Morning Market Internals

NYSE Composite Index:

• Volume Running +.9% Above 100-Day Average
• 1 Sector Rising, 10 Sectors Declining
• 31.0% of Issues Advancing, 65.7% Declining
• 31 New 52-Week Highs, 78 New Lows
• 47.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.1%
• Vix 13.9 +7.5%
• Total Put/Call 1.12 +28.7%
• TRIN/Arms .90 +10.6%

Tuesday Watch

Evening Headlines

Bloomberg:    

• The Stocks to Watch as China Gains Entry to the MSCI Club.

• Asian Stocks Are Mixed, With U.S. Yield Around 3%: Markets Wrap. Stocks in Asia traded mixed, with 10-year Treasury yields hitting the 3 percent mark again as investors assessed the outlook for global trade relations and increased tensions in the Middle East. The dollar held gains and crude oil steadied. Equity benchmarks fluctuated in Japan, Australia and South Korea, and declined in Hong Kong. Chinese stocks were little changed ahead of a slew of data due Tuesday. Earlier, the S&P 500 Index closed with a small gain on below-average volume, with technology shares boosted by President Donald Trump’s easing of China tensions. Treasury yields hovered around 3 percent and the dollar steadied after rising against a basket of major peers. The MSCI Asia Pacific Index fell 0.2 percent as of 10:38 a.m. Tokyo time. Topix index rose 0.3 percent. Hong Kong’s Hang Seng Index fell 0.5 percent. Kospi index fell 0.2 percent. Australia’s S&P/ASX 200 Index fell 0.1 percent. Futures on the S&P 500 Index fell 0.1 percent.  

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

• Fed Nominee Richard Clarida Favors ‘Balanced Approach’ to Policy.

• Investors Are Pouring Money Into Tech Stocks Once Again.

Wall Street Journal:

• U.S., China Weigh Deal on ZTE Ban, Agricultural Tariffs.

• How the World’s Biggest Companies Are Fine-Tuning the Robot Revolution.

• Scores Killed, Thousands Injured in Protests as U.S. Opens Jerusalem Embassy.

• Hedge Funds’ Favorite Charity Is Funding Their Opponents.

• Shale Drillers Look Beyond Texas as Prices Rise.

MarketWatch.com:

• Steve Eisman, of ‘The Big Short’ fame, is bearish on cryptos and Deutsche Bank.

Fox News:

• Gowdy, Nunes say feds launching anonymous attacks on congressional investigator.

CNBC:   

• Stocks shrugged off 'sell in May' and are now setting up for a summer rally .

• The Supreme Court opens up sports betting across the country .

• After-hours buzz: SWCH, SYMC, A & more .

• 3 reasons why this market rally should be taken seriously.

• Seattle backs new tax on largest companies, including Amazon.

• IRS may nix blue states' workaround on tax deduction caps.

• Three key unanswered questions in the landmark legal sports betting decision.

Zero Hedge:    

• Avenatti Sends "Insane" Email To The Daily Caller, Threatens To Sue.

• Australia's Restrictive Gun Laws Are Working Nearly As Well As Chicago's.

• Orphan CDS, Manufactured Credit Events, Insufficient Deliverables: What The Hell Is Going On In The CDS Market?

• Harvard Endowment Goes All-In Apple, Microsoft And Google.

• Uber Teams Up With US Army, NASA To Launch 'Flying Taxis'.

• Mueller Indicted A Russian Company That Didn't Even Exist, Court Transcripts Say.

• Erdogan Blasts: "Terrorist State" Israel Is "Guilty Of Genocide", Withdraws US Ambassador.

• Dow Clings To Longest Win Streak In 8 Months; Dollar & Bond Yields Rise.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 74.50 unch. 

• Asia Pacific Sovereign CDS Index 12.0 unch.

• Bloomberg Emerging Markets Currency Index 72.19 +.02%.

• FTSE 100 futures -.12%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (EXP)/1.08

• (HD)/2.06

Economic Releases

8:30 am EST

• Empire Manufacturing for May is estimated to fall to 15.0 versus 15.8 in April.

• Retail Sales Advance MoM for April is estimated to rise +.3% versus a +.6% gain in March.

• Retail Sales Ex Auto MoM for April is estimated to rise +.5% versus a +.2% gain in March.

• Retail Sales Ex Auto and Gas for April is estimated to rise +.4% versus a +.3% gain in March.

