Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 70.25 -.5 basis point. 

• China Sovereign CDS 49.5 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 68.40 -.04%.

• FTSE 100 futures -.25%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (AES)/.34

• (AMT)/2.15

• (BBY)/2.58

• (CPB)/.70

• (CHK)/.18

• (DF)/-.26

• (LOW)/.79

• (ODP)/.08

• (RDC)/-1.09

• (TJX)/.68

• (UTHR)/2.55

• (WEX)/2.10

After the Close:

• (AMED)/.85

• (APA)/.27

• (CVNA)/-.49

• (ESV)/-.36

• (HPQ)/.52

• (LB)/2.07

• (MNST)/.41

• (NDLS)/.02

• (SQ)/.13

• (TDOC)/-.36

• (WING)/.17

Economic Releases
8:30 am EST

• The Advance Goods Trade Deficit for Dec. is estimated at -$74.1B.

• Retail Inventories MoM for Dec. are estimated to rise +.2%.

10:00 am EST

• Pending Home Sales MoM for January is estimated to rise +1.0% versus a -2.2% decline in Dec.

• Factory Orders for Dec. is estimated to rise +.6% versus a -.6% decline in Nov.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +2,633,250 barrels versus a +3,672,00 barrels the prior week. Gasoline supplies are estimated to fall by -1,381,750 barrels versus a -1,454,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,838,380 barrels versus a -1,517,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.7% versus unch. prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell testimony to House, President Trump's N. Korea summit, UK Brexit Vote, House China Trade Hearing, Eurozone Industrial Production report, weekly MBA Mortgage Applications report, BTIG Medical Tech/Life Science/Diagnostic Tools Conference, Leerink Healthcare Conference, BofA Merrill Ag/Chemicals Conference, (HAIN) investor day and the (RF) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by consumer 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.

Stocks Reversing Higher into Final Hour on China Trade Deal Hopes, More Dovish FOMC Commentary, Earnings Outlooks, Tech/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.66 -1.28%

• Euro/Yen Carry Return Index 130.91 -.13%

• Emerging Markets Currency Volatility(VXY) 8.54 -.7%

• S&P 500 Implied Correlation 39.57 +.41%

• ISE Sentiment Index 78.0 -15.2%
  

• Total Put/Call .84 +7.69%

• NYSE Arms .82 -18.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.48 -.73%
  

• America Energy Sector High-Yield CDS Index 539.0 -.09%

• European Financial Sector CDS Index 75.65 -3.02%

• Italian/German 10Y Yld Spread 258.5 -8.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 70.50 +.36%
  

• Emerging Market CDS Index 164.75 -1.47%
  

• iBoxx Offshore RMB China Corporate High Yield Index 158.69 +.25%

• 2-Year Swap Spread 8.75 unch.

• TED Spread 20.75 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -7.5 -.25 basis point.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 68.44 +.10%
• 3-Month T-Bill Yield 2.43% -1.0 basis point

• Yield Curve 15.75 -.25 basis point

• China Iron Ore Spot 80.68 USD/Metric Tonne +.77%

• Citi US Economic Surprise Index -30.50 -7.1 points

• Citi Eurozone Economic Surprise Index -61.70 +.3 point

• Citi Emerging Markets Economic Surprise Index -8.90 -.6 point

• 10-Year TIPS Spread 1.92 -1.0 basis point
• 1.6% chance of Fed rate hike at May 1st meeting, 1.5% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +146 open in Japan 
• China A50 Futures: Indicating +86 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.4%

Sector Underperformers:

• 1) Oil Service -.7% 2) Defense -.7% 3) Medical Equipment -.6%

Stocks Falling on Unusual Volume: 

• SMLP, MEDP, CTMX, VCEL, RLGY, CDEV, NCI, KHC, MDB, QURE and ATRA

Stocks With Unusual Put Option Activity:

• 1) LB 2) AET 3) CPB 4) SHAK 5) BGS

Stocks With Most Negative News Mentions:

• 1) CDEV 2) NLS 3) MDB 4) CTL 5) CAT

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Papers +1.2% 2) Gaming +1.1% 3) Retail +.7%

Stocks Rising on Unusual Volume:

• NIO, MNK, DDS, NITE, FBM, THC, HSII, ENTG, SHAK, JBT, TWOU, FTCH, HMI, AERI, SERV, VSM, NOA, SSTK, LN, BANC, MGTA, VCYT, WP, PODD, ETSY, FCN, PRFT, WP, AZO, DVAX, SJM and MXL

Stocks With Unusual Call Option Activity:

• 1) HTZ 2) MYL 3) ETSY 4) SHAK 5) M

Stocks With Most Positive News Mentions:

• 1) EVER 2) ETSY 3) DDS 4) KBR 5) AZO

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +.9% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 47.5% of Issues Advancing, 49.7% Declining
• 47 New 52-Week Highs, 9 New Lows
• 50.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 58.3%
• Vix 14.7 -.9%
• Total Put/Call .74 -5.1%
• TRIN/Arms .74 -26.0%

Tuesday Watch

Night Trading 

• Asian equity indices are -.50% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 70.75 -1.5 basis points. 

• China Sovereign CDS 49.75 -1.75 basis points.

• Bloomberg Emerging Markets Currency Index 68.36 -.01%.

• FTSE 100 futures -.65%.

• S&P 500 futures -.40%.

• NASDAQ 100 futures -.56%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (AMWD)/1.33
• (AZO)/.10
• (CLVS)/-1.72
• (CBRL)/2.54
• (DISCA)/.81
• (HD)/2.16
• (SJM)/2.02
• (LL)/.16
• (M)/2.53
• (SAFM)/-1.48
• (TPH)/.65

After the Close:

• (EOG)/1.37
• (JAZZ)/3.03
• (MELI)/-.11
• (MYL)/1.36
• (NBR)/-.18
• (PANW)/1.22
• (PZZA)/.15
• (PSA)/2.78
• (RRGB)/.37
• (TOL)/.61

Economic Releases
8:30 am EST

• Housing Starts for Dec. is estimated to fall to 1255K versus 1256K in Nov.
• Building Permits for Dec. is estimated to fall to 1290K versus 1328K in Nov.

9:00 am EST

• The House Price Purchase Index for 4Q.
• The FHFA House Price Index MoM for Dec. is estimated to rise +.4% versus a +.4% gain in Nov.
• The S&P Corelogic CS 20-City MoM for Dec. is estimated to rise +.3% versus a +.3% gain in Nov.

10:00 am EST

• The Richmond Fed Manufacturing Index for Feb. is  estimated to rise to 5.0 versus -2.0 in Jan.
• The Conference Board Consumer Confidence Index for Feb. is estimated to rise to 124.9 versus 120.2 in Jan.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell testimony to Senate, German Consumer Confidence report, $32B 7Y T-Note auction, weekly US retail sales reports, US drugmakers testimony to Congress, Simmons Energy Conference, (TROW) investor day and the (JPM) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by commodity 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.