Stocks Slightly Higher into Final Hour on Less US High-Yield Debt Angst, Oil Rebound, Technical Buying, Tech/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.755 +2.25%

• Euro/Yen Carry Return Index 125.11 -.81%

• Emerging Markets Currency Volatility(VXY) 9.19 +2.11%

• S&P 500 Implied Correlation 47.76 -2.25%

• ISE Sentiment Index 90.0 +4.65%
  

• Total Put/Call .97 -3.9%

• NYSE Arms 1.03 -33.98%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.89 -.47%
  

• America Energy Sector High-Yield CDS Index 410.0 +.69%

• European Financial Sector CDS Index 91.81 +1.29%

• Western Europe Sovereign Debt CDS Index 12.42 -5.12%

• Asia Pacific Sovereign Debt CDS Index 20.88 +1.09%

• Emerging Market CDS Index 218.85 +.35%
  

• iBoxx Offshore RMB China Corporate High Yield Index 136.03 -.01%

• 2-Year Swap Spread 35.75 +.25 basis point

• TED Spread 39.0 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -27.25 -.5 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.23 -.01%
• 3-Month T-Bill Yield .76% +1.0 basis point
  

• Yield Curve 115.0 -1.0 basis point
  

• China Import Iron Ore Spot $84.99/Metric Tonne -2.97%

• Citi US Economic Surprise Index 54.40 -.8 point

• Citi Eurozone Economic Surprise Index 43.30 -2.0 points

• Citi Emerging Markets Economic Surprise Index 47.0 -1.4 points

• 10-Year TIPS Spread 1.98 -2.0 basis points
  
• 50.2% chance of Fed rate hike at June 14 meeting, 57.2% chance at July 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -106 open in Japan 
• China A50 Futures: Indicating +40 open in China

• DAX Futures: Indicating +47 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.6%

Sector Underperformers:

• 1) Telecom -1.4% 2) Oil Tankers -.9% 3) Homebuilding -.9%

Stocks Falling on Unusual Volume: 

• RGNX, APTI, TMHC, FTRPR, NKE, ATU, FINL and LKSD

Stocks With Unusual Put Option Activity:

• 1) FDX 2) NBR 3) GGP 4) SHLD 5) JDST

Stocks With Most Negative News Mentions:

• 1) FTR 2) TDG 3) LB 4) SIRI 5) MNK

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.2%

Sector Outperformers:

• 1) Steel +1.7% 2) Coal +1.4% 3) Gold & Silver +.9%

Stocks Rising on Unusual Volume:

• DLTH, WGO, PLSE, SLW, CBD, MOMO, MAR, BG, CNCE, FGEN, TELL and WMGI

Stocks With Unusual Call Option Activity:

• 1) CTSH 2) LVLT 3) CIT 4) FDX 5) ETN

Stocks With Most Positive News Mentions:

• 1) RUN 2) CMC 3) FDX 4) FCX 5) MU

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +4.5% Above 100-Day Average
• 2 Sectors Rising, 8 Sectors Declining
• 31.2% of Issues Advancing, 65.0% Declining
• 19 New 52-Week Highs, 55 New Lows
• 53.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.9%
• Vix 12.7 +1.4%
• Total Put/Call 1.01 unch.
• TRIN/Arms 1.07 -31.5%

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