Stocks Surging into Final Hour on Earnings Optimism, China Trade Deal Hopes, Oil Gain, Biotech/Defense Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 12.15 -2.17%

• Euro/Yen Carry Return Index 130.36 -.44%

• Emerging Markets Currency Volatility(VXY) 8.19 -1.09%

• S&P 500 Implied Correlation 34.51 -3.06%

• ISE Sentiment Index 112.0 +12.0%
  

• Total Put/Call .78 -11.3%

• NYSE Arms 1.07 +18.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.12 -1.54%
  

• America Energy Sector High-Yield CDS Index 448.0 -1.24%

• European Financial Sector CDS Index 69.45 +1.9%

• Italian/German 10Y Yld Spread 263.5 +5.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 63.75 -.02%
  

• Emerging Market CDS Index 179.66 +.47%
  

• iBoxx Offshore RMB China Corporate High Yield Index 161.74 +.08%

• 2-Year Swap Spread 8.5 unch.

• TED Spread 17.50 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -18.25 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.07 -.22%
• 3-Month T-Bill Yield 2.43% +1.0 basis point

• Yield Curve 20.75 +.25 basis point

• China Iron Ore Spot 89.95 USD/Metric Tonne +.35%

• Citi US Economic Surprise Index -65.80 +2.0 points

• Citi Eurozone Economic Surprise Index -36.60 +2.1 points

• Citi Emerging Markets Economic Surprise Index 1.60 -3.4 points

• 10-Year TIPS Spread 1.96 unch.
• 20.8% chance of Fed rate cut at June 19th meeting, 23.3% chance of cut at July 31st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +96 open in Japan 
• China A50 Futures: Indicating +36 open in China

• DAX Futures: Indicating +28 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.6%

Sector Underperformers:

• 1) Gold & Silver -.7% 2) Telecom -.7% 3) Disk Drives -.4%

Stocks Falling on Unusual Volume: 

• KMB, ASTE, WAT, AVX, MLI, STT, AVX, MLI and WAT

Stocks With Unusual Put Option Activity:

• 1) SWN 2) AET 3) NWL 4) HSY 5) LL

Stocks With Most Negative News Mentions:

• 1) MLI 2) FCAU 3) APA 4) HRL 5) CROX

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.9%

Sector Outperformers:

• 1) Healthcare Providers +3.4% 2) Social Media +3.1% 3) Biotech +2.5%

Stocks Rising on Unusual Volume:

• SVRA, TWTR, HAS, IBP, MX, IGV, MNOV, KSS, IMUX, NVS, TGS, WHR, MINI, GPK, QCOM, ISRG, CNC, MRCY, WSO, JBLU, ARCH, ORTX, BRO, CIT, TDY, GES, DGX, MINI, WAL, UPLD and LMT

Stocks With Unusual Call Option Activity:

• 1) GD 2) KSS 3) TWTR 4) CERN 5) QCOM

Stocks With Most Positive News Mentions:

• 1) HAS 2) TWTR 3) LMT 4) QCOM 5) SNAP

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +2.7% Above 100-Day Average
• 10 Sectors Rising, 1 Sectors Declining
• 76.1% of Issues Advancing, 21.2% Declining
• 116 New 52-Week Highs, 26 New Lows
• 56.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.0%
• Vix 12.3 -.8%
• Total Put/Call .81 -8.0%
• TRIN/Arms 1.09 +21.1%

Tuesday Watch

Night Trading 

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 63.75 +.5 basis point.

• China Sovereign CDS 42.0 +1.0 basis point.

• Bloomberg Emerging Markets Currency Index 67.21 -.01%.

• S&P 500 futures -.03%

• NASDAQ 100 futures +.02%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (ATI)/.11
• (CIT)/1.07
• (KO)/.46
• (FITB)/.39
• (HOG)/.86
• (HAS)/-.11
• (IPI)/.04
• (JBLU)/.12
• (LMT)/4.34
• (NUE)/1.51
• (PII)/.91
• (PG)/1.04
• (PHM)/.47 
• (DGX)/1.38
• (SHW)/3.68
• (STT)/1.21
• (TWTR)/.15
• (UTX)/1.72
• (VZ)/1.16
• (WAT)/1.73

After the Close:

• (CP)/3.00
• (EBAY)/.63
• (MANH)/.34
• (RHI)/.95
• (SYK)/1.84
• (AMTD)/.92
• (TER)/.44
• (TNX)/1.16
• (VMI)/1.74

Economic Releases

9:00 am EST

• The FHFA House Price Index MoM for Feb. is estimated to rise +.5% versus a +.6% gain in Jan.

10:00 am EST

• Richmond Fed Manufacturing Index for April is estimated at 10.0 versus 10.0 in March.
• New Home Sales for March is estimated to fall to 650K versus 667K in Feb.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI report, $40B 2Y T-Note auction and the US weekly retail sales reports could also impact trading today.

BOTTOM LINE: Asian indices are mostly 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.

Stocks Reversing Slightly Higher into Final Hour on Earnings Optimism, Oil Gain, Technical Buying, Energy/Defense Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.6 +4.3%

• Euro/Yen Carry Return Index 130.96 +.16%

• Emerging Markets Currency Volatility(VXY) 8.26 -.12%

• S&P 500 Implied Correlation 35.98 +.11%

• ISE Sentiment Index 105.0 +22.1%
  

• Total Put/Call .86 -1.156%

• NYSE Arms .79 -8.14%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.31 +1.59%
  

• America Energy Sector High-Yield CDS Index 454.0 +.28%

• European Financial Sector CDS Index 68.16 +.27%

• Italian/German 10Y Yld Spread 257.75 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 63.75 -.10%
  

• Emerging Market CDS Index 178.82 +.40%
  

• iBoxx Offshore RMB China Corporate High Yield Index 161.61 +.07%

• 2-Year Swap Spread 8.5 -1.25 basis points

• TED Spread 17.0 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -18.0 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.22 -.13%
• 3-Month T-Bill Yield 2.42% +1.0 basis point

• Yield Curve 20.5 +2.5 basis points

• China Iron Ore Spot 92.47 USD/Metric Tonne +1.97%

• Citi US Economic Surprise Index -67.80 -8.6 points

• Citi Eurozone Economic Surprise Index -38.70 +4.6 points

• Citi Emerging Markets Economic Surprise Index 5.0 -.6 point

• 10-Year TIPS Spread 1.96 +1.0 basis point
• 16.1% chance of Fed rate cut at June 19th meeting, 21.0% chance of cut at July 31st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +33 open in Japan 
• China A50 Futures: Indicating +5 open in China

• DAX Futures: Indicating +21 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long