Thursday Watch

Night Trading 

• Asian equity indices are +.75% to +1.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 77.75 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 13.25 unch.

• Bloomberg Emerging Markets Currency Index 75.15 -.01%.

• FTSE 100 futures +1.4%.

• S&P 500 futures +.40%.

• NASDAQ 100 futures +.50%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CONN)/.54

• (MON)/3.31

• (SCHN)/.91

• (PSMT)/.90

• (WDFC)/.95

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for March.

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 225K versus 215K the prior week.

• Continuing Claims are estimated to fall to 1843Kversus 1871K prior.

• The Trade Deficit for February is estimated at -$56.8B versus -$56.6B in January.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German Factory Orders report, Eurozone Services PMI report, Eurozone PPI report, Eurozone Retail Sales report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the (NTAP) analyst day 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 modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the day.

Stocks Reversing Sharply Higher into Final Hour on Diminishing Trade War Fears, Earnings Optimism, Technical Buying, Homebuilding/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.9 -1.0%

• Euro/Yen Carry Return Index 136.49 -.2%

• Emerging Markets Currency Volatility(VXY) 8.28 unch.

• S&P 500 Implied Correlation 48.9 +2.1%

• ISE Sentiment Index 95.0 unch.
  

• Total Put/Call 1.09 +4.8%

• NYSE Arms .90 +45.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 65.15 -2.55%
  

• America Energy Sector High-Yield CDS Index 474.0 +1.77%

• European Financial Sector CDS Index 65.61 -.08%

• Italian/German 10Y Yld Spread 124.25 -5.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 13.4 +1.28%

• Emerging Market CDS Index 135.48 -.62%
  

• iBoxx Offshore RMB China Corporate High Yield Index 148.60 +.03%

• 2-Year Swap Spread 31.0 -.5 basis point

• TED Spread 57.75 +2.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -14.5 -6.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.11 -.09%
• 3-Month T-Bill Yield 1.70% -4.0 basis points
  

• Yield Curve 50.5 +.25 basis point

• China Iron Ore Spot 62.24 USD/Metric Tonne unch.

• Citi US Economic Surprise Index 46.8 +.8 point

• Citi Eurozone Economic Surprise Index -65.0 -4.7 points

• Citi Emerging Markets Economic Surprise Index 26.90 -1.2 points

• 10-Year TIPS Spread 2.09 +1.0 basis point
  
• 79.4% chance of Fed rate hike at June 13 meeting, 80.3% chance at August 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +187 open in Japan 
• China A50 Futures: Indicating +115 open in China

• DAX Futures: Indicating +84 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.4%

Sector Underperformers:

• 1) Coal -1.2% 2) Road & Rail -1.1% 3) Gaming -.9%

Stocks Falling on Unusual Volume: 

• CLDR, CLLS, AYI, SGH, TITN, ABB, HDP, APOG and SEND

Stocks With Unusual Put Option Activity:

• 1) KMX 2) VNQ 3) ALB 4) AEO 5) ZION

Stocks With Most Negative News Mentions:

• 1) CLDR 2) VIRTU 3) LFIN 4) RMD 5) PRA

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.3%

Sector Outperformers:

• 1) Homebuilders +5.1% 2) Biotech +2.1% 3) Retail +1.9%

Stocks Rising on Unusual Volume:

• PAR, TCAP, ANAB, UBIO, NEWA, TSLA, SSTI, LEN, HRL, TEAM, SWCH, SAM, URGN, KMX, CRESY, LYV, HTH, ACXM, LNDC, TEDU, TUSK, AOI, VCEL, FSCT, KPTI and TERP

Stocks With Unusual Call Option Activity:

• 1) FOXA 2) MNST 3) UA 4) GLW 5) COP

Stocks With Most Positive News Mentions:

• 1) LEN 2) SAM 3) CUI 4) CVS 5) KMX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.4% Below 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 38.5% of Issues Advancing, 58.0% Declining
• 16 New 52-Week Highs, 73 New Lows
• 38.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.9%
• Vix 22.6 +7.2%
• Total Put/Call 1.17 +12.5%
• TRIN/Arms 1.15 +83.71%

