Bull Radar

Style Outperformer:

• Small-Cap Growth +.55%

Sector Outperformers:

• 1) Telecom +3.54% 2) Gaming +1.87% 3) Hospitals +.95%
  

Stocks Rising on Unusual Volume:

• WIN, CTL, CGNX, SNCR, IPGP, GHL, CVLT, MDSO, IDTI, PCYC, LVLT, ARWR, UTHR, GHL, MAS, HLS, CVC, TWTC and IRBT

Stocks With Unusual Call Option Activity:

• 1) ETFC 2) DD 3) DLTR 4) ODP 5) MHR
  

Stocks With Most Positive News Mentions:

• 1) WM 2) DRI 3) MLM 4) T 5) TWTR
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg: 

• New Sanctions Readied by U.S., EU as Russia Prepares. The U.S. and European Union may move as soon as today to impose tougher sanctions against Russia as Vladimir Putin’s government sought replacements for defense imports and considered restrictions on some agriculture products from America and its allies. The new sanctions are aimed at “key sectors” of Russia’s economy -- finance, defense and energy -- and are being imposed in the face of Putin “doubling down” in support of separatists battling the government of Ukraine, U.S. Deputy National Security Adviser Tony Blinken said yesterday. “The longer this goes on, there is the risk of further outrageous actions by the separatists or by Russia that deepen the international crisis,” Blinken said. “So there’s a need to take further action now to convince Russia to change course.”  

• Russia Eyes Banning U.S. Chicken And Some European Fruit. Facing tougher sanctions over its incursion into Ukraine, Russia announced today that it may ban imports of chicken from the U.S. and fruit from Europe and is investigating McDonald’s Corp. (MCD) cheese for safety. While Russia and the U.S. have long sparred over agricultural trade, today’s actions fueled speculation they could be retaliatory. The 28-nation European Union and the U.S. plan to announce as soon as this week additional actions to punish Russian President Vladimir Putin’s government. 

• Microsoft(MSFT) China Target of Potential Probe, Sina Reports. Chinese regulators met with managers at Microsoft Corp. (MSFT)’s offices in four cities including Beijing and Shanghai in preparation for a potential probe into whether the company engaged in monopolistic practices, Sina.com said.

• Asian Stocks Gain as Bonds Drop Before Fed; Oil Declines. Asian stocks rose, with the regional index advancing a third day to extend its six-year high, while bonds followed U.S. Treasuries lower before the Federal Reserve starts meeting today. Oil fell as soybeans climbed. The MSCI Asia Pacific Index added 0.1 percent by 9:53 a.m. in Tokyo, as Japan’s Topix (TPX) index and the Kospi in Seoul climbed at least 0.2 percent.

• Gold Holds Above $1,300 Before Fed Meeting Amid Ukraine Tension. Gold for immediate delivery traded at $1,304.59 an ounce by 9:28 a.m. in Singapore from $1,304.05 yesterday, according to Bloomberg generic pricing.

Wall Street Journal: 

• Setbacks Complicate Putin's Ukraine Strategy. Pro-Russia Rebels Suffer Setbacks as West Readies Tougher Sanctions; Kremlin Prepares for Deeper International Isolation. Pro-Russia rebels in eastern Ukraine saw some of their worst battlefield setbacks in weeks Monday as the West agreed on tougher sanctions aimed at forcing Moscow to cut support for the militias—posing fresh challenges on two fronts for Russian President Vladimir Putin. Ukrainian forces were advancing from the north and south in an effort to cut off Donetsk, one of two remaining separatist strongholds, from fellow rebels in the... 

• Israel Says It Is Escalating Gaza Campaign. Defies International Pressure for Immediate Cease-fire. Israel's leaders said they were escalating the military campaign in Gaza and told the country to prepare for a prolonged operation, defying international demands for an immediate cease-fire after Hamas militants broke a Muslim holiday lull. The military chief of staff, Lt. Gen. Benny Gantz, said Israel's assault on Gaza's Hamas rulers was being "intensified" after three weeks of fighting that have cost more than 1,100 lives.
  

• Electric Utilities Get No Jolt From Gadgets, Improving Economy. Electricity Sales Anemic for Seventh Year in a Row. 

