Bull Radar

Style Outperformer:

• Mid-Cap Value (+2.79%)

Sector Outperformers:

• Disk Drives (+5.50%), Oil Tankers (+5.25%) and Steel (+5.22%)

Stocks Rising on Unusual Volume:

• PT, MMR, IVN, SGY, BP, NTAP, ORBK, MSFT, RUE, COST, EXXI, QSFT, HIT, PAY, JKK, WBD, TIF, JAS, IGW, GCO and ABM
  

Stocks With Unusual Call Option Activity:

• 1) RF 2) TIF 3) RMBS 4) RRI 5) NOK
  

Stocks With Most Positive News Mentions:

• 1) TIF 2) HJZ 3) COST 4) MSFT 5) NTAP

Thursday Watch

Night Trading

• Asian indices are -.50% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 155.50 -5.0 basis points.
• S&P 500 futures +.55%.
  
• NASDAQ 100 futures +.54%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (NOVL)/.07
• (OVTI)/.17
• (JCG)/.57
• (GES)/.49
• (BCSI)/.40
• (COST)/.66
• (HNZ)/.59
• (BIG)/.67
• (TIF)/.37

Economic Releases
8:30 am EST

• 1Q GDP is estimated to rise +3.4% versus a prior estimate of a +3.2% gain.
• 1Q Personal Consumption is estimated to rise +3.8% versus a prior estimate of a +3.6% gain.
• 1Q GDP Price Index is estimated to rise +.9% versus a prior estimate of a +.9% gain.
• 1Q Core PCE is estimated to rise +.6% versus a prior estimate of a .6% gain.
• Initial Jobless Claims for last week are estimated to fall to 455K versus 471K the prior week.
• Continuing Claims are estimated to fall to 4613K versus 4625K prior.
  

Upcoming Splits

• (IDSA) 3-for-2
  

Other Potential Market Movers

• The Fed's Bullard speaking, $31 Bln 7-Year Treasury Note Auction, weekly EIA natural gas inventory report, Citi Healthcare Conference, UBS Oil/Gas Conference, Barclays Communications/Media/Technology Conference, (BRS) analyst meeting, (NEM) investor day, (NVLS) Q2 Mid-Quarter Update and the (AEL) investor day could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and automaker shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Reversing Lower into Final Hour on Rising Sovereign Debt Angst, Technical Selling, More Shorting, North Korea Worries

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Above Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 32.91 -4.91%
  
• ISE Sentiment Index 103.0 +10.75%
  
• Total Put/Call .99 -13.16%
  
• NYSE Arms 1.06 +74.26%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 121.13 bps -5.94%
  
• European Financial Sector CDS Index 158.10 bps -.25%
  
• Western Europe Sovereign Debt CDS Index 147.33 bps +1.96%
  
• Emerging Market CDS Index 292.05 bps -5.06%
  
• 2-Year Swap Spread 46.0 -8 bps
  
• TED Spread 38.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .16% +1 bp
  
• Yield Curve 238.0 -2 bps
  
• China Import Iron Ore Spot $142.70/Metric Tonne -.56%
  
• Citi US Economic Surprise Index +30.30 +5.3 points
  
• 10-Year TIPS Spread 1.96% +7 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -12 open in Japan
• DAX Futures: Indicating -5 open in Germany

Portfolio:

• Slightly Higher: On gains in my Medical and Retail long positions
  
• Disclosed Trades: Added to my (IWM)/(QQQQ) hedges and added to my (EEM) short
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 reverses morning gains on good volume despite mostly positive economic data and overseas stock gains. On the positive side, Airline, Road&Rail, HMO and Oil Tanker stocks are strongly outperforming, rising 1.5%+. Small-cap shares are also strongly outperforming. The Spain sovereign cds is falling -7.97% to 225.43 bps. On the negative side, Education, Telecom, Software, Retail, Restaurant, Drug, Biotech and Networking shares are especially weak, falling 1.0%+. The rise in the Western Europe sovereign debt cds index, despite this morning's equity rally, was a large negative. As well, the Japan sovereign cds is rising +8.4% today to 98.17 bps and the euro financial sector cds index is slightly higher. (MSFT) is breaking down further on heavy volume, which is another headwind for the NASDAQ. I expect to see Asian shares come under pressure tonight after our reversal lower this afternoon. I expect US stocks to trade mixed-to-lower into the close from current levels on another disorderly decline in the euro, North Korea worries, more shorting, technical selling, tax hike worries and regulatory concerns.