Wednesday Watch

Evening Headlines

Bloomberg:

• U.S. Tariff List Aims at Technology China Wants to Dominate. (video) The U.S. proposed imposing 25 percent tariffs on about $50 billion worth of Chinese-made products, focusing on high-tech items from semiconductors to lithium batteries while seeking to minimize the impact on American consumers. “This level is appropriate both in light of the estimated harm to the U.S. economy, and to obtain elimination of China’s harmful acts, policies, and practices,” the U.S. Trade Representative’s office said in a report on Tuesday. The U.S. is targeting the 1,300 product lines to try and force China to change its intellectual property practices, the office said.

• Stocks to Watch After Trump Announces Proposed China Tariffs. (video)

• The Tokyo Whale Steps Up With Record Buys of Japanese Stocks.

• Stocks in Asia Trade Mixed; Treasuries Steady. Equity benchmarks fluctuated in Tokyo, Sydney and Seoul. A recovery in U.S. equities from a technology-fueled drubbing on Monday seemed to be largely overshadowed by the Trump administration’s announcement that came after the close of stock trading in New York. The S&P 500 Index is still more than 9 percent below its January record. Treasuries were steady after sliding Tuesday as risk appetite returned. The Topix index was little changed as of 9:15 a.m. in Tokyo. Australia’s S&P/ASX 200 Index fell 0.2 percent. South Korea’s Kospi index lost 0.2 percent. Contracts on the S&P 500 fell 0.2 percent.

• Five Things You Need to Know to Start Your Day. (video)

• OPEC Output Falls to Lowest in a Year Amid Venezuela Woes.

• Despite Trump’s Tweets, White House Isn’t Talking About Amazon(AMZN) Action. (video)

Wall Street Journal:

• U.S. Announces Tariffs on $50 Billion of China Imports. Levies target 1,300 separate product categories.

• The Fuel Economy Fraud. Pruitt is right to rewrite rules that are mostly honored in the breach.

MarketWatch.com:

• This volatility ratio offers stock-market bulls a reason to be cheerful.

Fox News:

• YouTube shooting injures 4, woman believed to be shooter dead, police say. (video)

• Homeland Security finds suspected phone surveillance devices in Washington.

CNBC:

• Mueller reportedly told Trump's lawyers the president is not a criminal target at this point.

• Chinese ambassador to US: We will take measures to fight back very soon.

• Stocks making the biggest moves after hours: Cloudera, Dave & Buster's & more.

• Apple(AAPL) hires Google’s(GOOG) AI chief.

• Trump’s tax cut windfall lifts stock dividends to new record.

• Earnings reports can't get here soon enough for a market trying to find its footing. (video)

Zero Hedge:   

• Trade War Round 2: US Releases China Tariff List Targeting 1,300 Products.

• "It Is Difficult To Explain What Happened": Einhorn Lost Money On Both His Longs And Shorts In Q1.

• What Reflation? Despite Massive Money Printing, Japan's Industrial Production Still Below 2008 Levels.

• Stocks Soar After Bloomberg Report Unleashes Amazon Buying Panic. (graph)

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 77.75 -.75 basis point. 

• Asia Pacific Sovereign CDS Index 13.25 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 75.21 +.03%.

• FTSE 100 futures -.21%.

• S&P 500 futures -.29%.

• NASDAQ 100 futures -.42%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AYI)/2.09

• (LEN)/.77

• (KMX)/.87

• (OLLI)/.50

• (RECN)/.17

Economic Releases
8:15 am EST

• The ADP Employment Change for March is estimated to fall to 210K versus 235K in February.

10:00 am EST

• ISM Non-Manufacturing Composite for March is estimated to fall to 59.0 versus 59.5 in February.

• Factory Orders for February is estimated to rise +1.7% versus a -1.4% decline in January.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,396,820 barrels versus a +1,643,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,577,640 barrels versus a -3,472,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,360,640 barrels versus a -2,090,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.13% versus a +.6% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Mester speaking, China Services PMI report, Eurozone CPI report and the weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by retail and industrial 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.