Bear Radar

Style Underperformer:

• Small-Cap Value -.8%

Sector Underperformers:

• 1) Foods -1.9% 2) Utilities -1.9% 3) REITs -1.4%

Stocks Falling on Unusual Volume:

• WNRL, FRAN, RRGB, DLR, BECN, COKE, ABBV, ANAC, BCPC, WWE, HD, PEN, BAX, PFGC, SJI, FOGO, TRUP, VRTU, PETS, SAGE, CPK, RGLD, ROST, ARA and LBTYK

Stocks With Unusual Put Option Activity:

• 1) ROST 2) LOW 3) LLY 4) HD 5) CVC

Stocks With Most Negative News Mentions:

• 1) FFIV 2) SGY 3) FOGO 4) AEGR 5) LC

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer: 

• Mid-Cap Growth -.4%

Sector Outperformers:

• 1) Oil Service +1.9% 2) Gold & Silver +1.8% 3) Hospitals +1.8% 

Stocks Rising on Unusual Volume: 

• CHRS, TEP, P, AG, AKRX, VRX, TASR, CWEI, MOMO, CXRX and URI

Stocks With Unusual Call Option Activity: 

• 1) GSAT 2) TEP 3) ENLK 4) AKRX 5) PACB

Stocks With Most Positive News Mentions: 

• 1) FCX 2) A 3) HAL 4) DAL 5) VIA/B

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Market Internals

NYSE Composite Index:

• Volume Running -3.2% Below 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 43.8% of Issues Advancing, 53.5% Declining
• 84 New 52-Week Highs, 27 New Lows
• 51.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.1%
• Vix 15.1 +2.9%
• Total Put/Call .87 +13.0%
• TRIN/Arms .67 +3.9%

Tuesday Watch

Evening Headlines
Bloomberg:  

• China City Deconstruction. Offshore bondholders in one Chinese company are showing more faith in implicit government guarantees than investors back home. That should concern anyone with an appreciation for the risks embedded in the nation's opaque bond market.
• China Silence on Mao’s ’Catastrophe’ Role Feeds Fears of Revival. China’s Communist Party has a deep appreciation for its anniversaries. The 50th anniversary of the Cultural Revolution is one they’d rather not talk about. Monday marked five decades since Mao Zedong launched China into one of its most chaotic and destructive periods, a campaign to remake society that pitted children against parents and turned friends to foes. While the party officially considers the 1966-76 movement "10 years of catastrophe," reflections on its extremes and why it happened remain censored from public discussion.
• China's staples turn into stock-market stars as economy worsens. China's traders have little doubt where the nation's economy is heading. They're piling into producers of meat, animal feed and alcohol on bets such companies will endure a deepening slowdown. Since the stock market's low on Jan 28, a gauge of consumer staples has jumped 18 per cent to be the best performer among 10 industry groups on the CSI 300 Index, which has gained 8 per cent. With the shares trading at a 21 per cent discount to emerging market peers and data over the weekend confirming a worsening outlook for Asia's largest economy, HFT Investment Management Co and Yingda Securities Co say makers of consumer essentials will continue to climb.
• Bond Defaults in China Trigger Blame Game. (video)
• Can China Shake Its Debt Addiction? (video)
• Saudi Arabia’s $117 Billion Treasuries Tally Poses Fresh Puzzle. (video) After the U.S. government’s first-ever release quantifying Saudi Arabia’s Treasuries holdings, a question echoed through Wall Street: That’s it? The kingdom held $116.8 billion of Treasuries as of March, according to data that the Treasury Department released Monday in response to a Freedom-of-Information Act request submitted by Bloomberg News. It’s the first time the U.S. disclosed a breakdown for the world’s biggest oil exporter, after lumping it in with a group of other oil producers since 1974.
• Asian Stocks Extend Climb After Apple Rally as Oil, Metals Rise. Asian stocks rallied into a second day, led by commodity and technology companies amid an oil-led revival in raw materials and after Apple Inc. drove a rebound in the U.S. Japanese shares climbed as the yen nursed last session’s retreat against the dollar, with U.S. crude holding around a six-month high and continued gains in industrial metals bolstering investors’ appetite for risk. Technology stocks rose after Apple jumped the most since March as Warren Buffett’s Berkshire Hathaway Inc. disclosed a stake in the world’s most valuable company. Australian and New Zealand government debt tracked a drop in Treasuries amid speculation over the outlook for U.S. monetary policy. Gold advanced. The MSCI Asia Pacific Index added 0.3 percent as of 10:02 a.m. Tokyo time, with sub-indexes of raw-material, energy and technology stocks rallying at least 0.5 percent.
• World Metals Hub in London Loses as Trading Grows in China, U.S. Traders are buying and selling more metal than they have in years on Chinese and American exchanges. In London, the heart of the global market for more than century, it’s just the opposite. During the first four months of the year, futures trading on the London Metal Exchange fell a combined 10 percent for its six main contracts, including copper and aluminum. That’s the worst start to a year since the data begins in 2006. While the LME remains the industry’s primary hub, its share of the global market slipped to 76 percent last year from 83 percent in 2012, according to the exchange. 
• Shadow Banks Make Diciest Loans While Wall Street Retains Risk. Wall Street has cut its lending to the riskiest companies, shifting its financing to nonbanks that make the loans instead, according to a team of analysts at the Federal Reserve Bank of New York. “Since those policies reach beyond individual banks and target risk in the entire banking system, they are more likely to trigger significant responses that may have unintended consequences,” said the report by Sooji Kim, Matthew Plosser and João Santos. Nonbanks, part of what’s called the shadow banking system, are financial institutions that don’t take deposits and fall outside the purview of banking regulators. They’ve increased their borrowing from banks, possibly to finance their growing leveraged-lending activity, the study found. That means regulated banks may still be vulnerable to the stability of institutions that took their place in lending to companies that heap debt on their balance sheets.

