Thursday, May 31, 2018

Stocks Lower into Afternoon on Trade War Fears, Emerging Markets Debt Angst, Oil Decline, Retail/Telecom Sector Weakness

 Broad Equity Market Tone:
  • Advance/Decline Line: Modestly Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 15.3 +2.5%
  • Euro/Yen Carry Return Index 132.01 -.17%
  • Emerging Markets Currency Volatility(VXY) 9.29 unch.
  • S&P 500 Implied Correlation 39.34 +.28%
  • ISE Sentiment Index 80.0 -37.5%
  • Total Put/Call 1.13 +15.3%
  • NYSE Arms 1.14 +120.60%
Credit Investor Angst:
  • North American Investment Grade CDS Index 66.55 +1.17%
  • America Energy Sector High-Yield CDS Index 377.0 -.05%
  • European Financial Sector CDS Index 86.61 +.38%
  • Italian/German 10Y Yld Spread 245.25 -9.25 basis points
  • Asia Pacific Sovereign Debt CDS Index 12.07 -2.78%
  • Emerging Market CDS Index 172.13 +3.65%
  • iBoxx Offshore RMB China Corporate High Yield Index 150.11 +.09%
  • 2-Year Swap Spread 26.0 +1.5 basis points
  • TED Spread 39.25 unch.
  • 3-Month EUR/USD Cross-Currency Basis Swap -11.75 +1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 70.98 -.34%
  • 3-Month T-Bill Yield 1.91% unch.
  • Yield Curve 41.75 -2.0 basis points
  • China Iron Ore Spot 65.0 USD/Metric Tonne +.70%
  • Citi US Economic Surprise Index 11.10 +3.2 points
  • Citi Eurozone Economic Surprise Index -91.40 +4.2 points
  • Citi Emerging Markets Economic Surprise Index -6.1 +5.2 points
  • 10-Year TIPS Spread 2.09 +1.0 basis point
  • 100.0% chance of Fed rate hike at August 1 meeting, 100.0% chance at September 26 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -99  open in Japan 
  • China A50 Futures: Indicating -31 open in China
  • DAX Futures: Indicating +21 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my biotech/tech/medical sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:
  •   Large-Cap Value -.5%
Sector Underperformers:
  • 1) Oil Service -2.3% 2) Foods -1.6% 3) Telecom -1.4%
Stocks Falling on Unusual Volume: 
  • CHMI, GLNG, DLTR, CLSD, BOX, DB, MMSI, GMLP, SWIR, DG, CRSP, CARS, GES, KORS, ICPT, CMCM, MU, THO and CMD
Stocks With Unusual Put Option Activity:
  • 1) DLTR 2) PVH 3) CIEN 4) ANF 5) EXPR
Stocks With Most Negative News Mentions:
  • 1) QTM 2) SHLD 3) ICPT 4) CORT 5) MU
Charts:

Bull Radar

Style Outperformer:
  • Large-Cap Growth +.2%
Sector Outperformers:
  • 1) Social Media +1.2% 2) Software +.9% 3) Education +.8%
Stocks Rising on Unusual Volume:
  • MDGL, KEYS, TLYS, NGL, BCO, GM, KIRK, BURL, QSII, CBAY, AAOI, TECD, LIVN, CBPO, LXRX, STAY, IRWD, TSRO, SNP, CRH, I, MOMO, RYTM, PVH, SPTN, NGL, IMGN, QSII, SMTC, SNAP, CDNA, X, TSRO, ADI, IMMR and ENLK
Stocks With Unusual Call Option Activity:
  • 1) RUN 2) XLNX 3) AKS 4) GM 5)GM
Stocks With Most Positive News Mentions:
  • 1) GM 2) TECD 3) BURL 4) ADI 5) SMTC
Charts:

Morning Market Internals

NYSE Composite Index:

Wednesday, May 30, 2018

Thursday Watch

Night Trading 
  • Asian equity indices are +.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 76.75 +1.25 basis points. 
  • Asia Pacific Sovereign CDS Index 12.5 unch.
  • Bloomberg Emerging Markets Currency Index 71.21 -.02%.
  • FTSE 100 futures +.37%.
  • S&P 500 futures -.09%.
  • NASDAQ 100 futures -.07%.
Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:
  • (AEO)/.22
  • (BURL)/1.09
  • (CIEN)/.30
  • (DG)/1.39
  • (DLTR)/1.23
  • (DCI)/.52
  • (PERY)/.69
  • (SHLD)/-1.51
  • (TECD)/1.47
After the Close:
  • (COST)/1.68
  • (GME)/1.37
  • (LULU)/.46
  • (ULTA)/2.48
  • (VMW)/1.15
  • (WDAY)/.26
Economic Releases
7:30 am EST
  • Challenger Job Cuts YoY for May. 
8:30 am EST
  • Personal Income for April is estimated to rise +.3% versus a +.3% gain in March.
  • Personal Spending for April is estimated to rise +.4% versus a +.4% gain in March. 
  • The PCE Core MoM for April is estimated to rise +.1% versus a +.2% gain in March.
  • Initial Jobless Claims for last week are estimated to fall to 228K versus 234K the prior week.
  • Continuing Claims are estimated to fall to 1733K versus 1741K the prior week.
9:45 am EST
  • Chicago Purchasing Manager for May is estimated to rise to 58.3 versus 57.6 in April.
10:00 am EST
  • Pending Home Sales MoM for April is estimated to rise +.4% versus a +.4% gain in March.
11:00 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -137,200 barrels versus a +5,778,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -870,800 barrels versus a +1,883,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,192,300 barrels versus a -951,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.74% versus a +.7% gain prior.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China PMI report, Eurozone CPI report, weekly Bloomberg Consumer Comfort Index, RBC Auto Tech: Connected/Autonomous/Shared/Electric Conference, Keefe Bruyette Woods Mortgage Finance/Asset Mgmt Conference, Ladenburg Thalmann Tech Forum and the (UNP) investor day could also impact trading today.
BOTTOM LINE:  Asian indices are mostly 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 mixed.  The Portfolio is 75% net long heading into the day.

Stocks Surging into Afternoon on Less European/Emerging Market/US High-Yield Debt Angst, Oil Gain, Economic Optimism, Energy/Financial Sector Strength

 Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Almost Every Sector Rising
  • Volume: Around Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 14.9 -12.4%
  • Euro/Yen Carry Return Index 132.19 +1.16%
  • Emerging Markets Currency Volatility(VXY) 9.38 -.21%
  • S&P 500 Implied Correlation 38.31 -3.26%
  • ISE Sentiment Index 164.0 +56.2%
  • Total Put/Call 1.02 -5.56%
  • NYSE Arms .50 -73.61%
Credit Investor Angst:
  • North American Investment Grade CDS Index 65.13 -2.58%
  • America Energy Sector High-Yield CDS Index 380.0 +.41%
  • European Financial Sector CDS Index 87.54 -3.5%
  • Italian/German 10Y Yld Spread 254.5 -36.0 basis points
  • Asia Pacific Sovereign Debt CDS Index 12.39 unch.
  • Emerging Market CDS Index 164.17 -2.76%
  • iBoxx Offshore RMB China Corporate High Yield Index 150.0 -.07%
  • 2-Year Swap Spread 24.50 +.5 basis point
  • TED Spread 39.25 -3.75 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -12.75 +6.5 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 71.17 +.71%
  • 3-Month T-Bill Yield 1.91% +3.0 basis points
  • Yield Curve 43.75 -.25 basis point
  • China Iron Ore Spot 64.30 USD/Metric Tonne -.58%
  • Citi US Economic Surprise Index 7.90 -3.3 points
  • Citi Eurozone Economic Surprise Index -95.60 -2.5 points
  • Citi Emerging Markets Economic Surprise Index -11.3 -1.3 points
  • 10-Year TIPS Spread 2.08 +2.0 basis points
  • 100.0% chance of Fed rate hike at August 1 meeting, 100.0% chance at September 26 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +252  open in Japan 
  • China A50 Futures: Indicating +49 open in China
  • DAX Futures: Indicating +31 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my biotech/tech/medical/industrial/retail sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  • Market Exposure: Moved to 75% Net Long