Bull Radar

Style Outperformer:

• Large-Cap Value -.1%

Sector Outperformers:

• 1) REITs +.5% 2) Utilities +.5% 3) Computer Services +.2%

Stocks Rising on Unusual Volume:

• HGV, TRCO, SELB, EPZM, SBGI, KMG, AAAP, NDSN, PETS, FRPT, TRI, HRB, SPNC, NXST, ENTA, NVDA, AAOI, VEEV, REV, RL, PLD and MAA

Stocks With Unusual Call Option Activity:

• 1) WBA 2) TXT 3) LEN 4) XME 5) PAYX

Stocks With Most Positive News Mentions:

• 1) ATNM 2) BZH 3) PCAR 4) LQ 5) BA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -2.3% Below 100-Day Average
• 3 Sectors Rising, 7 Sectors Declining
• 31.6% of Issues Advancing, 65.3% Declining
• 51 New 52-Week Highs, 50 New Lows
• 49.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.9%
• Vix 11.2 +5.0%
• Total Put/Call 1.09 +32.9%
• TRIN/Arms 1.69 +9.4%

Thursday Watch

Night Trading 

• Asian equity indices are -.75% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 82.25 -2.25 basis points. 
• Asia Pacific Sovereign CDS Index 16.75 -.75 basis point.
• Bloomberg Emerging Markets Currency Index 73.56 +.02%.
• S&P 500 futures -.24%.
• NASDAQ 100 futures -.49%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BOBE)/.52
• (KR)/.58
• (FNSR)/.50

Economic Releases 

8:30 am EST

• Import Price Index MoM for May is estimated to fall -.1% versus a +.5% gain in April.
• Empire Manufacturing for June is estimated to rise to 5.0 versus -1.0 in May.
• Export Price Index MoM for May is estimated to rise +.2% versus a +.2% gain in April.
• Initial Jobless Claims for last week are estimated to fall to 241K versus 245K the prior week.
• Continuing Claims are estimated to rise to 1920K versus 1917K prior. 
• Philly Fed Business Outlook Index for June is estimated to fall to 25.0 versus 38.8 in May.

9:15 am EST

• Industrial Production MoM for May is estimated to rise +.2% versus a +1.0% gain in April.
• Capacity Utilization is estimated to rise to 76.8% versus 76.7% in April.

10:00 am EST

• The NAHB Housing Market Index for June is estimated at 70.0 versus 70.0 in May.

4:00 pm EST

• Net Long-Term TIC Flows for April.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Retail Sales report, Australia Unemployment report, Eurogroup Meeting, Stifel Industrials Conference, weekly EIA natural gas inventory report, (WFT) annual meeting and the (ANF) annual meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

Stocks Finish Slightly Lower on More Hawkish Fed Commentary, Less Economic Optimism, Oil Decline, Commodity/Transport Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 10.87 +4.32%

• Euro/Yen Carry Return Index 128.26 -.4%

• Emerging Markets Currency Volatility(VXY) 7.60 -.78%

• S&P 500 Implied Correlation 37.72 -.95%

• ISE Sentiment Index 85.0 -2.3%
  

• Total Put/Call .85 -12.37%

• NYSE Arms 1.92 +113.67%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.89 -.41%
  

• America Energy Sector High-Yield CDS Index 412.0 +.58%

• European Financial Sector CDS Index 61.59 -.86%

• Western Europe Sovereign Debt CDS Index 7.07 +6.08%

• Asia Pacific Sovereign Debt CDS Index 16.83 -3.61%

• Emerging Market CDS Index 190.24 -.40%
  

• iBoxx Offshore RMB China Corporate High Yield Index 139.15 +.07%

• 2-Year Swap Spread 18.75 -1.25 basis points

• TED Spread 24.5 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -33.5 -.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.50 +.21%
• 3-Month T-Bill Yield 1.0% 1.0 basis point
  

• Yield Curve 80.0 -5.0 basis points
  

• China Import Iron Ore Spot $54.43/Metric Tonne +2.01%

• Citi US Economic Surprise Index -57.30 -12.2 points

• Citi Eurozone Economic Surprise Index 32.50 -.9 point

• Citi Emerging Markets Economic Surprise Index 8.0 +2.0 points

• 10-Year TIPS Spread 1.72 -5.0 basis points
  
• 26.2% chance of Fed rate hike at Sept. 20 meeting, 29.3% chance at Nov. 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +12 open in Japan 
• China A50 Futures: Indicating +2 open in China

