Stocks Slightly Higher into Final Hour on Less Emerging Markets Debt Angst, Short-Covering, Technical Buying, Biotech/Retail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Mixed
  

Equity Investor Angst:

• Volatility(VIX) 13.4 +1.4%

• Euro/Yen Carry Return Index 135.87 +.12%

• Emerging Markets Currency Volatility(VXY) 8.51 -.58%

• S&P 500 Implied Correlation 35.99 +.87%

• ISE Sentiment Index 128.0 -9.86%
  

• Total Put/Call .88 +.10%

• NYSE Arms 1.0 +38.31%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.85 -1.79%
  

• America Energy Sector High-Yield CDS Index 369.0 -.22%

• European Financial Sector CDS Index 58.23 -2.52%

• Italian/German 10Y Yld Spread 131.25 -6.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.08 -3.13%

• Emerging Market CDS Index 154.65 +3.1%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.40 +.04%

• 2-Year Swap Spread 22.25 -2.25 basis points

• TED Spread 45.5 -1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.39 -.27%
• 3-Month T-Bill Yield 1.90% +2.0 basis points
  

• Yield Curve 43.75 +.25 basis point

• China Iron Ore Spot 67.73 USD/Metric Tonne +.77%

• Citi US Economic Surprise Index 21.4 +.2 point

• Citi Eurozone Economic Surprise Index -97.90 +1.0 point

• Citi Emerging Markets Economic Surprise Index -.2 +.5 point

• 10-Year TIPS Spread 2.17 -1.0 basis point
  
• 100.0% chance of Fed rate hike at August 1 meeting, 100.0% chance at September 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -48  open in Japan 
• China A50 Futures: Indicating +44 open in China

• DAX Futures: Indicating -9 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth unch.

Sector Underperformers:

• 1) Gaming -2.1% 2) Tobacco -1.1% 3) Construction -1.0%

Stocks Falling on Unusual Volume: 

• SYMC, AQ, YELP, TLND, PSDO, HALO, KLIC, WB, PZZA, XON, TRI and FLS

Stocks With Unusual Put Option Activity:

• 1) SYMC 2) GOGO 3) DISH 4) ACAD 5) NUE

Stocks With Most Negative News Mentions:

• 1) OBLN 2) PSDO 3) HALO 4) MG 5) CHH

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.1%

Sector Outperformers:

• 1) Biotech +1.0% 2) Road & Rail +1.0% 3) Papers +.9%

Stocks Rising on Unusual Volume:

• TTD, HEAR, IMMR, ARCB, REDU, UEPS, WTW, GLOB, AKCA, MCFT, APPN, MIXT, HUBS, PEGA, SSRM, OMER, FSCT, EOLS, INFN, IMTE, SGRY, CUTR, EPAM, ASND, UNIT, CHRS, JNCE, KTOS,  COOL, REGN, UNIT, TPX and WTTR

Stocks With Unusual Call Option Activity:

• 1) EMB 2) BYD 3) DBX 4) CSX 5) PH

Stocks With Most Positive News Mentions:

• 1) TTD 2) AKCA 3) VZ 4) UNVR 5) CAT

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -18.6% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 61.6% of Issues Advancing, 34.1% Declining
• 97 New 52-Week Highs, 13 New Lows
• 47.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.0%
• Vix 13.2 -.6%
• Total Put/Call .79 -1.3%
• TRIN/Arms .97 +36.0%

Friday Watch

Evening Headlines

Bloomberg:       

• What Happened in the World Economy This Week and What It Means.  

• Shorting China Stocks From New York Could Get Easier.

• Asian Stocks Open Higher as U.S. Prices Reassure: Markets Wrap. Asian stocks opened higher after their U.S. counterparts rallied amid relief the latest reading on American inflation suggested less need for the Federal Reserve to accelerate monetary tightening. The dollar steadied after dropping the most since March. Equity benchmarks advanced in Japan and South Korea, and futures on Hong Kong shares rose before the open there. The MSCI Emerging Markets Index is heading for its best week since March thanks to easing investor concern that higher U.S. yields and a stronger dollar would spur broad contagion. Ten-year Treasury yields dropped further below 3 percent after the consumer-price report showed a smaller gain in prices than forecast for April. Malaysian assets trading offshore began to stabilize after the shock election win for the opposition. Japan’s Topix index rose 0.6 percent as of 9:21 a.m. in Tokyo. Australia’s S&P/ASX 200 was up 0.3 percent. Hang Seng futures rose 0.9 percent. Futures on the S&P 500 were little changed after the underlying gauge closed up 0.9 percent. The Kospi advanced 0.5 percent.

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

• Nvidia(NVDA) Reveals Crypto Sales for First Time and Predicts Big Drop. 

• Four Things to Look for in Trump's Drug Pricing Speech Friday.

