Stocks Sharply Lower into Final Hour on China Trade War Fears, Global Growth Worries, European/Emerging Markets/US High-Yield Debt Angst, Tech/Biotech Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 21.4 +38.8%

• Euro/Yen Carry Return Index 128.10 -.68%

• Emerging Markets Currency Volatility(VXY) 8.74 +3.68%

• S&P 500 Implied Correlation 42.91 +16.5%

• ISE Sentiment Index 92.0 +24.3%
  

• Total Put/Call .91 -12.5%

• NYSE Arms 1.42 +2.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.33 +4.85%
  

• America Energy Sector High-Yield CDS Index 455.0 +.80%

• European Financial Sector CDS Index 74.82 +6.14%

• Italian/German 10Y Yld Spread 265.75 +8.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 67.79 +1.37%
  

• Emerging Market CDS Index 199.23 +3.75%
  

• iBoxx Offshore RMB China Corporate High Yield Index 162.42 +.03%

• 2-Year Swap Spread 10.0 -.25 basis point

• TED Spread 17.0 +2.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -16.25 +2.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.98 -.31%
• 3-Month T-Bill Yield 2.41% unch.

• Yield Curve 16.75 -2.25 basis points

• China Iron Ore Spot 92.80 USD/Metric Tonne +.21%

• Citi US Economic Surprise Index -44.70 +2.5 points

• Citi Eurozone Economic Surprise Index -20.40 -.6 point

• Citi Emerging Markets Economic Surprise Index -13.30 unch.

• 10-Year TIPS Spread 1.87 -3.0 basis points
• 16.7% chance of Fed rate cut at July 31st meeting, 34.1% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -368 open in Japan 
• China A50 Futures: Indicating -361 open in China

• DAX Futures: Indicating -38 open in Germany

Portfolio:

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

• Disclosed Trades:Added to my (IWM)/(QQQ) hedges and to my emerging market shorts

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.7%

Sector Underperformers:

• 1) Gaming -4.2% 2) Semis -2.8% 3) Biotech-2.8%

Stocks Falling on Unusual Volume: 

• XENT, PMT, KRNT, MYL, ARMK, R, LMNX, KLAC, LGIH, AVNS, YETI, RP, CC, REGN, TIGR, BE, KMT, LMNX, UPLD, PXD, MOS and AEIS

Stocks With Unusual Put Option Activity:

• 1) EWJ 2) MYL 3) AET 4) S 5) KWEB

Stocks With Most Negative News Mentions:

• 1) XENT 2) MYL 3) NIO 4) CMT 5) BA

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value -.9%

Sector Outperformers:

• 1) Alt Energy +1.2% 2) Gold & Silver +.2% 3) Computer Hardware +.1%

Stocks Rising on Unusual Volume:

• SEDG, COHU, AIG, SBGI, VRRM, CODA, ITRI, GWPH, EVER, SERV, CBLK, CLAR, INS, CRAY, PRIM, VECO, HSIC, MTSC, CATS, USFD, IMMR, FNKO, ABIO, BLD, HSIC, EGRX, USFD, ATKR, LCII and RCII

Stocks With Unusual Call Option Activity:

• 1) LCI 2) XME 3) AIG 4) CRZO 5) CME

Stocks With Most Positive News Mentions:

• 1) AIG 2) JEC 3) HSIC 4) GWPH 5) TDG

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +1.2% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 18.4% of Issues Advancing, 79.5% Declining
• 78 New 52-Week Highs, 29 New Lows
• 59.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.8%
• Vix 19.7 +27.5%
• Total Put/Call .94 -9.62%
• TRIN/Arms 1.66 +23.9%

Tuesday Watch

Night Trading 

• Asian equity indices are -.5% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 66.75 +1.75 basis points.

• China Sovereign CDS 40.25 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 66.24 +.07%.

• S&P 500 futures -.5%.

• NASDAQ 100 futures -.57%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (AES)/.30
• (AGN)/3.57
• (BUD)/1.33
• (BCC)/.37
• (CRL)/1.39
• (CLVS)/-1.73
• (DF)/-.27
• (EMR)/.84
• (EXPD)/.83
• (IT)/.53
• (IPI)/.04
• (JEC)/1.13
• (JLL)/.67
• (LPX)/.14
• (MYL)/.80
• (REGN)/5.52

After the Close:

• (DDD)/-.01
• (EA)/.99
• (JAZZ)/3.126
• (LYFT)/-1.10
• (MYGN)/.43
• (PZZA)/.24
• (SGMS)/-.05
• (TRIP)/.32
• (WING)/.19
• (WYNN)/1.58

Economic Releases

10:00 am EST

• JOLTS Job Openings for March is estimated to rise to 7350 versus 7087 in February.

3:00 pm EST

• Consumer Credit for March is estimated to rise to $16.0B versus $15.19B in February.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Quarles speaking, Fed's Kaplan speaking, German Factory Orders report, weekly US retail sales reports, Senate Hearing on drug prices, Wells Fargo Industrials Conference, Oppenheimer Industrial Growth Conference, SunTrust Life Sciences Summit, (RDN) investor day, Deutche Bank Healthcare Conference and the (EHTH) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted 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.

Stocks Lower into Afternoon on China Trade Deal Worries, Global Growth Fears, Profit-Taking, Tech/Gaming Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 16.44 +27.8%

• Euro/Yen Carry Return Index 128.95 -.28%

• Emerging Markets Currency Volatility(VXY) 8.43 +7.4%

• S&P 500 Implied Correlation 38.50 +9.03%

• ISE Sentiment Index 64.0 -11.11%
  

• Total Put/Call 1.08 -42.1%

• NYSE Arms 1.53 +124.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.46 +2.60%
  

• America Energy Sector High-Yield CDS Index 452.0 -.96%

• European Financial Sector CDS Index 70.53 +1.30%

• Italian/German 10Y Yld Spread 257.25 +3.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 67.03 +3.10%
  

• Emerging Market CDS Index 192.55 +2.48%
  

• iBoxx Offshore RMB China Corporate High Yield Index 162.21 +.10%

• 2-Year Swap Spread 10.25 -.75 basis point

• TED Spread 14.25 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -19.0 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.23 -.26%
• 3-Month T-Bill Yield 2.41% -1.0 basis point

• Yield Curve 19.0 -.5 basis point

• China Iron Ore Spot 91.33 USD/Metric Tonne -2.8%

• Citi US Economic Surprise Index -47.20 +4.9 points

• Citi Eurozone Economic Surprise Index -19.80 +2.6 points

• Citi Emerging Markets Economic Surprise Index -13.30 -2.9 points

• 10-Year TIPS Spread 1.90 -1.0 basis point
• 16.2% chance of Fed rate cut at July 31st meeting, 32.8% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -108 open in Japan 
• China A50 Futures: Indicating +110 open in China

• DAX Futures: Indicating +13 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long