Wall Street Journal:

• SandRidge Energy Files for Bankruptcy Protection. Oklahoma City oil and gas company becomes latest victim of downturn in energy sector.
• Obama’s Transgender ‘Guidance’. The White House starts another culture war to drive liberal turnout. The directive on bathroom facilities for transgender students, sent last Friday by the U.S. Departments of Justice and Education to every public school district in the country, is not the first time the Obama Administration has swept American institutions under its administrative control.

Fox News:

• Panama Papers reveal George Soros' deep money ties to secretive weapons, intel investment firm. Billionaire George Soros, who has spent millions of dollars financing Democrats and left-wing causes, used a controversial Panamanian law firm to establish a web of offshore investment partnerships that operate around the world and out of the scrutiny of U.S. regulators, according to leaked documents.

MarketWatch:

• It’s too early for the oil market to say farewell to oversupply.

CNBC:

• Why Apple(AAPL) is heading lower: Strategist. (video)

Zero Hedge:

• "Markets Have No Purpose Any More" Mark Spitznagel Warns "Biggest Collapse In History" Is Inevitable.
• Analyst Warns Deutsche Bank's Problems May Now Be "Insurmountable".
• US Treasuries Account For A Stunning 60% Of All Global Positive Yielding Debt.
• LendingClubbed: Stock Plummets On News Of A DOJ Grand Jury Subpoena As Accusations Fly.
• ETF Gold Holdings Rise At The Fastest Pace Since 2009 As Central Banker Credibility Plunges. (graph)
• The Economy In Pictures: Weakness Continues. (graph)
• Falling Chinese Demand Could Intensify The Oil War.
• Oil Driller Hedges Soar To Five Year Highs. (graph)
• Investors Dump Bonds, Bullion For Safety Of Biotech Stocks After Dismal China Data. (graph)

Business Insider:

• China is slowing down (again) a lot faster than anyone expected.
• These 2 charts show a huge problem with bank-CEO pay.

Reuters:

• Soros Fund Management doubles bet against the S&P 500 in first quarter.

Les Echos:

• Amazon(AMZN), Netflix(NFLX) May Face Local-Content Rules in Europe. European Commission is working on rules that would require on-demand video services such as Netflix, Amazon Prime to ensure 20% of their offerings in Europe consist of European Works.