 10:00 am EST

• Business Inventories for March are estimated to rise +.1% versus a +.6% gain in February.

• The NAHB Housing Market Index for May is estimated at 69.0 versus 69.0 in April.
  

4:00 pm EST

• Net Long-Term TIC Flows for March.
  

Upcoming Splits

• (HLF) 2-for-1

Other Potential Market Movers

• The Eurozone GDP report, China Retail Sales/Industrial Production reports, German GDP report, US China Trade Talks, weekly US retail sales reports, JPMorgan Consumer Conference, JPMorgan Tech/Media/Communications Conference, Oppenheimer Tech/Internet/Communications Conference, BofA Merrill Healthcare Conference, BofA Merrill Mining/Metals/Steel Conference, Citi Energy/Utilities Conference, Goldman Sachs Basic Materials Conference, Bank of America Merrill Transport Conference and the Needham Emerging Tech Conference could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by technology and financial 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 Rising into Final Hour on Diminished Trade War Tensions, Oil Gain, Yen Weakness, Biotech/Retail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.0 +3.1%

• Euro/Yen Carry Return Index 136.35 +.30%

• Emerging Markets Currency Volatility(VXY) 8.53 -.35%

• S&P 500 Implied Correlation 34.08 -1.12%

• ISE Sentiment Index 117.0 +1.74%
  

• Total Put/Call .84 -13.4%

• NYSE Arms .75 -32.12%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.60 +.37%
  

• America Energy Sector High-Yield CDS Index 369.0 +.03%

• European Financial Sector CDS Index 57.20 -.25%

• Italian/German 10Y Yld Spread 131.75 +.5 basis point
  

• Asia Pacific Sovereign Debt CDS Index 12.03 -.54%

• Emerging Market CDS Index 154.83 +.33%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.46 +.04%

• 2-Year Swap Spread 21.0 -1.25 basis points

• TED Spread 44.25 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -3.0 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.23 -.25%
• 3-Month T-Bill Yield 1.89% -1.0 basis point
  

• Yield Curve 44.75 +1.0 basis point

• China Iron Ore Spot 68.44 USD/Metric Tonne +.44%

• Citi US Economic Surprise Index 19.0 -2.4 points

• Citi Eurozone Economic Surprise Index -94.60 +3.3 points

• Citi Emerging Markets Economic Surprise Index -1.3 -1.1 points

• 10-Year TIPS Spread 2.16 unch.
  
• 100.0% chance of Fed rate hike at August 1 meeting, 100.0% chance at September 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +20  open in Japan 
• China A50 Futures: Indicating +70 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.2%

Sector Underperformers:

• 1) REITs -1.0% 2) Airlines -.8% 3) Utilities -.7%

Stocks Falling on Unusual Volume: 

• AOSL, CRF, CLM, WRD, LOMA, GGAL, HEAR, XRX, VIAB, SEND, USAT, TCO, ORA and WRD

Stocks With Unusual Put Option Activity:

• 1) ADP 2) EXPR 3) AIG 4) TTD 5) DKS

Stocks With Most Negative News Mentions:

• 1) ORA 2) DF 3) AOSL 4) XRX 5) TWNK

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.2%

Sector Outperformers:

• 1) Alt Energy +1.6% 2) Semis +1.2% 3) Retail +1.2%

Stocks Rising on Unusual Volume:

• IMTE, STBZ, SYMC, REGI, TSG, EOLS, SGMS, ACIA, NXPI, CHDN, MZOR, VIRT, TNDM, SEDG, BATRK, EIGR, CZR, CMCO, CSTE, TTEK, MIXT, TLRD, BYD, NWS, PENN, TLRD, OMER, CZR, CAVM, COOL, WTW, ABCD, BOOT, IGT, PENN and IMMR

Stocks With Unusual Call Option Activity:

• 1) URBN 2) CZR 3) XRT 4) XBI 5) ALXN

Stocks With Most Positive News Mentions:

• 1) TLRD 2) LB 3) QCOM 4) LEA 5) FMC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -18.4% Below 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 61.6% of Issues Advancing, 34.7% Declining
• 96 New 52-Week Highs, 18 New Lows
• 48.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.3%
• Vix 12.9 +1.9%
• Total Put/Call .85 -12.4%
• TRIN/Arms .63 -42.9%