Bull Radar

Style Outperformer:

• Mid-Cap Growth +.7%

Sector Outperformers:

• 1) Homebuilders +1.9% 2) Computer Hardware +1.7% 3) Gaming +1.7%

Stocks Rising on Unusual Volume:

• OMER, UIHC, LPL, SMG, AHH, SGMS, SWIR, GDI, WLDN, SOXX, ALOG, XLRN, SPNC, TM and KEM

Stocks With Unusual Call Option Activity:

• 1) ETSY 2) FXE 3) ORCL 4) TSRO 5) NUE

Stocks With Most Positive News Mentions:

• 1) DATA 2) TSLA 3) WDC 4) CAR 5) HRS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -9.5% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 60.6% of Issues Advancing, 35.1% Declining
• 70 New 52-Week Highs, 13 New Lows
• 49.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.3%
• Vix 10.7 -7.0%
• Total Put/Call .77 -19.8%
• TRIN/Arms .89 +11.2%

Tuesday Watch

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 85.5 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 17.75 unch.

• Bloomberg Emerging Markets Currency Index 73.26 +.04%.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.14%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JW/A)/.54

• (HRB)/3.53

Economic Releases 

6:00 am EST

• The NFIB Small Business Optimism Index for May is estimated at 104.5 versus 104.5 in April.
  

8:30 am EST

• PPI Final Demand MoM for May is estimated unch. versus a +.5% gain in April.

• PPI Ex Food & Energy MoM for May is estimated to rise +.1% versus a +.4% gain in April.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Dudley speaking, AG Jeff Sessions testimony to Senate Intel Committee, Senate Health Committee Hearing on drug costs, UK CPI report, German Zew Index, $12B 30Y T-Bond auction, weekly US retail sales reports, RBC Mining/Materials Conference, Piper Jaffray Consumer Conference, Deutsche Bank Consumer Conference, Goldman Sachs Healthcare Conference, Citi Industrials Conference and the Morgan Stanley Financials Conference could also impact trading today.

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

Stocks Lower into Final Hour on Profit-Taking, Yen Strength, Fed Rate-Hike Worries, Tech/Restaurant Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 11.52 +7.85%

• Euro/Yen Carry Return Index 128.42 -.4%

• Emerging Markets Currency Volatility(VXY) 7.77 -.77%

• S&P 500 Implied Correlation 38.36 +.45%

• ISE Sentiment Index 67.0 -19.28%
  

• Total Put/Call .95 -10.38%

• NYSE Arms .68 -18.56%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.25 -.86%
  

• America Energy Sector High-Yield CDS Index 414.0 -1.27%

• European Financial Sector CDS Index 63.99 -1.36%

• Western Europe Sovereign Debt CDS Index 7.26 -3.72%

• Asia Pacific Sovereign Debt CDS Index 17.68 -.56%

• Emerging Market CDS Index 194.80 +.20%
  

• iBoxx Offshore RMB China Corporate High Yield Index 139.01 +.11%

• 2-Year Swap Spread 19.5 -1.25 basis points

• TED Spread 23.5 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -33.5 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.25 -.04%
• 3-Month T-Bill Yield 1.0% unch.
  

• Yield Curve 86.0 -1.0 basis point
  

• China Import Iron Ore Spot $54.87/Metric Tonne +.85%

• Citi US Economic Surprise Index -45.30 -1.9 points

• Citi Eurozone Economic Surprise Index 35.90 -3.2 points

• Citi Emerging Markets Economic Surprise Index 6.0 -.9 point

• 10-Year TIPS Spread 1.77 -3.0 basis points
  
• 99.5% chance of Fed rate hike at July 26 meeting, 99.7% chance at Sept. 20 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -87 open in Japan 
• China A50 Futures: Indicating -75 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio: 