Fox News:

• US, Israel clash over criticism of Kerry. The State Department publicly battled a barrage of Israeli criticism on Monday over Secretary of State John Kerry’s efforts to secure a cease-fire with Hamas, in the latest signs of strain between the Obama administration and Israeli Prime Minister Benjamin Netanyahu’s government. Administration officials spoke in unusually blunt terms in defending Kerry, accusing some in Israel of launching a "misinformation campaign" against the top American diplomat.

CNBC:

• Why the Fed could start raising rates sooner than you think.

• Herbalife(HLF) reports earnings of $1.55 a share vs. estimate of $1.56.

Zero Hedge: 

• The Shocking Reason Putin Isn't Worried About The $50 Billion Yukos Ruling.

• NYSE Margin Debt Storms Back To All Time Highs. (graph)

• Mapping The Global Contagion From Portugal's Systemic Banking Crisis.

• Peak IPO. (graph)

• High-Yield Credit Hits 10-Week Wides As Stocks Bounceback To Unch. (graph)

• Most Transparent Insider Trading Congress Ever Tells SEC To Shove it.

• Japanese Unemployment Jumps To Worst In 2014 As Household Spending & Retail Sales Drop For 3rd Month. (graph)

• Is This The Chart That Has High-Yield Investors Running For The Hills? (graph)

• US May Send Military Aid To Ukraine; Accuses Russia Of Violating Nuclear Arms Treaty With ICBM Launch.

• Is This China's QE? (graph)

Business Insider:

• HAMAS LEADER: We Have No Current Plans To 'Coexist' With Israel.

• GARY SHILLING: Wall Street's Herd Will Be Disappointed.

Telegraph:

• IMF tax bombshell: its plans for higher VAT and a property raid are wrong. The IMF's suggestions for VAT would destroy any government that sought to implement them.

21st Century Business Herald:

• China to Start Nationwide Audit on Land Incomes. National Audit Office will start audit on land transfer incomes in 2008-2013 soon, citing a person close to the office. The audit will focus on local governments' non-compliant issues related to land incomes. The audit may bring pressure to property development or govt financing. The audit may affect trust, asset management and PE products related to property development or local government financing vehicles due to local governments' reliance on land incomes.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 102.0 -2.0 basis points.

• Asia Pacific Sovereign CDS Index 70.75 +.75 basis point.

• FTSE-100 futures +.09%.

• S&P 500 futures -.02%.

• NASDAQ 100 futures  -.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ACI)/-.49

• (AKS)/-.03

• (RAI)/.87

• (GLW)/.38

• (UTHR)/1.62

• (ETN)/1.12

• (MRK)/.81

• (PCAR)/.89

• (AGCO)/1.69

• (HCA)/1.37

• (IP)/.83

• (WYNN)/2.03

• (PFE)/.57

• (AET)/1.60

• (TRW)/2.12

• (UPS)/1.25

• (ITW)/1.20

• (TWTR)/-.01

• (AFL)/1.59

• (AXP)/1.38

• (AMGN)/2.06

• (IGT)/.27

• (NEM)/.19

• (BWLD)/1.20

• (ESRX)/1.22

• (X)/-.31

• (PNRA)/1.75

• (BXP)/1.33

• (APC)/1.30

• (RGR)/1.23

Economic Releases
9:00 am EST

• The S&P/CS 20 City MoM SA for May is estimated to rise +.3% versus a +.19% gain in April.

10:00 am EST

• The Consumer Confidence Index for July is estimated to rise to 85.5 versus 85.2 in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Industrial Production report, $35B 5Y T-Note auction, US weekly retail sales reports, Keefe Bruyette Community Bank Conference and the (MW) analyst 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 50% net long heading into the day.

