Stocks Surging into Final Hour on US Economic Data, China Trade Deal Hopes, Earnings Optimism, Commodity/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 13.16 -8.74%

• Euro/Yen Carry Return Index 129.22 -.16%

• Emerging Markets Currency Volatility(VXY) 7.87 -1.13%

• S&P 500 Implied Correlation 35.34 -4.4%

• ISE Sentiment Index 92.0 -8.91%
  

• Total Put/Call .75 -19.4%

• NYSE Arms .94 -7.84%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.71 -2.1%
  

• America Energy Sector High-Yield CDS Index 456.0 +.44%

• European Financial Sector CDS Index 69.62 -1.32%

• Italian/German 10Y Yld Spread 253.5 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.85 +.59%
  

• Emerging Market CDS Index 187.56 -3.99%
  

• iBoxx Offshore RMB China Corporate High Yield Index 162.21 +.04%

• 2-Year Swap Spread 11.0 -1.25 basis points

• TED Spread 15.75 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -20.25 -.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.53 +.36%
• 3-Month T-Bill Yield 2.42% unch.

• Yield Curve 19.50 -.5 basis point

• China Iron Ore Spot 94.0 USD/Metric Tonne -.22%

• Citi US Economic Surprise Index -52.10 +3.0 points

• Citi Eurozone Economic Surprise Index -22.40 +10.5 points

• Citi Emerging Markets Economic Surprise Index -10.40 -.8 point

• 10-Year TIPS Spread 1.91 -4.0 basis points
• 10.9% chance of Fed rate cut at July 31st meeting, 25.5% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +226 open in Japan 
• China A50 Futures: Indicating +90 open in China

• DAX Futures: Indicating +42 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.7%

Sector Underperformers:

• 1) Education -1.9% 2) Computer Services -.5% 3) Networking -.4%

Stocks Falling on Unusual Volume: 

• CTSH, STAA, SRCL, ANET, ALNY, BGS, EPAY, TDC, APPN, LOCO, BAND, GMED, REGI, FND, BL, FTNT, MPWR, SGMS, LGND, FLDM and UIS

Stocks With Unusual Put Option Activity:

• 1) MTZ 2) VST 3) AET 4) CTSH 5) SRPT

Stocks With Most Negative News Mentions:

• 1) DRAD 2) REGI 3) TWI 4) FTNT 5) CTSH

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.5%

Sector Outperformers:

• 1) Coal +5.3% 2) Steel +3.6% 3) Oil Service +2.3%

Stocks Rising on Unusual Volume:

• SY, IEFA, ZLAB, ZIXI, VCYT, CBLK, IGV, OLED, EB, UEIC, LPLA, KNSL, X, EFAV, CARB, UCTT, WAIR, CCS, WW, FBNC, MELI, SFE, DMRC, MERC, FLS, ZIXI, BRKR, ERII, BLDR, NWL, PODD, MNST, PETQ, FLOW, XRAY, NTLA, CYRX, COHR, CRC, DATA, AGIO, TACO, TSLA, WSC, VIAV, PMT, FRPT, COHU, AMZN and PRFT

Stocks With Unusual Call Option Activity:

• 1) RSX 2) XLK 3) OLED 4) MNST 5) ANET

Stocks With Most Positive News Mentions:

• 1) OLED 2) WW 3) MELI 4) NWL 5) MNST

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -7.6% Below 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 76.6% of Issues Advancing, 19.9% Declining
• 111 New 52-Week Highs, 20 New Lows
• 57.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.1%
• Vix 13.1 -8.9%
• Total Put/Call .85 -8.6%
• TRIN/Arms 1.02 unch.

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 65.0 unch.

• China Sovereign CDS 40.75 unch.

• Bloomberg Emerging Markets Currency Index 66.27 -.04%.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.12%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (AXL)/.34

• (AMT)/1.68

• (DISH)/.65

• (FCAU)/.50

• (ITT)/.84

• (NWL)/.06

• (RUTH)/.45

• (SGMS)/-.05

• (VFC)/.59

After the Close:

• None of note

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for April is estimated to fall to 190K versus 196K in March.

• The Unemployment Rate for April is estimated at 3.8% versus 3.8% in March.

• Average Hourly Earnings MoM for April is estimated to rise +.3% versus a +.1% gain in March.

• The Advance Goods Trade Balance for March is estimated at -$73.0B versus -$70.9B in Feb. 

• Wholesale Inventories MoM for March are estimated to rise +.2% versus a +.2% gain in Feb. 

• Retail Inventories MoM for March are estimated to rise +.1% versus a +.3% gain in Feb.
  

10:00 am EST

• The ISM Non-Manufacturing Index for April is estimated to rise to 57.0 versus 56.1 in March.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Bullard speaking, Fed's Clarida speaking and the Eurozone PPI report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Lower into Final Hour on China Trade Deal Concerns, Oil Decline, Profit-Taking, Commodity/Construction Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.25 -3.72%

• Euro/Yen Carry Return Index 129.45 -.08%

• Emerging Markets Currency Volatility(VXY) 7.99 -.13%

• S&P 500 Implied Correlation 37.04 -4.6%

• ISE Sentiment Index 105.0 +34.6%
  

• Total Put/Call .91 -2.15%

• NYSE Arms 1.09 -51.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.33 +1.39%
  

• America Energy Sector High-Yield CDS Index 454.0 +.29%

• European Financial Sector CDS Index 70.55 +2.76%

• Italian/German 10Y Yld Spread 252.25 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.63 +.58%
  

• Emerging Market CDS Index 195.26 +1.28%
  

• iBoxx Offshore RMB China Corporate High Yield Index 162.15 +.04%

• 2-Year Swap Spread 12.25 +.25 basis point

• TED Spread 16.75 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -19.5 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.29 -.37%
• 3-Month T-Bill Yield 2.42% +1.0 basis point

• Yield Curve 20.50 -.5 basis point

• China Iron Ore Spot 94.19 USD/Metric Tonne +.36%

• Citi US Economic Surprise Index -55.50 +.4 point

• Citi Eurozone Economic Surprise Index -32.90 -1.4 points

• Citi Emerging Markets Economic Surprise Index -9.60 -2.0 points

• 10-Year TIPS Spread 1.89 -4.0 basis points
• 15.7% chance of Fed rate cut at July 31st meeting, 28.6% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +12 open in Japan 
• China A50 Futures: Indicating -135 open in China

• DAX Futures: Indicating -13 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long