Stocks Falling into Final Hour on Global Growth Fears, Oil Decline, Technical Selling, Biotech/Energy Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.4 +4.0%

• Euro/Yen Carry Return Index 131.38 -.07%

• Emerging Markets Currency Volatility(VXY) 8.09 -.12%

• S&P 500 Implied Correlation 41.02 +1.2%

• ISE Sentiment Index 59.0 -42.7%
  

• Total Put/Call 1.03 +13.2%

• NYSE Arms 1.91 +120.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.28 +2.27%
  

• America Energy Sector High-Yield CDS Index 507.0 +.30%

• European Financial Sector CDS Index 75.14 -.27%

• Italian/German 10Y Yld Spread 246.25 -7.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 66.89 +.26%
  

• Emerging Market CDS Index 172.75 +.65%
  

• iBoxx Offshore RMB China Corporate High Yield Index 159.04 +.1%

• 2-Year Swap Spread 11.25 +1.25 basis points

• TED Spread 17.0 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.25 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.75 -.28%
• 3-Month T-Bill Yield 2.45% +1.0 basis point

• Yield Curve 17.25 unch.

• China Iron Ore Spot 83.59 USD/Metric Tonne +.19%

• Citi US Economic Surprise Index -34.0 -.2 point

• Citi Eurozone Economic Surprise Index -49.8 +1.4 points

• Citi Emerging Markets Economic Surprise Index -15.0 +.4 point

• 10-Year TIPS Spread 1.91 -2.0 basis points
• .8% chance of Fed rate hike at May 1st meeting, .8% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -216 open in Japan 
• China A50 Futures: Indicating +20 open in China

• DAX Futures: Indicating -16 open in Germany

Portfolio:

• Slightly Lower: On losses in my industrial/retail/tech/biotech/medical sector longs

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.8%

Sector Underperformers:

• 1) Alt Energy -3.4% 2) Oil Service -3.1% 3) Disk Drives -2.6%

Stocks Falling on Unusual Volume: 

• INXN, ASND, SRPT, CDLX, HUYA, YY, LGND, JKS, CBAY, BJ, BANC, SAIL, CTMX, UNFI, BF/B, VCYT, TNDM, NVCR, DLTH and LGND

Stocks With Unusual Put Option Activity:

• 1) AET 2) ZAYO 3) GPS 4) MDCO 5) CAG

Stocks With Most Negative News Mentions:

• 1) NIO 2) SRPT 3) DLTH 4) MU 5) DF

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.6%

Sector Outperformers:

• 1) Gaming +1.2% 2) Utilities +.3% 3) Homebuilders +.3%

Stocks Rising on Unusual Volume:

• BPTH, AVAV, AMBA, ANF, AGS, DLTR, TSG, ZAYO, CBPO, CARB, HCCI, AON, GSKY, DEO, ALG, I, LFUS, TPIC, BIDU, DBD, TRHC, AEO, BTI, AGX, PLCE and AFIN

Stocks With Unusual Call Option Activity:

• 1) HRB 2) ZAYO 3) AMBA 4) LYB 5) ROST

Stocks With Most Positive News Mentions:

• 1) JILL 2) AMBA 3) DLTR 4) ANF 5) TGT

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +14.6% Above 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 29.9% of Issues Advancing, 66.1% Declining
• 28 New 52-Week Highs, 20 New Lows
• 48.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.8%
• Vix 15.1 +2.4%
• Total Put/Call .90 +1.1%
• TRIN/Arms 1.39 +8.7%

Wednesday Watch

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 67.0 +.25 basis point. 

• China Sovereign CDS 45.75 -1.5 basis points.

• Bloomberg Emerging Markets Currency Index 67.93 unch.

• FTSE 100 futures -.31%.

• S&P 500 futures -.21%.

• NASDAQ 100 futures -.23%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (ANF)/1.15
• (BJ)/.36
• (BF/B)/.45
• (DLTR)/1.92
• (DCI)/.51
• (THO)/1.02

After the Close:

• (CASY)/.96

Economic Releases
8:15 am EST

• The ADP Employment Change for  Feb. is estimated to fall to 190K versus 213K in Jan.

8:30 pm EST

• The Trade Balance for Dec. is estimated to widen to -$57.9B versus -$49.2B in Nov.

2:00 pm EST

• US Fed Beige Book report.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Mester speaking, Australia GDP report, weekly EIA energy inventory data, weekly MBA Mortgage Applicatins report, (XOM) investor day, (ZUMZ) monthly sales release, (LOGI) investor day, (EL) investor day, Huawei CFO extradition hearing and the (TTD) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by financial and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.

Stocks Reversing Slightly Higher into Final Hour on Diminishing Global Growth Fears, Earnings Outlooks, Technical Buying, Retail/Restaurant Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.39 -1.6%

• Euro/Yen Carry Return Index 131.41 -.19%

• Emerging Markets Currency Volatility(VXY) 8.11 -1.34%

• S&P 500 Implied Correlation 39.77 -1.36%

• ISE Sentiment Index 97.0 +26.0%
  

• Total Put/Call .88 -11.11%

• NYSE Arms .98 -2.97%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.72 +1.73%
  

• America Energy Sector High-Yield CDS Index 507.0 +.22%

• European Financial Sector CDS Index 75.34 -.67%

• Italian/German 10Y Yld Spread 254.0 -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 66.5 -.18%
  

• Emerging Market CDS Index 171.41 +.89%
  

• iBoxx Offshore RMB China Corporate High Yield Index 158.88 +.09%

• 2-Year Swap Spread 9.75 +1.25 basis points

• TED Spread 16.0 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.94 -.06%
• 3-Month T-Bill Yield 2.44% +2.0 basis points

• Yield Curve 17.25 -1.0 basis point

• China Iron Ore Spot 84.47 USD/Metric Tonne +.12%

• Citi US Economic Surprise Index -33.80 +9.1 points

• Citi Eurozone Economic Surprise Index -51.2 +8.8 points

• Citi Emerging Markets Economic Surprise Index -15.4 +1.1 points

• 10-Year TIPS Spread 1.93 -1.0 basis point
• .8% chance of Fed rate hike at May 1st meeting, 4.5% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -136 open in Japan 
• China A50 Futures: Indicating +87 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio:

• Slightly Lower: On losses in my industrial sector longs and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 50% Net Long