Wednesday Watch

Night Trading 

• Asian equity indices are -1.25% to -.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 97.50 +.5 basis point. 
• Asia Pacific Sovereign CDS Index 20.75 +.25 basis point.
• Bloomberg Emerging Markets Currency Index 72.18 -.08%. 
• S&P 500 futures -.20%. 
• NASDAQ 100 futures -.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (PERY)/.61
• (WGO)/.44
• (CTAS)/1.07
• (MLHR)/.32
• (PVH)/1.18

Economic Releases

9:00 am EST 

• The FHFA House Price Index MoM for January is estimated to rise +.4% versus a +.4% gain in December. 

10:00 am EST

• Existing Home Sales for February is estimated to rise to 564K versus 555K in January.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,854,380 barrels versus a -237,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -2,611,130 barrels versus a -3,055,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,743,130 barrels versus a -4,229,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.39% versus a -.8% decline the prior week.

Upcoming Splits

• None of note

Other Potential Market Movers

• The weekly MBA mortgage applications report 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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 50% net long heading into the day.

Stocks Reversing Lower into Afternoon on Diminishing Tax Reform/Deregulation Hopes, Yen Strength, Oil Decline, Financial/Transport Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.55 +10.7%

• Euro/Yen Carry Return Index 126.34 +.1%

• Emerging Markets Currency Volatility(VXY) 8.92 unch.

• S&P 500 Implied Correlation 47.12 +1.93%

• ISE Sentiment Index 124.0 +27.8%
  

• Total Put/Call .97 -9.4%

• NYSE Arms 1.41 +23.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.91 +.77%
  

• America Energy Sector High-Yield CDS Index 403.0 +1.29%

• European Financial Sector CDS Index 89.42 -3.03%

• Western Europe Sovereign Debt CDS Index 13.14 -9.16%

• Asia Pacific Sovereign Debt CDS Index 20.42 -.39%

• Emerging Market CDS Index 214.89 +.39%
  

• iBoxx Offshore RMB China Corporate High Yield Index 136.05 +.09%

• 2-Year Swap Spread 35.5 +.75 basis point

• TED Spread 39.5 -3.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -26.75 +2.75 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.32 +.05%
• 3-Month T-Bill Yield .75% +2.0 basis points
  

• Yield Curve 116.0 -2.0 basis points
  

• China Import Iron Ore Spot $87.59/Metric Tonne -4.26%

• Citi US Economic Surprise Index 55.20 -.7 point

• Citi Eurozone Economic Surprise Index 45.30 -1.0 point

• Citi Emerging Markets Economic Surprise Index 48.40 -.8 point

• 10-Year TIPS Spread 2.0 -1.0 basis point
  
• 56.7% chance of Fed rate hike at June 14 meeting, 62.2% chance at July 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -290 open in Japan 
• China A50 Futures: Indicating -48 open in China

• DAX Futures: Indicating +26 open in Germany

Portfolio: 

• Lower: On losses in my retail/tech/biotech sector longs 

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -2.2%

Sector Underperformers:

• 1) Steel -4.9% 2) Hospitals -4.4% 3) I-Banks -2.7%

Stocks Falling on Unusual Volume: 

• CMCM, CSIQ, SYNA, CALA, KEM, CAR, EDIT, KATE, KEY, UCTT, BAC, HTZ and CALA

Stocks With Unusual Put Option Activity:

• 1) MBI 2) BK 3) FITB 4) PSX 5) ESPR

Stocks With Most Negative News Mentions:

• 1) CAR 2) BAC 3) CPB 4) K 5) YHOO

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.6%

Sector Outperformers:

• 1) Utilities +.5% 2) Gold & Silver +.1% 3) Telecom +.1%

Stocks Rising on Unusual Volume:

• PLSE, JBSS, OSUR, WMGI, BIIB, MZOR, MAR, DB, BIS, WLB, MSI, LITE, CMG, SWIR, FNV, PAAS and LN

Stocks With Unusual Call Option Activity:

• 1) FRED 2) RSX 3) ETE 4) KMX 5) XBI

Stocks With Most Positive News Mentions:

• 1) WMGI 2) CCL 3) HTBX 4) AFH 5) MSI

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -18.8% Below 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 39.6% of Issues Advancing, 53.6% Declining
• 84 New 52-Week Highs, 14 New Lows
• 57.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.1%
• Vix 11.1 -1.7%
• Total Put/Call .81 -24.3%
• TRIN/Arms 1.26 +10.4%

Tuesday Watch

Night Trading 

• Asian equity indices are unch. to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 97.0 +10.75 basis points. (new series)
• Asia Pacific Sovereign CDS Index 20.5 -5.75 basis points.
• Bloomberg Emerging Markets Currency Index 72.28 unch. 
• S&P 500 futures +.16%. 
• NASDAQ 100 futures +.20%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GIS)/.71
• (LE)/.35
• (LEN)/.55
• (FDX)/2.62
• (NKE)/.53
• (SCS)/.23

Economic Releases

8:30 am EST 

• The 4Q Current Account Balance is estimated to widen to -$129.0B versus -$113.0B in 3Q. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Rosengren speaking, Fed's George speaking, Fed's Mester speaking, UK PPI report, Japan Trade Balance report, US weekly retail sales reports, (MAR) analyst meeting, (MDRX) investor day, Oppenheimer Healthcare Conference, Morgan Stanley Financials Conference and the BofA Merrill Industrials Conference 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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.