Friday Watch

Night Trading 

• Asian equity indices are +.25% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 88.25 -2.5 basis points. 
• Asia Pacific Sovereign CDS Index 19.25 -.5 basis point.
• Bloomberg Emerging Markets Currency Index 73.21 +.01%.
• S&P 500 futures +.18%.
• NASDAQ 100 futures +.24%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GOOS)/-.19
• (HOV)/-.03

Economic Releases 

8:30 am EST

• The Change in Non-Farm Payrolls for May is estimated to fall to 180K versus 211K.
• The Unemployment Rate for May is estimated at 4.4% versus 4.4% in April.
• Average Hourly Earnings MoM for May is estimated to rise +.2% versus a +.3% gain in April.
• The Trade Deficit for April is estimated at -$46.1B versus -$43.7B in March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PPI report, ASCO-American Society of Clinical Oncology Annual Meeting, (ICE) Investor Day, (LOW) Annual Meeting and the (WMT) Annual Meeting could also impact trading today.

BOTTOM LINE:  Asian indices are 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 100% net long heading into the day.

Stocks Rising into Final Hour on Economic Optimism, Yen Weakness, Short-Covering, Healthcare/Retail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 10.11 -2.88%

• Euro/Yen Carry Return Index 130.38 +.32%

• Emerging Markets Currency Volatility(VXY) 8.23 -1.08%

• S&P 500 Implied Correlation 39.89 +1.66%

• ISE Sentiment Index 98.0 +13.95%
  

• Total Put/Call .96 -4.95%

• NYSE Arms 1.03 -22.67%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.66 -1.78%
  

• America Energy Sector High-Yield CDS Index 371.0 -.92%

• European Financial Sector CDS Index 70.88 +1.73%

• Western Europe Sovereign Debt CDS Index 8.32 +2.02%

• Asia Pacific Sovereign Debt CDS Index 19.25 -2.01%

• Emerging Market CDS Index 193.61 -.85%
  

• iBoxx Offshore RMB China Corporate High Yield Index 138.65 +.06%

• 2-Year Swap Spread 22.75 -.5 basis point

• TED Spread 23.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -33.50 +1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.21 +.05%
• 3-Month T-Bill Yield .97% unch.
  

• Yield Curve 92.0 unch.
  

• China Import Iron Ore Spot $55.97/Metric Tonne -1.84%

• Citi US Economic Surprise Index -36.10 +2.1 points

• Citi Eurozone Economic Surprise Index 43.50 +2.9 points

• Citi Emerging Markets Economic Surprise Index 11.0 +3.6 points

• 10-Year TIPS Spread 1.84 +1.0 basis point
  
• 91.4% chance of Fed rate hike at July 26 meeting, 94.0% chance at Sept. 20 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +65 open in Japan 
• China A50 Futures: Indicating +1 open in China

• DAX Futures: Indicating +29 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.6%

Sector Underperformers:

• 1) Steel -.5% 2) Gold & Silver -.2% 3) Semis unch.

Stocks Falling on Unusual Volume: 

• NSTG, HPE, SMTC, GOGO and TGNA

Stocks With Unusual Put Option Activity:

• 1) RRC 2) HPE 3) AMBA 4) TOL 5) ACIA

Stocks With Most Negative News Mentions:

• 1) RYAM 2) CATO 3) COH 4) ADM 5) RAI

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.5%

Sector Outperformers:

• 1) Gaming +3.8% 2) Hospitals +3.0% 3) Networking +2.7%

Stocks Rising on Unusual Volume:

• NERV, PANW, PF, CIEN, CLDT, BOX, BBRY, DBVT, KBWB, PDCO, FWONK, SHLO, PLT, RGS, INFO, SIG, BLK, TAST, GT, CTL, PICO, DG, FCAU, ALDR, MTLS, BNFT, LVS, MOD, CZR, ORBC, OLLI, EPZM, CAG and ITT

Stocks With Unusual Call Option Activity:

• 1) TSCO 2) UPS 3) SGMS 4) PANW 5) CIEN

Stocks With Most Positive News Mentions:

• 1) PANW 2) CIEN 3) NERV 4) BOX 5) GT

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +9.6% Above 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 70.5% of Issues Advancing, 25.8% Declining
• 156 New 52-Week Highs, 14 New Lows
• 44.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.7%
• Vix 10.3 -1.1%
• Total Put/Call 1.06 +5.0%
• TRIN/Arms .94 -27.5%

Thursday Watch

Night Trading 

• Asian equity indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 90.75 unch. 
• Asia Pacific Sovereign CDS Index 19.75 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 73.17 -.01%.
• S&P 500 futures +.07%.
• NASDAQ 100 futures +.19%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CIEN)/.37
• (DG)/1.00
• (MBLY)/.24
• (TECD)/1.33
• (ACGO)/3.50
• (COO)/2.25
• (LULU)/.28
• (RH)/.05
• (VMW)/.95
• (WDAY)/.16
• (ZUMZ)/-.21

Economic Releases 

7:30 am 

• Challenger Job Cuts YoY for May.

8:15 am EST

• The ADP Employment Change for May is estimated to rise to 180K versus 177K in April.
  

8:30 am EST

• Initial Jobless Claims are estimated to rise to 238K versus 234K the prior week.
• Continuing Claims are estimated to fall to 1920K versus 1923K prior.
  

10:00 am EST

• ISM Manufacturing for May is estimated to fall to 54.6 versus 54.8 in April.
• ISM Prices Paid for May is estimated to fall to 67.0 versus 68.5 in April. 
• Construction Spending MoM for April is estimated to rise +.5% versus a -.2% decline in March.
  

Afternoon:

• Wards Total Vehicle Sales for May are estimated to rise to 16.9M versus 16.81M in April.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell speaking, Eurozone Manufacturing PMI report, weekly Bloomberg Consumer Comfort Index, Keefe Bruyette Woods Asset Management Conference, (F) Sales Call, (SKX) annual meeting, (FEYE) annual meeting and the (BKE)/(CATO)/(FRED)/(LB) monthly results 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.