Stocks Slightly Higher into Final Hour on China Trade Deal Hopes, Diminishing Global Growth Worries, Technical Buying, Tech/Airline Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.9 +4.1%

• Euro/Yen Carry Return Index 130.20 +.47%

• Emerging Markets Currency Volatility(VXY) 8.58 -.69%

• S&P 500 Implied Correlation 37.17 -.64%

• ISE Sentiment Index 78.0 -8.24%
  

• Total Put/Call .80 -1.23%

• NYSE Arms 1.47 +37.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.93 -.07%
  

• America Energy Sector High-Yield CDS Index 513.0 -.39%

• European Financial Sector CDS Index 76.30 -3.2%

• Italian/German 10Y Yld Spread 253.25 -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 66.76 -2.07%
  

• Emerging Market CDS Index 171.77 -.58%
  

• iBoxx Offshore RMB China Corporate High Yield Index 161.0 +.01%

• 2-Year Swap Spread 11.25 -.25 basis point

• TED Spread 18.25 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -13.5 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.50 +.31%
• 3-Month T-Bill Yield 2.42% +1.0 basis point

• Yield Curve 18.75 +1.5 basis points

• China Iron Ore Spot 89.90 USD/Metric Tonne -1.25%

• Citi US Economic Surprise Index -57.70 -12.9 points

• Citi Eurozone Economic Surprise Index -53.0 +11.9 points

• Citi Emerging Markets Economic Surprise Index -9.60 +3.5 points

• 10-Year TIPS Spread 1.91 +1.0 basis point
• 15.3% chance of Fed rate cut at June 19th meeting, 22.7% chance of cut at July 31st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +57 open in Japan 
• China A50 Futures: Indicating +42 open in China

• DAX Futures: Indicating +13 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.4%

Sector Underperformers:

• 1) Tobacco -1.5% 2) Oil Service -.6% 3) Drugs -.2%

Stocks Falling on Unusual Volume: 

• QTT, STNE, ANGO, VIVO and SPR

Stocks With Unusual Put Option Activity:

• 1) AET 2) SYNA 3) GME 4) ASHR 5) AMT

Stocks With Most Negative News Mentions:

• 1) FSNN 2) AVEO 3) VIVO 4) AVP 5) SPR

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Semis +3.1% 2) Video Gaming +2.6% 3) Alt Energy +2.1%

Stocks Rising on Unusual Volume:

• OPTT, IEFA, FLY, PLAY, TIGR, BOOM, VFF, AYI, PHUN, IOVA, SIG, ELF, IGV, SGMO, CAMT, AMD, VONG, UPWK, ESTC, AAXJ, IRTC, JYNT, GH, SIMO, BBL, NLSN, UPWK and IRTC

Stocks With Unusual Call Option Activity:

• 1) UNIT 2) MCHP 3) SIG 4) TXN 5) XLB

Stocks With Most Positive News Mentions:

• 1) AMD 2) DAL 3) URBN 4) AYI 5) APTX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -3.7% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 68.4% of Issues Advancing, 28.5% Declining
• 139 New 52-Week Highs, 12 New Lows
• 51.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.9%
• Vix 13.2 -1.2%
• Total Put/Call .66 -18.5%
• TRIN/Arms .94 -12.15%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 67.75 unch. 

• China Sovereign CDS 42.75 -.25 basis point.
  

• Bloomberg Emerging Markets Currency Index 67.34 +.06%.

• FTSE 100 futures -.08%.

• S&P 500 futures +.23%.

• NASDAQ 100 futures +.23%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (AYI)/1.78
• (SIG)/3.82

After the Close:

• (RECN)/.22

Economic Releases
8:15 am EST

• The ADP Employment Change for March is estimated to fall to 175K versus 183K in Feb.
  

10:00 am EST

• The ISM Non-Manufacturing Index for March is estimated to fall to 58.0 versus 59.7 in Feb.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -590,910 barrels versus a +2,800,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,072,730 barrels versus a -2,883,000 barrel decline the prior week. Distillate inventories are estimated to fall by -786,360 barrels versus a -2,075,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.9% versus a -2.3% decline prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking, Chinese trade talks in Washington, China Manufacturing/Services PMI reports, PBMs testimony to Senate and the weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to strengthen into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 67.75 -1.5 basis points. 

• China Sovereign CDS 43.0 -.5 basis point.
  

• Bloomberg Emerging Markets Currency Index 67.40 -.07%.

• FTSE 100 futures +.21%.

• S&P 500 futures -.09%.

• NASDAQ 100 futures -.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (ANGO)/.22
• (WBA)/1.72

After the Close:

• (PLAY)/.64
• (GME)/1.58

Economic Releases
8:30 am EST

• Durable Goods Orders for Feb. are estimated to fall -1.8% versus a +.3% gain in Jan.
• Durables Ex Transports for Feb. is estimated to rise +.1% versus a -.2% decline in Jan.
• Cap Goods Orders Non-Defense Ex-Air for Feb. is estimated to rise +.1% versus a +.8% gain in Jan.
  

Afternoon:

• Wards Total Vehicle Sales for March are estimated to rise to 16.8M versus 16.56M in Feb.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PPI report, weekly US retail sales reports and the BofA Merrill Utilities/Energy Conference could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by commodity and technology shares in the region. I expect US stocks to open mixed and to strengthen into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.