Night Trading 

• Asian equity indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 143.25 -1.5 basis points. 
• Asia Pacific Sovereign CDS Index 53.25 -.5 basis point.
• Bloomberg Emerging Markets Currency Index 7154 +.11%. 
• S&P 500 futures -.01%. 
• NASDAQ 100 futures unch.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (HD)/1.35
• (RRGB)/1.11
• (PLCE)/1.04
• (TJX)/.71
• (VIPS)/.15
• (VSAT)/.37 
• (ITRI)/.34

Economic Releases 
8:30 am EST

• Housing Starts for April are estimated to rise to 1125K versus 1089K in March.
• Building Permits for April are estimated to rise to 1135K versus 1086K in March.
• The CPI MoM for April is estimated to rise +.3% versus a +.1% gain in March.
• The CPI Ex Food and Energy MoM for April is estimated to rise +.2% versus a +.1% gain in March. 
• Real Avg. Weekly Earnings YoY for April. 

9:15 am EST

• Industrial Production for April is estimated to rise +.3% versus a -.6% decline in March.
• Capacity Utilization for April is estimated to rise to 75.0% versus 74.8% in  March.
• Manufacturing Production for April is estimated to rise +.3% versus a -.3% decline in March. 

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Kaplan speaking, Fed's Williams speaking, Japan GDP report, UK retail sales report, weekly US retail sales reports, Oppenheimer Emerging Growth Conference, BofA Merrill Transport Conference, Goldman Basic Materials Conference, (EA) investor day, JPMorgan Homebuilding Conference, (AMZN) annual meeting and the (JNPR) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and technology shares in the region. I expect US stocks to open mixed and to strengthen into the afternoon, finishing modestly higher. The Portfolio is 50% net long heading into the day.

Stocks Surging into Final Hour on Central Bank Hopes, Oil Gain, Yen Weakness, Biotech/Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.32 -4.79%

• Euro/Yen Carry Return Index 128.93 +.46%

• Emerging Markets Currency Volatility(VXY) 10.92 +.74%

• S&P 500 Implied Correlation 52.33 -3.22%

• ISE Sentiment Index 69.0 -21.59%

• Total Put/Call .77 -31.86%

• NYSE Arms .63 -70.66% 

Credit Investor Angst:

• North American Investment Grade CDS Index 81.17 -2.5%
  

• America Energy Sector High-Yield CDS Index 932.0 -.45%

• European Financial Sector CDS Index 99.0 +1.05%

• Western Europe Sovereign Debt CDS Index 25.68 -1.21%

• Asia Pacific Sovereign Debt CDS Index 53.38 -.33%

• Emerging Market CDS Index 289.70 -.43%
  

• iBoxx Offshore RMB China Corporate High Yield Index 127.88 -.01%

• 2-Year Swap Spread 12.75 -.5 basis point
  

• TED Spread 36.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 -1.25 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.50 +.23%
• 3-Month T-Bill Yield .27% unch.

• Yield Curve 97.0 +1.0 basis point
  

• China Import Iron Ore Spot $54.34/Metric Tonne -.37%

• Citi US Economic Surprise Index -36.20 -3.2 points

• Citi Eurozone Economic Surprise Index -5.2 +1.8 points

• Citi Emerging Markets Economic Surprise Index -2.4 -2.5 points

• 10-Year TIPS Spread 1.63% +1.0 basis point
  
• 19.4% chance of Fed rate hike at July 27 meeting, 37.1% chance at September 21 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +190 open in Japan 
• China A50 Futures: Indicating -35 open in China

• DAX Futures: Indicating n/a open in Germany

Portfolio: 

• Slightly Higher: On gains in my biotech/tech/medical/retail sector longs 
  

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added some back

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.8%

Sector Underperformers:

• 1) Utilities -.4% 2) Restaurants -.3% 3) Insurance +.3%

Stocks Falling on Unusual Volume:

• CHTR, COKE, VRTU, TWC, RRC, LBRDA, SHAK, KLAC, DXPE, BITA, CUDA, LRCX, AMZN, BRSS, DDS, HFC, FB, RDCM, QTWO, VRX, WSM, LBRDK, MNRO, LULU, CSGP and WRK

Stocks With Unusual Put Option Activity:

• 1) EMR 2) CF 3) TIF 4) KRE 5) VMW

Stocks With Most Negative News Mentions:

• 1) MON 2) BITA 3) GMED 4) TSLA 5) ODP

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume