMY) .

* Shorting More of 4 Stocks

Shorting more American Express (AXP) , Blackstone (BX) , Apollo Global (APO) and KKR & Co. (KKR) .

In the early going -  as has become my custom over the last 10 days - I shorted more (SPY) and (QQQ) at $475.62 and $410.90, respectively.