Stocks Surging into Final Hour on Economic Optimism, Technical Buying, Yen Weakness, Energy/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 21.2 -10.4%

• Euro/Yen Carry Return Index 136.17 +.37%

• Emerging Markets Currency Volatility(VXY) 8.23 -.84%

• S&P 500 Implied Correlation 49.65 -6.5%

• ISE Sentiment Index 102.0 -4.0%
  

• Total Put/Call 1.11 -11.9%

• NYSE Arms .67 -73.15%

Credit Investor Angst:

• North American Investment Grade CDS Index 66.70 -1.0%
  

• America Energy Sector High-Yield CDS Index 467.0 +2.91%

• European Financial Sector CDS Index 65.66 -.18%

• Italian/German 10Y Yld Spread 129.25 +.25 basis point
  

• Asia Pacific Sovereign Debt CDS Index 13.29 -2.17%

• Emerging Market CDS Index 135.71 -5.0%
  

• iBoxx Offshore RMB China Corporate High Yield Index 148.55 +.01%

• 2-Year Swap Spread 31.5 +.25 basis point

• TED Spread 55.5 -3.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -8.25 -2.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.19 +.03%
• 3-Month T-Bill Yield 1.74% +2.0 basis points
  

• Yield Curve 50.25 +1.25 basis points

• China Iron Ore Spot 64.14 USD/Metric Tonne +.38%

• Citi US Economic Surprise Index 46.0 -.1 point

• Citi Eurozone Economic Surprise Index -60.30 -3.2 points

• Citi Emerging Markets Economic Surprise Index 28.1 +3.1 points

• 10-Year TIPS Spread 2.08 +3.0 basis points
  
• 79.4% chance of Fed rate hike at June 13 meeting, 80.7% chance at August 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +238 open in Japan 
• China A50 Futures: Indicating +81 open in China

• DAX Futures: Indicating +46 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and my emerging markets shorts

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth unch.

Sector Underperformers:

• 1) Gold & Silver -.9% 2) Shipping -.1% 3) Biotech unch.

Stocks Falling on Unusual Volume: 

• SWCH, LFIN, PETQ, ISCA, HF, MXL, EEFT, ALKS, FMI, TWOU, ACXM and LYV

Stocks With Unusual Put Option Activity:

• 1) LFIN 2) RCII 3) HMNY 4) NOG 5) VZ

Stocks With Most Negative News Mentions:

• 1) CGIX 2) RIGL 3) LFIN 4) EEFT 5) OSTK

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.9%

Sector Outperformers:

• 1) Paper +2.6% 2) Airlines +2.5% 3) Oil Service +1.5%

Stocks Rising on Unusual Volume:

• ALNA, CLLS, URGN, FLXN, NNBR, DBX, INNT, PAY, KEP, TSLA, CALM, IJT, TOT, LHCG, VSTO, GLPG, ANGO, EHTH, AOI, CBI, SATS, FCAU, CAE, CIB and LE

Stocks With Unusual Call Option Activity:

• 1) RCII 2) MAT 3) UA 4) FAST 5) CXO

Stocks With Most Positive News Mentions:

• 1) FCAU 2) MGI 3) DAL 4) SLB 5) GD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -13.5% Below 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 51.9% of Issues Advancing, 44.3% Declining
• 8 New 52-Week Highs, 62 New Lows
• 34.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.5%
• Vix 23.4 -1.0%
• Total Put/Call 1.01 -19.8%
• TRIN/Arms 1.38 -45.4%

Tuesday Watch

Evening Headlines

Bloomberg:

• Japan's Central Bank Wants You to Be Wary of Cryptocurrencies.

• U.S. Sell-Off Hits Asia Stocks; Yen Trades Higher. Asian stocks declined as a sell-off in once much-favored U.S. technology shares deepened and volatility soared. Havens like the yen added to gains and Treasuries steadied. Equities in Japan and South Korea declined, and Australia opened lower after a four-day long weekend. The S&P 500 Index closed below its average price for the past 200 days for the first time since June 2016 with fresh presidential criticism of Amazon.com and retaliatory tariffs from China rattling investors. The Cboe Volatility Index jumped 18 percent. The Topix index fell 0.9 percent as of 9:08 a.m. in Tokyo. Australia’s S&P/ASX 200 Index lost 0.3 percent. South Korea’s Kospi index declined 0.8 percent. Futures on the S&P 500 Index were 0.4 percent higher.

