Stocks Rising into Final Hour on Stable Long-Term Rates, Diminishing Trade War Concerns, Yen Weakness, Energy/Gaming Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.84 +1.18%

• Euro/Yen Carry Return Index 136.0 +.33%

• Emerging Markets Currency Volatility(VXY) 9.56 +.95%

• S&P 500 Implied Correlation 32.88 +3.56%

• ISE Sentiment Index 114.0 +8.57%
  

• Total Put/Call 1.0 +9.89%

• NYSE Arms .82 +9.81%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.19 -.44%
  

• America Energy Sector High-Yield CDS Index 383.0 -1.52%

• European Financial Sector CDS Index 80.02 -.92%

• Italian/German 10Y Yld Spread 235.25 -1.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 14.50 +.76%

• Emerging Market CDS Index 171.83 +.93%
  

• iBoxx Offshore RMB China Corporate High Yield Index 148.26 +.06%

• 2-Year Swap Spread 24.25 -.75 basis point

• TED Spread 36.25 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -2.25 +4.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.15 +.39%
• 3-Month T-Bill Yield 1.97% +2.0 basis points
  

• Yield Curve 28.25 -1.0 basis point

• China Iron Ore Spot 63.0 USD/Metric Tonne +.16%

• Citi US Economic Surprise Index 13.90 +.6 point

• Citi Eurozone Economic Surprise Index -36.70 -6.0 points

• Citi Emerging Markets Economic Surprise Index -1.70 +1.3 points

• 10-Year TIPS Spread 2.13 -1.0 basis point
  
• 86.5% chance of Fed rate hike at Sept. 26th meeting, 86.9% chance at November 8th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +64 open in Japan 
• China A50 Futures: Indicating -108 open in China

• DAX Futures: Indicating -12 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/industrial sector longs and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.6%

Sector Underperformers:

• 1) Airlines -.9% 2) Retail -.9% 3) Banks -.8%

Stocks Falling on Unusual Volume: 

• NVRO, WHD, SPRO, JWN, SAH, EGAN, FORM, DOVA, AN, HTZ and GBT

Stocks With Unusual Put Option Activity:

• 1) P 2) UUP 3) PEP 4) UNIT 5) PG

Stocks With Most Negative News Mentions:

• 1) SAH 2) MRTN 3) AN 4) CERN 5) PRTA

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.3%

Sector Outperformers:

• 1) Utilities +1.5% 2) Gaming +1.1% 3) Semis +.9%

Stocks Rising on Unusual Volume:

• KDP, ELVT, SMPL, XLRN, CBPO, SFIX, HELE, PEP, MLNX, TDW, AIRG, PANW, MRVL, CBLK, BTAI, CASA, GIL, KOF, WNS, CHKP, FCN, WDFC, NVO, KEM, NTRA and VNE

Stocks With Unusual Call Option Activity:

• 1) FAST 2) ZAYO 3) JWN 4) AMTD 5) SGMS

Stocks With Most Positive News Mentions:

• 1) SFIX 2) CTRV 3) IMPV 4) PEP 5) XLRN

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -5.0% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 60.2% of Issues Advancing, 35.2% Declining
• 97 New 52-Week Highs, 9 New Lows
• 52.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.1%
• Vix 12.4 -2.4%
• Total Put/Call .91 unch.
• TRIN/Arms .81 +8.6%

Tuesday Watch

Night Trading 

• Asian equity indices are +.25% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 91.5 -4.0 basis points. 
• Asia Pacific Sovereign CDS Index 14.50 -.5 basis point.
• Bloomberg Emerging Markets Currency Index 69.96 +.12%.
• FTSE 100 futures +.18%.
• S&P 500 futures +.22%.
• NASDAQ 100 futures +.35%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (PEP)/1.53

After the Close:

• (AIR)/.51
• (WDFC)/1.05
  

Economic Releases 
6:00 am EST

• The NFIB Small Business Optimism Index for June is estimated to fall to 106.9 versus 107.8 in May.
  

10:00 am EST

• The JOLTS Job Openings Index for May is estimated to fall to 6620 versus 6698 in April.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The China CPI report, UK Industrial Production report, US weekly retail sales reports, $33B 3Y T-Note auction, (OTEX) investor day, (JWN) investor day, (KLIC) analyst day and the SEMICON West could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by industrial and technology 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 Surging into Afternoon on Economic Optimism, Diminishing Trade War Fears, Less European/Emerging Markets/US High-Yield Debt Angst, Transport/Financial Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.8 -4.0%

• Euro/Yen Carry Return Index 135.08 +.35%

• Emerging Markets Currency Volatility(VXY) 9.49 +.96%

• S&P 500 Implied Correlation 33.45 -2.56%

• ISE Sentiment Index 134.0 +36.73%
  

• Total Put/Call .88 -11.11%

• NYSE Arms .74 +17.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.86 -2.55%
  

• America Energy Sector High-Yield CDS Index 389.0 -1.87%

• European Financial Sector CDS Index 80.76 -2.97%

• Italian/German 10Y Yld Spread 236.75 -5.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 14.39 -4.0%

• Emerging Market CDS Index 169.44 -3.76%
  

• iBoxx Offshore RMB China Corporate High Yield Index 148.18 -.08%

• 2-Year Swap Spread 25.0 unch.

• TED Spread 37.5 -2.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -6.75 -3.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.07 +.13%
• 3-Month T-Bill Yield 1.95% +1.0 basis point
  

• Yield Curve 29.25 +.75 basis point

• China Iron Ore Spot 63.10 USD/Metric Tonne +.33%

• Citi US Economic Surprise Index 13.30 +.7 point

• Citi Eurozone Economic Surprise Index -30.70 +5.4 points

• Citi Emerging Markets Economic Surprise Index -3.0 +2.4 points

• 10-Year TIPS Spread 2.14 unch.
  
• 83.2% chance of Fed rate hike at Sept. 26th meeting, 84.1% chance at November 8th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +113 open in Japan 
• China A50 Futures: Indicating -65 open in China

• DAX Futures: Indicating -3 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long