• Amazon(AMZN) Stops Buying Prized Shopping Ads on Google(GOOGL).

Wall Street Journal:

• North Korea-Trump Summit Set for June in Singapore as Detainees Return.

• U.S. Raises Pressure on Iran, Targeting Currency Exchange.

• Record Buybacks Help Steady Wobbly Stock Market.

• Goldman Sachs, Apple Team Up on New Credit Card.

• U.S. Stocks Climb as Inflation Fears, Volatility Ebb.

• Program Allowing Foreign Students to Work in U.S. Has Grown Rapidly.

MarketWatch.com:

• Here’s why the stock market has its swagger back — at least for now.

• Nvidia’s(NVDA) stock eases back from record high following big earnings beat, strong outlook.  

• Red-hot chip stocks are actually getting cheaper as their prices rise.

Fox News:

• Democrat states lead charge to dump Electoral College, back popular vote.

CNBC: 

• Alphabet(GOOGL) is considering investing in Flipkart alongside Walmart(WMT) — insiders explain why.

• Symantec(SYMC) plunges 20 percent after it reveals internal investigation by board's audit committee.

• JP Morgan(JPM) revamps its stock trading business in a sign of the changes sweeping through Wall Street.

• After-hours buzz: DBX, NVDA, SYMC & more.

• Supplier fire isn't just hurting Ford, supply issues are rippling across auto industry.

• Oil prices risk spiking to $100 a barrel next year, Bank of America analysts say.

• Commerce Secretary Wilbur Ross: I think China 'agreed to the concept' of reducing the trade deficit.

• Dropbox(BOX) falls despite beating on every count.

Zero Hedge:   

• Avenatti Exposed: Stormy's Lawyer May Face Disbarrment, Legal Action As Past Catches Up.

• Cryptos Crash After Nvidia Forecasts Big Drop In Mining Demand.

• China "Regrets" Trump's Decision, Vows To Protect Iran Nuclear Deal.

• Students "Deeply Hurt" By Criticism Of Liberal Intolerance.

• Gas Price Tops $4 In California For First Time Since July 2014.

• US Posts Biggest Budget Surplus In History.

• Five "Most Wanted" ISIS Leaders Captured, Trapped Using Smartphone App.

• Stocks Jump For 6th Straight Day As Dollar, Yield Curve Dump.

Night Trading 

• Asian equity indices are +.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 75.50 -2.0 basis points. 

• Asia Pacific Sovereign CDS Index 12.5 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 72.61 +.04%.

• FTSE 100 futures +.05%.

• S&P 500 futures +.03%.

• NASDAQ 100 futures -.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TRI)/.65

Economic Releases

8:30 am EST

• The Import Price Index MoM for April is estimated to rise +.5% versus unch. in March.

• The Export Price Index MoM for April is estimated to rise +.4% versus a +.3% gain in March.

 10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment Index for May is estimated to fall to 98.3 versus 98.8 in April.
  

Upcoming Splits

• (HLF) 2-for-1

Other Potential Market Movers

• The Australia Home Loans report and the (CTB) investor day 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 modestly lower and to rally into the afternoon, finishing modestly mixed.  The Portfolio is 75% net long heading into the day.

Stocks Surging into Final Hour on Less Emerging Markets Debt Angst, Lower Long-Term Rates, Technical Buying, Tech/Commodity Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 13.2 -1.6%

• Euro/Yen Carry Return Index 135.74 +.24%

• Emerging Markets Currency Volatility(VXY) 8.67 -1.25%

• S&P 500 Implied Correlation 36.0 -1.9%

• ISE Sentiment Index 155.0 +36.0%
  

• Total Put/Call .80 -3.6%

• NYSE Arms .81 -6.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.11 -2.23%
  

• America Energy Sector High-Yield CDS Index 370.0 -1.24%

• European Financial Sector CDS Index 59.5 -1.65%

• Italian/German 10Y Yld Spread 137.75 -5.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.5 -4.44%

• Emerging Market CDS Index 148.96 -5.78%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.33 +.03%

• 2-Year Swap Spread 24.5 -.75 basis point

• TED Spread 47.25 -1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -1.75 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.65 +1.06%
• 3-Month T-Bill Yield 1.88% unch.
  

• Yield Curve 43.5 -3.75 basis points

• China Iron Ore Spot 66.6 USD/Metric Tonne +1.12%

• Citi US Economic Surprise Index 21.2 -6.5 points

• Citi Eurozone Economic Surprise Index -98.90 +2.1 points

• Citi Emerging Markets Economic Surprise Index -.7 -1.2 points

• 10-Year TIPS Spread 2.18 -1.0 basis point
  
• 100.0% chance of Fed rate hike at August 1 meeting, 100.0% chance at September 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +33  open in Japan 
• China A50 Futures: Indicating +77 open in China

• DAX Futures: Indicating -4 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long