Bear Radar

Style Underperformer:

•   Mid-Cap Value +.4%

Sector Underperformers:

• 1) Utilities -1.9% 2) Tobacco -.5% 3) Foods -.5%

Stocks Falling on Unusual Volume: 

• AMBA, FSLR, JKS, YY, AZUL, IOVA, IRDM, PPL, FAST and YELP

Stocks With Unusual Put Option Activity:

• 1) SIG 2) FSLR 3) AMBA 4) FIVE 5) BIG

Stocks With Most Negative News Mentions:

• 1) RFBC 2) FSLR 3) YELP 4) WHR 5) DAL

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.7%

Sector Outperformers:

• 1) Steel +2.4% 2) Banks +2.0% 3) Restaurants +1.6%

Stocks Rising on Unusual Volume:

• EFG, VRA, SIG, MRSN, INDY, NKTR, FEMS, NCS, VONG, AERI, OA, CGC, LOB, CBTX, GHDX, ZIONW, IMTE, AYX, ZTO, MDGL, UA, DOVA, RYB, CBLK, COOL, MTW, TSLA, EFX, RGNX, VICR and CYRX

Stocks With Unusual Call Option Activity:

• 1) FDC 2) SIG 3) HOG 4) XLB 5)EA

Stocks With Most Positive News Mentions:

• 1) AGN 2) CAT 3) X 4) V 5) KSS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +.4% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 50.8% of Issues Advancing, 45.9% Declining
• 151 New 52-Week Highs, 40 New Lows
• 50.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.5%
• Vix 12.0 -3.6%
• Total Put/Call .83 +7.8%
• TRIN/Arms .75 -43.8%

Wednesday Watch

Evening Headlines

Bloomberg:   

• Mnuchin Favors Less Sweeping Investment Limits for China, Sources Say. The Treasury Department wants President Donald Trump to rely on legislation to tighten scrutiny of Chinese investments in the U.S. instead of an executive move imposing sweeping new limits, according to three people familiar with the matter. Treasury Secretary Steven Mnuchin has until the end of June to present to the president his department’s final recommendations on Chinese investment curbs. Trump directed Mnuchin to draw up the restrictions as part of a probe into China’s alleged theft of intellectual property that also allows the imposition of tariffs.

• China Offers to Boost U.S. Goods Purchases by $25 Billion, Sources Say.  

• Emerging Markets in May Saw Biggest Outflows in 18 Months.

• Risk of Default in Asia Is Rising as Governments Allow Failures.

• Asian Stocks Trade Mixed as Global Rally Pauses. Stocks in Asia opened mixed Wednesday as a global rally in risk assets that sent U.S. equities to three-months highs stalled amid a backdrop of protectionism and geopolitical issues. Treasury yields ticked higher and the dollar pared gains. Equities were little changed in Japan and rose in Australia, while South Korean markets were closed for a holiday. Earlier, advances in megacap tech shares helped support the Nasdaq indexes, pushing them to fresh records for a second straight day. Italian bonds tumbled after the nation’s premier pledged a raft of populist measures. Crude oil was on track to rise for a second day. Topix index was little changed as of 9:28 a.m. in Tokyo. S&P/ASX 200 Index rose 0.5 percent. Hang Seng Index futures fell 0.2 percent. S&P 500 Index futures were flat.

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

• Investors Are Getting Used to Trade War Bluster.

• America May Need to Adopt China's Weapons to Win the Tech War.

Wall Street Journal:

• OPEC Faces New Concern Over Global Oil Stocks: China.

• Delaware Cashes In on Sports Betting.

• China Offers to Buy $70 Billion in Goods to Fend Off Tariffs.

• Instagram Could Soon Allow Users to Post Long-Form Video.

• U.S. Companies Wind Down Iran Business After Nuclear Deal Pullout.

MarketWatch.com:

• Tesla(TSLA) on track to make 5,000 Model 3s a week by end of the month, Musk says.

• Apple’s(AAPL) stock rises to new highs, but it’s still inexpensive, writes Thomas Kee.

• ‘Fortnite’ is the most talked about factor during earnings season, eclipsing cryptocurrencies.

Fox News:

• 'Demented' media jumps shark with wild speculation president beat Melania during surgery recovery.

