Thursday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 71.25 -.5 basis point.

• China Sovereign CDS 48.5 unch.

• Bloomberg Emerging Markets Currency Index 66.11 -.05%.

• S&P 500 futures -.18%.

• NASDAQ 100 futures -.24%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (AZZ)/.46
• (EXP)/.83
• (FRO)/.26
• (WMT)/1.02

After the Close:

• (AMAT)/.66
• (BIDU)/.64
• (NVDA)/.81

Economic Releases

8:30 am EST

• Housing Starts for April are estimated to rise to 1209K versus 1139K in March.
• Building Permits for April are estimated to rise to 1290K versus 1269K in March.
• The Philly Fed Business Outlook Index for May is estimated to rise to 9.0 versus 8.5 in April.
• Initial Jobless Claims for last week are estimated to fall to 220K versus 228K the prior week. 
• Continuing Claims are estimated to fall to 1675K versus 1684K prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking, Fed's Brainard speaking, Australia unemployment report, weekly Bloomberg Consumer Comfort Index, Bloomberg Economic Expectations Index for May, weekly EIA natural gas inventory report, Citi Chemicals Conference, UBS Water Conference, Goldman Industrials Conference, HSBC China Conference and the (SWK) investor day could also impact trading today.

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

Stocks Reversing Higher into Final Hour on China Trade Deal Hopes, Less Emerging Markets Debt Angst, Oil Gain, Tech/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 16.6 -8.0%

• Euro/Yen Carry Return Index 127.50 -.06%

• Emerging Markets Currency Volatility(VXY) 9.0 +.11%

• S&P 500 Implied Correlation 40.30 -2.89%

• ISE Sentiment Index 88.0 +46.7%
  

• Total Put/Call 1.24 +21.6%

• NYSE Arms 1.51 +91.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 63.07 -1.30%
  

• America Energy Sector High-Yield CDS Index 525.0 -7.94%

• European Financial Sector CDS Index 81.95 +2.55%

• Italian/German 10Y Yld Spread 284.5 +4.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 71.73 -.18%
  

• Emerging Market CDS Index 201.41 -1.24%
  

• iBoxx Offshore RMB China Corporate High Yield Index 162.80 +.02%

• 2-Year Swap Spread 7.5 -.25 basis point

• TED Spread 12.75 -1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -16.5 +1.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.16 +.09%
• 3-Month T-Bill Yield 2.39% unch.

• Yield Curve 20.75 -1.0 basis point

• China Iron Ore Spot 92.75 USD/Metric Tonne +.44%

• Citi US Economic Surprise Index -43.50 -12.7 points

• Citi Eurozone Economic Surprise Index -19.50 unch.

• Citi Emerging Markets Economic Surprise Index -29.60 -10.1 points

• 10-Year TIPS Spread 1.85 -2.0 basis points
• 28.4% chance of Fed rate cut at July 31st meeting, 53.2% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -8 open in Japan 
• China A50 Futures: Indicating -150 open in China

• DAX Futures: Indicating +17 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value +.1%

Sector Underperformers:

• 1) Banks -.8% 2) Papers -.6% 3) Retail -.3%

Stocks Falling on Unusual Volume: 

• VIRT, A, WMC, PLCE, TEVA, EGHT, NEWR, TLRY, MGNX and PBYI

Stocks With Unusual Put Option Activity:

• 1) RF 2) AET 3) JWN 4) RHT 5) CIEN

Stocks With Most Negative News Mentions:

• 1) SLDB 2) ICON 3) ARA 4) GIII 5) FIZZ

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.1%

Sector Outperformers:

• 1) Computer Hardware +1.6% 2) Shipping +1.3% 3) Internet +1.2%

Stocks Rising on Unusual Volume:

• DOX, IGV, BABA, WERN, SOXX, FTDR, YMAB, AVDR, KTOS, DOVA, TWOU, JACK, TTD, STM, MGTX, QNST, TCX, AEIS, KNSL, CYBR, DAVA, DMRC, LM, CHD, WAIR and AFIN

Stocks With Unusual Call Option Activity:

• 1) FITB 2) TMUS 3) KTOS 4) ITB 5) ADP

Stocks With Most Positive News Mentions:

• 1) DOX 2) AMAT 3) ZG 4) PGR 5) ALPN

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -7.0% Below 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 65.3% of Issues Advancing, 31.4% Declining
• 86 New 52-Week Highs, 71 New Lows
• 50.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.7%
• Vix 16.8 -7.2%
• Total Put/Call 1.44 +41.2%
• TRIN/Arms 1.24 +57.0%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 71.75 unch.

• China Sovereign CDS 48.5 -2.75 basis points.

• Bloomberg Emerging Markets Currency Index 66.03 -.09%.

• S&P 500 futures -.11%.

• NASDAQ 100 futures -.06%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (BABA)/6.51

• (M)/.34

• (RUBY)/-.41

• (PLCE)/-.54

• (TSG)/.44

After the Close:

• (CSCO)/.77

• (FLO)/.30

• (JACK)/.93

• (KHC)/.61

• (NTES)/2.48

Economic Releases

8:30 am EST

• Empire Manufacturing for May is estimated to fall to 8.0 versus 10.1 in April.

• Retail Sales Advance MoM for April is estimated to rise +.2% versus a +1.6% gain in March.

• Retail Sales Ex Autos MoM for April is estimated to rise +.7% versus a +1.2% gain in March. 

• Retail Sales Ex Autos and Gas for April is estimated to rise +.3% versus a +.9% gain in March.
  

9:15 am EST

• Industrial Production MoM for April is estimated unch. versus a -.1% decline in March.

• Manufacturing Production for April is estimated unch. versus unch. in March.

• Capacity Utilization for April is estimated to fall to 78.7% versus 78.8% in March.

10:00 am EST

• The NAHB Housing Market Index for May is estimated to rise to 64.0 versus 63.0 in April.

• Business Inventories for March is estimated unch. versus a +.3% gain in Feb.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +29,000 barrels versus a -3,963,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -439,500 barrels versus a -596,000 barrel decline the prior week. Distillate inventories are estimated to fall by -613,700 barrels versus a -159,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.57% versus a -.3% decline prior.
  

Afternoon:

• Net Long-Term TIC Flows for March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Barkin speaking, Fed's Quarles speaking, Senate Hearing with Steve Mnuchin, China Industrial Profits/Retail Sales reports, Eurozone GDP report, House Transport/Infra Committee hearing on (BA) 737 Max, weekly MBA Mortgage Applications report, Goldman Industrials/Materials Conference,  could also impact trading today.

BOTTOM LINE: Asian indices are slightly higher, boosted by technology and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.