• Five Things You Need to Know to Start Your Day.

Wall Street Journal:

• In the Oil Patch, Bigger Is No Longer Better. Investors grow leery of free-spending energy firms, like discipline of ConocoPhillips.

• EPA Will Ease Vehicle-Emissions Standards. Shift on Obama-era rules that aimed to slow climate change sets up a likely fight with California. 

• Migrant ‘Caravan’ in Mexico Raises Trump’s Ire. Annual protest march to U.S. border prompts tweets criticizing Mexico, DACA, and Nafta.

Fox News: 

• Trump administration sues California over federal land sales.

CNBC: 

• Trump trade advisor Peter Navarro: If we hit all points of Trump's agenda 'the market will go up'. (video)

• Walmart(WMT) is looking at buying PillPack, an online pharmacy, for under $1 billion.

• Buy Intel(INTC) because Apple's(AAPL) reported move to abandon its chips is ‘not a major threat,’ Stifel says.

• Earnings will help reverse market meltdown: Boston Advisors. (video)

• Market plunges on first day of second-quarter trading, but some analysts remain bullish. (video)

• Analyst slashes profit forecast for Nvidia(NVDA) due to plunging cryptocurrency prices.

• Bitcoin's market value should fall by more than a third before year-end, Swiss researchers say.

Zero Hedge:    

• Musk Gets Into Twitter Fight, Says "I Am Back To Sleeping At The Factory".

• Japan's FM Warns North Korea Preparing For Another Nuclear Test.

• Saudi Crown Prince Admits Saudis "Financed Terrorist Groups", Blesses Israeli Statehood.

• Off The Grid Economic Indicators: Q1 2018 Edition.

• National Apartment Rents Stabilize As Small Cities Boom.

• Trump Pushing For Nafta Deal In Next Two Weeks.

• Trump Hits 50% Approval Rating, Surpasses Obama At This Time In His Presidency.

• Stocks Suffer Worst Q2 Start Since The Great Depression. (graph)

Night Trading 

• Asian equity indices are -.75% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 78.5 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 13.5 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 75.21 +.04%.

• FTSE 100 futures -1.02%.

• S&P 500 futures +.42%.

• NASDAQ 100 futures +.43%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ISCA)/.57

• (CLDR)/-.23

• (PLAY)/.60

Economic Releases
Afternoon

• Wards Total Vehicle Sales for March is estimated to fall to 16.9M versus 16.96M in February.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking, Eurozone PMI report, weekly US retail sales reports and the (F) sales conference call for March could also impact trading today.

BOTTOM LINE:  Asian indices are lower, weighed down by technology and industrial 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 Substantially Lower into Final Hour on Trade War Fears, Amazon Political Woes, Technical Selling, Tech/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 24.9 +24.7%

• Euro/Yen Carry Return Index 135.62 -.57%

• Emerging Markets Currency Volatility(VXY) 8.28 +3.9%

• S&P 500 Implied Correlation 54.23 +11.4%

• ISE Sentiment Index 121.0 n/a
  

• Total Put/Call 1.25 +33.0%

• NYSE Arms 2.53 +196.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.06 +3.86%
  

• America Energy Sector High-Yield CDS Index 454.0 +1.59%

• European Financial Sector CDS Index 65.76 +.18%

• Italian/German 10Y Yld Spread 129.0 unch.
  

• Asia Pacific Sovereign Debt CDS Index 13.49 +1.66%

• Emerging Market CDS Index 143.1.0 +4.1%
  

• iBoxx Offshore RMB China Corporate High Yield Index 148542 -.07%

• 2-Year Swap Spread 31.25 +.5 basis point

• TED Spread 59.25 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -5.5 +1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.13 -.28%
• 3-Month T-Bill Yield 1.72% +2.0 basis points
  

• Yield Curve 49.0 +1.75 basis points

• China Iron Ore Spot 65.60 USD/Metric Tonne +.51%

• Citi US Economic Surprise Index 46.1 -3.7 points

• Citi Eurozone Economic Surprise Index -57.10 -1.3 points

• Citi Emerging Markets Economic Surprise Index 25.0 -6.8 points

• 10-Year TIPS Spread 2.05 -1.0 basis point
  
• 79.0% chance of Fed rate hike at June 13 meeting, 80.3% chance at August 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -323 open in Japan 
• China A50 Futures: Indicating -166 open in China

• DAX Futures: Indicating n/a open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging markets shorts

• Market Exposure: Moved to 25% Net Long