CNBC:    

• There are more jobs than people out of work, something the American economy has never experienced before.

• After-hours buzz: NCS, AMBA & more.  

• Trustees warn Medicare's financial problems are worsening.  

• Howard Schultz rips Democrats for veering too far left: 'How are we going to pay for these things?'   

• Tesla(TSLA) reveals plans for a new factory in Shanghai at shareholder meeting.

Zero Hedge: 

• In Heated Interview, Putin Says "Ask The State Department About Soros".

• Priestap: FBI's Strzok Played "More Central Role Than Previously Known" In Clinton, Russia Probes.

• McCabe Scrambles To Secure Immunity Before Senate Testimony.

• The Market Has Not Been This "Nervous" Since 2008.

• Berkeley Scholar Admits "Climate Change Has Run Its Course".

• White House Urges US Airlines To Resist Beijing's "Orwellian Nonsense" On Taiwan.

• Chanos Blasts Bitcoin As "Speculation Masquerading As Breakthrough". 

• WTI/RBOB Drop After Huge Gasoline Build.

• Millions Trust Ancestry.com With Their Genetic Code: What Could Go Wrong?

• Brazil Central Bank Intervention Fails As Real Rout Accelerates. 

• Big-Tech & Small-Caps Record High But Bonds, Bullion, & Black Gold Bounce. 

Business Insider:

• The NFL's worst nightmare for its anthem policy has already come true.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 77.0 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 12.75 unch.

• Bloomberg Emerging Markets Currency Index 70.98 +.03%.

• FTSE 100 futures -.12%.

• S&P 500 futures +.06%.

• NASDAQ 100 futures +.12%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (BF/B)/.23

• (SIG)/-.10

After the Close:

• (FIVE)/.33

• (OKTA)/-.16

• (THO)/2.60

• (UNFI)/.92

Economic Releases

8:30 am EST

• The Trade Deficit for April is estimated at -$49.0B versus -$49.0B in March.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,264,170 barrels versus a -3,620,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +160,500 barrels versus a +534,000 barrel gain the prior week. Distillate inventories are estimated to rise by +564,000 barrels versus a +634,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.3% versus a +2.1% gain prior.
  

Upcoming Splits

• (EXPO) 2-for-1

• (PFBI) 5-for-4

Other Potential Market Movers

• The Eurozone Retail PMI report, weekly MBA mortgage applications report, Deutsche Bank Industrials/Materials Conference, Goldman Sachs European Financials Conference, Deutsche Bank Financial Services Conference, Citi Small/Mid-Cap Conference, (FAST) April Sales report, (LB) Sales report, (COST) May sales results and the (A) analyst meeting 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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Slightly Higher into Final Hour on Economic Optimism, Technical Buying, Short-Covering, Retail/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.64 -.78%

• Euro/Yen Carry Return Index 133.83 +.10%

• Emerging Markets Currency Volatility(VXY) 9.16 +.11%

• S&P 500 Implied Correlation 35.18 -3.96%

• ISE Sentiment Index 104.0 -15.5%
  

• Total Put/Call .77 -3.8%

• NYSE Arms 1.14 -1.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.56 +.67%
  

• America Energy Sector High-Yield CDS Index 375.0 -.78%

• European Financial Sector CDS Index 79.53 +7.1%

• Italian/German 10Y Yld Spread 242.0 +30.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.65 -1.4%

• Emerging Market CDS Index 170.14 +.28%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.84 -.12%

• 2-Year Swap Spread 26.25 unch.

• TED Spread 39.25 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -8.0 +2.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.95 -.23%
• 3-Month T-Bill Yield 1.93% +3.0 basis points
  

• Yield Curve 42.50 -.5 basis point

• China Iron Ore Spot 65.25 USD/Metric Tonne +.69%

• Citi US Economic Surprise Index 11.70 +2.0 points

• Citi Eurozone Economic Surprise Index -90.0 -.2 point

• Citi Emerging Markets Economic Surprise Index -14.80 -2.1 points

• 10-Year TIPS Spread 2.14 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 -29  open in Japan 
• China A50 Futures: Indicating -64 open in China

• DAX Futures: Indicating -12 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long