Bear Radar

Style Underperformer:

• Large-Cap Value (+1.31%)

Sector Underperformers:

• Restaurants (+.22%), Drugs (+.23%) and Retail (+.23%)

Stocks Falling on Unusual Volume:

• DWA, MICC, TEVA and KB
  

Stocks With Unusual Put Option Activity:

• 1) VRTX 2) FFIV 3) OC 4) ECA 5) RL
  

Stocks With Most Negative News Mentions:

• 1) BP 2) ZLC 3) TOL 4) AIG 5) BHP
  

Bull Radar

Style Outperformer:

• Small-Cap Growth (+2.48%)

Sector Outperformers:

• Airlines (+4.46%), Coal (+3.40%) and Homebuilders (+3.25%)

Stocks Rising on Unusual Volume:

• NANO, CRUS, TXT, FO, IVN, PBR, F, PCAR, WGO, VRTX, APKT, NAFC, CETV, HAWK, ACOM, MFLX, BEXP, FARO, PCAR, ASML, AIXG, SNDK, ATMI, CNQR, VECO, ODC, CCH, VIP and FIS
  

Stocks With Unusual Call Option Activity:

• 1) SNV 2) GENZ 3) CY 4) BBD 5) AEO
  

Stocks With Most Positive News Mentions:

• 1) BA 2) LMT 3) HRS 4) WFR 5) DUK

Wednesday Watch

Evening Recommendations
Citigroup:

• Reiterated Buy on (AZO), raised estimates, boosted target to $224.
• Reiterated Buy on (CVS), target $40.
• Reiterated Buy on (JCP), target $40.
  

Night Trading

• Asian indices are +.25% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 160.50 +2.5 basis points.
• S&P 500 futures +.08%.
  
• NASDAQ 100 futures +.18%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TOL)/-.20
• (AEO)/.17
• (DBRN)/.57
• (NTAP)/.43
• (RUE)/.19
• (JAS)/.44
• (PAY)/.26
• (FRED)/.20
  

Economic Releases
8:30 am EST

• Durable Goods Orders for April are estimated to rise +1.3% versus a -1.3% decline in March.
• Durables Ex Transports for April are estimated to rise +.5% versus a +2.8% gain in March.
  

10:00 am EST

• New Home Sales for April are estimated to rise to 425K versus 411K in March.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +250,000 barrels versus a +162,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +300,000 barrels versus a -294,000 barrel decline the prior week. Distillate inventories are expected to rise by +500,000 barrels versus a -979,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.03% versus a -.48% decline the prior week.

Upcoming Splits

• (EW) 2-for-1
  

Other Potential Market Movers

• The Fed's Lacker speaking, Fed's Evans speaking, weekly MBA mortgage applications report, $40 Bln 5-Year T-Note Auction, Barclays Capital Communications/Media/Tech Conference, Citi Healthcare Conference, BofA Merrill Services Conference, Janney Montgomery Scott Consumer Conference, Stephens Spring Investment Conference, UBS Oil/Gas Conference, Kaufman Cloud Computing Conference, (ITRI) Investor Day, (NWL) Analyst Day, (VQ) Analyst Meeting, (ARW) Analyst Meeting, (FSR) Investors Day, (SFG) Investor Meeting, (TMO) Analyst Meeting, (NTRS) Investor Conference, (YHOO) Investor Day and the (EW) Analyst Reception could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and shipping shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.