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

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

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• May Said to Tell Tories: ‘I’ll Get Us Out of This Mess’. U.K. Prime Minister Theresa May told rank-and-file lawmakers from her Conservative Party that she takes responsibility for their general-election defeat last week and will stay on as head of government only as long as they want her to. “I’m the person who got us into this mess and I’m the one who will get us out of it,” May said Monday, according to two lawmakers who were in the private meeting. May was appearing for the first time since the election in front of lawmakers furious at the catastrophic campaign that cost the party its majority and threatens to end her premiership.
• Pound Extends Drop as U.K. Political Chaos Adds to Brexit Stress. (video) The pound fell against all its Group-of-10 peers on the prospect of an unstable coalition government heading into Brexit talks with the European Union in a week’s time.
• U.S. Bears Return to China With Shorts Circling $6 Billion ETFs.
• Tech Selloff Doesn't Mean Investors Have Given Up on the Bull Market. With the tech meltdown showing no sign of abating, equity bulls are taking solace in how little money is actually leaving the stock market as a whole. The trend can be seen in investment flows, where one of the biggest withdrawals from exchange-traded funds tracking technology shares in a year was more than offset by deposits into banks, energy producers and retailers.
• European Stocks Slide as Technology Selloff Spreads Around World. (video) European stocks fell as investors dumped technology shares while assessing political events in the U.K. and France. The Stoxx Europe 600 Index dropped 1 percent at the close. Technology shares led the declines, following their peers in U.S. and Asian markets, with the European tech sector falling the most in a year. The Stoxx 600 rose 0.3 percent Friday, boosted by gains in the U.K.’s FTSE 100 Index.
• Your Evening Briefing.

Wall Street Journal:

• After Young Voters Rock Britain, U.S. Watches for the Wave. U.K. election results hint at promise, but also risks, for American Democrats.
• A Single-Payer Test Drive. If Democrats are serious, why not try it out in California?
• You Don’t Know VIX: The Fear Gauge Is Now the Epicenter of Today’s Markets. Created to track expectations of volatility, the indicator has spawned a giant trading ecosystem that could magnify losses when turbulence hits.
• Facebook(FB) Building Feature to Let Users Subscribe to News Publications. Subscription support for news on social media company’s mobile app seen rolling out by end of year.

Fox News:

• 9th Circuit rules against Trump travel ban. (video)

CNBC:

• Inside Trump Inc: The president's known holdings, in one stunning map.
• More than a quarter of the market's technology stocks are already in a correction.
• How Tesla(TSLA) can become worth more than Apple(AAPL), according to Morgan Stanley(MS).
• Senate's Obamacare reform bill reportedly due to be finalized Monday night, but no plans to show public yet.
• RBC raises stock market outlook into the tech wreck, sees 7% S&P 500 rebound into end of the year.
• Last time this happened small caps exploded higher: Technician.

Zero Hedge:

• 'Madoff Whistleblower' Harry Markopolos Has Uncovered A New Fraud.
• US Urges Beijing To Impose First Round Of Sanctions Against Chinese Firms Trading With North Korea.
• McDonalds(MCD) To Hire 250,000 This Summer Via SnapChat(SNAP), Spotify And Hulu.
• You Know It's Bad In Spain's Banking System When...
• Sessions To Testify Publicly Before Senate Intel Committee Tomorrow.
• Italian Bond Yields Plunge To 5-Month Lows After Anti-EU 5-Star Party Flops In Local Elections. (graph)
• Traders Are Buying The Most Nasdaq Downside Protection Since Lehman. (graph)
• (AAPL) Loses $50BN In Market Cap As Citi Piles On: Cuts EPS, iPhone Sales Forecast.
• Viking Returns $8 Billion To Investors As CIO Departs.
• GE(GE) CEO Jeff Immelt To Step Down.

The Telegraph:

• Germany faces an uncertain future as the eurozone's magic money tree.

Bear Radar

Style Underperformer:

• Large-Cap Growth -.5%

Sector Underperformers:

• 1) Computer Hardware -1.5% 2) Restaurants -1.3% 3) HMOs -1.1%

Stocks Falling on Unusual Volume: 

• CHRS, CLM, ICHR, MKSI, NAV, OLED, BLUE, MTCH, MXL, BJRI and FORM

Stocks With Unusual Put Option Activity:

• 1) K 2) WM 3) KR 4) WPX 5) SIRI

Stocks With Most Negative News Mentions:

• 1) TDG 2) CG 3) EBAY 4) LBIO 5) SAM

Charts:

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