• DAX Futures: Indicating +29 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Today's Headlines

Bloomberg:

• U.K. in Limbo as May Power Bid Stalled Before Brexit Talks. (video) The U.K. slipped further into political limbo as Prime Minister Theresa May’s talks with Northern Ireland’s Democratic Unionists dragged on and calls mounted for a cross-party consensus on Brexit. Scottish First Minister Nicola Sturgeon wrote to May to demand clarity on her plans for talks with the European Union and protect “participation” in the bloc’s single market and customs union. Hers was the latest cry for a “more inclusive process” in setting priorities for the exit negotiations with the EU.
• PBOC Says Lower M2 Growth May Become China's New Normal. (video)
• European Stocks Retreat as Banks Fall After U.S. Data Miss. European stocks fell for the second time this week as banks slid after disappointing U.S. economic data signaled uneven growth ahead of the Federal Reserve’s rate decision. The Stoxx Europe 600 Index lost 0.3 percent at the close, reversing an earlier advance of as much as 0.7 percent. The region’s lenders tracked losses in U.S. peers as the dollar weakened following data showing that inflation cooled and retail sales unexpectedly contracted in the world’s biggest economy. Miners slid to a six-week low and energy shares fell to a November low. Technology shares rebounded for a second day, following their biggest slump in almost a year.
  Your Evening Briefing.
• Portfolio Managers Are Holding Record Levels of Corporate Debt.
• Homebuilder ETF Rallies as Treasury Yields Tumble.

Wall Street Journal:

• Congressman Scalise, Others Shot; Alleged Gunman Is Dead -- Live Coverage.
• Federal Reserve Interest-Rate Decision—Live Analysis.
• Tax Cuts That Last—With 51 Votes. The ‘budget window’ has traditionally been a decade. But the Senate could make it 25 years.

MarketWatch.com: 

• Dow can hit 22,900—as long as tech doesn’t ‘roll over’, says godfather of chart analysis.

Fox News:

• Scalise shooter ID'd as James Hodgkinson. (video)
• Steve Scalise shooting: 'Political rhetorical terrorism' contributed to attack, rep says. (video)

CNBC:

• Millionaires own a record 45% of the world's wealth — and their share is growing.
• Apple(AAPL) prepping for an iPhone 8 'super cycle,' ramping up production, Credit Suisse says.
• US shale oil strikes again: Non-OPEC output growth to outpace demand gains in 2018.

Zero Hedge:

• Multiple People Shot, Including House Majority Whip, At Congressional Baseball Practice; Shooter Dead.
• Shooter Identified As Never-Trumper James Hodgkinson: “Mr. President You Are Biggest Asshole Ever”.
• 10-Year Treasuries Break Key Trendline As Yield Curve Collapses. (graph)
• WTI Plunges To $44 Handle After Inventory & Demand Disappointment. (graph)
• Goldman(GS) Revises FOMC Forecast After Third Consecutive CPI Miss.
• Consumer Price Growth Plunges To 27-Month Lows As Shelter Inflation Rolls Over. (graph)
• GM(GM) Extends Plant Shutdowns As Toxic Trifecta For Auto Loans Fuels Carmageddon.
• Retail Sales Tumble Most Since January 2016 As Gasoline, Electronics Sales Slump. (graph)
• Bundesbank's Weidmann: Digital Currencies Will Make The Next Crisis Worse. (graph)
• Q2 GDP In Trouble As Business Inventories Tumble In April. (graph)

The Telegraph:

• Bernie Sanders says he is 'sickened' after supporter shoots top Republican Steve Scalise and Republican aides at baseball practice.

Bear Radar

Style Underperformer:

• Small-Cap Value -.9%

Sector Underperformers:

• 1) Oil Service -4.7% 2) Energy -1.9% 3) Steel -1.8%

Stocks Falling on Unusual Volume: 

• HA, SEMG, FIVE, REN, HP, SNCR, AMID and SLCA

Stocks With Unusual Put Option Activity:

• 1) EPI 2) AGNC 3) HAIN 4) RSX 5) AMJ

Stocks With Most Negative News Mentions:

• 1) RIG 2) X 3) SNCR 4) APC 5) FIVE

Charts:

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