Stocks Slightly Higher into Final Hour on Buyout Speculation, Diminishing Global Growth Fears, Short-Covering, Healthcare/Utility Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.59 -.79%

• Euro/Yen Carry Return Index 142.87 +.07%

• Emerging Markets Currency Volatility(VXY) 5.93 +.68%

• S&P 500 Implied Correlation 54.76 -1.76%

• ISE Sentiment Index 108.0 +22.73%

• Total Put/Call .93 -1.06%

• NYSE Arms 1.17 +15.44% 

Credit Investor Angst:

• North American Investment Grade CDS Index 59.22 -.59%

• European Financial Sector CDS Index 66.69 -1.19%

• Western Europe Sovereign Debt CDS Index 33.19 -1.72%

• Asia Pacific Sovereign Debt CDS Index 70.65 -.58%

• Emerging Market CDS Index 255.83 +4.40%

• China Blended Corporate Spread Index 302.25 +.52%

• 2-Year Swap Spread 20.75 +.5 basis point

• TED Spread 21.0 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -8.0 +.75 basis point

Economic Gauges:

• 3-Month T-Bill Yield .03% +1.0 basis point

• Yield Curve 198.0 -4.0 basis points

• China Import Iron Ore Spot $94.30/Metric Tonne +.75%

• Citi US Economic Surprise Index -20.70 +3.8 points

• Citi Emerging Markets Economic Surprise Index -.5 +.1 point

• 10-Year TIPS Spread 2.27 unch.

Overseas Futures:

• Nikkei Futures: Indicating +58 open in Japan

• DAX Futures: Indicating +25 open in Germany

Portfolio: 

• Slightly Higher: On gains in my retail/tech sector longs and index hedges

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:

• EU Moving With U.S. on More Russia Sanctions. The U.S. and European Union will act on stiffer sanctions against Russia as soon as this week as Vladimir Putin’s government is “doubling down” on its support for Ukrainian rebels, an Obama administration official said. The new sanctions by the EU are aimed at the Russian finance, defense and energy industries as well as Putin’s “cronies,” Deputy National Security Adviser Tony Blinken said. 

• Secret Tunnels Under Israel Reveal Threat From Gaza. Slipping into a tunnel under Israel’s southern border and heading toward the Gaza Strip, the scorching summer heat suddenly turns cooler and the boom of artillery fire above fades away. 

• Europe Stocks Decline as Investors Weigh Unrest, Earnings. European stocks fell for a second day as investors weighed unrest in Ukraine and the Middle East, and watched companies’ financial results. Wincor Nixdorf AG slid the most since May after the maker of automated teller machines posted third-quarter revenue that fell short of analysts’ estimates. Aberdeen Asset Management Plc (ADN) slid 5.3 percent after reporting a drop in assets under management. Ryanair Holdings Plc (RYA) added 2.7 percent after lifting its fiscal full-year profit goal as quarterly profit more than doubled. Reckitt Benckiser Group Plc rose 2.7 percent after saying it will spin off its pharmaceutical business. The Stoxx Europe 600 Index fell 0.2 percent to 341.34 at the close of trading after sliding as much as 0.7 percent and rising as much as 0.3 percent.

• Fed’s Fisher: Rates Too Loose for Too Long. (video)

• Buying on Dips Pays Most in Five Years as Stocks Rebound. Not since the bull market began has buying dips in the Standard & Poor’s 500 Index been a surer way of making money. Declines (SPX) in the benchmark gauge for American equity are lasting an average of 1.5 days in 2014, the shortest since at least 2009, according to data compiled by Bloomberg. Starting last year, returns on days after the index fell have averaged 0.13 percent, the highest since they were 0.38 percent in 2009.

• Memphis Cops Call in Sick in New Tactic to Stop Cuts. Police and firefighters in Memphis are calling in sick by the scores as a new Tennessee law kicks in requiring cities to stop shortchanging workers’ pensions. Their beef: Memphis’s plan to comply. Tennessee’s largest city, which for years has failed to save enough to support promised retirement checks, plans to make up that sum by eliminating retirees’ health insurance, which has fewer legal protections. At one point, 558 police officers stayed home, one fourth of the force, in a city that had the sixth-highest incidence of violent crime in the U.S. last year. At the end of last week, 131 were out.

Wall Street Journal:

• Fragile Gaza Truce for Muslim Holiday Breaks Down. Four People Killed in Israel by Mortar Shell.

• Ukraine Reports Heavy Fighting Around Malaysia Airlines Crash Site. Kiev Seeking to Cut Off Rebel Stronghold of Donetsk.

MarketWatch.com:

• Stock trader who called three crashes sees 20% collapse. Insight: Veteran investor expects bear market within 12 months.

CNBC:

• The Fed in denial.

• Fed up? Janet Yellen facing challenges from within.

• When everything tech is up and to the right.

ZeroHedge:

• Earnings Recovery? Europe Would Love Some Of That. (graph)

• The Case For A Bull Or Bear Market In Two Charts. (graph)

• LOCO IPO Soars To Insane 20x EBITDA Multiple. (graph)

• Pending Home Sales Tumble From Recovery Highs, Biggest Miss In 2014. (graph)

• US Services PMI Beats After Last Week's Manufacturing PMI Record Miss, Employment Plunges. (graph)

• China's Solution To “Property Companies Facing Huge Debt Burdens”: Much More Debt. (graph)

• "Reprehensible" Lloyds Bank Agrees To $105 Million Wristslap For Manipulating Libor.

• Spanish Bond Yields Tumble Below 2.5% - Lowest In History. (graph)

Business Insider: 

• The White House Is Furious At Israel’s Thrashing Of John Kerry.

• WHITE HOUSE TO RUSSIA: Prepare To Get Whacked By The Worst Sanctions Yet.

• Former Yale Professor Says Ivy League Schools Are Churning Out 'Zombies'.

• Africa's Most Populous Country On 'Red Alert' After Ebola Death In City Of 21 Million.

• POLL: Romney Would Beat Obama In Election Rematch.

• ZILLOW(Z) BUYS TRULIA(TRLA) FOR $3.5 BILLION.

• This Could Be The Busiest Week For IPOs Since August 2000.

• ART CASHIN: Three Things Worry Me Right Now.

NY Post:

• 2,500 Ground Zero Workers Have Cancer. More than 2,500 Ground Zero rescuers and responders have come down with cancer, and a growing number are seeking compensation for their illnesses, The Post has learned. The grim toll has skyrocketed from the 1,140 cancer cases reported last year.

Spiegel:

• EU Ministers May Decide on More Russian Sanctions Soon. EU foreign ministers will be able to make decisions on tougher sanctions for Russia "in the coming days," Frank-Walter Steinmeier, German foreign ministers, says in an interview.

Le Temps:

• Russia May Retaliate Against Sanctions, Chizhov Says. Russia reserves the right to respond to "hostile measures" in manner that will be "as strong," and "symmetrical," Vladimir Chizhov, Russia ambassador to European Union, says in an interview. Russia is not only considering retaliation measures, is also ready for them, Chizhov says.

Xinhua:

• China angered by U.S. protectionism. The Ministry of Commerce (MOC) announced on Monday that China is strongly dissatisfied with the United States for its anti-dumping and countervailing probes into Chinese exports of photovoltaic products.

China News Service:

• China Property Market May Face 2-3 Years Adjustment. Large number of housing units will enter the market after 2014 and result in oversupply, citing a report from the Chinese Academy of Social Sciences. Short-term declines are inevitable. Prices won't crash entirely, the report said.

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.05%

Sector Underperformers:

• 1) Homebuilders -2.21% 2) Road & Rail -1.52% 3) Biotech -1.43%

Stocks Falling on Unusual Volume:

• CMP, AWI, ZION, GALT, Z, CALM, CMI, LRE, TTS, ENPH, HYGS, BFR, USLV, MLNX, SKYW, GNC, NVDQ, AIMC, WIRE, CWEI, VLP, CYN, SWI, NXPI, INVN and MAN

Stocks With Unusual Put Option Activity:

• 1) OIH 2) GLW 3) XLI 4) CMI 5) JNK
  

Stocks With Most Negative News Mentions:

• 1) LVLT 2) FDX 3) ITB 4) MNST 5) LTM
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Value -.35%

Sector Outperformers:

• 1) Utilities +.89% 2) Gaming +.87% 3) Hospitals +.77%
  

Stocks Rising on Unusual Volume:

• DLTR, FDO, TRLA, TOUR, MOVE, JKS and TSN

Stocks With Unusual Call Option Activity:

• 1) LNG 2) TRLA 3) FDO 4) RFMD 5) INFN
  

Stocks With Most Positive News Mentions:

• 1) Z 2) F 3) FDO 4) ESRX 5) AAPL
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume