Stocks Slightly Lower into Afternoon on China Trade Deal Concerns, Earnings Worries, Technical Selling, Commodity/Gaming Sector Weakness

 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) 15.06 -1.5%

• Euro/Yen Carry Return Index 127.61 +.08%

• Emerging Markets Currency Volatility(VXY) 9.11 +2.82%

• S&P 500 Implied Correlation 38.08 -6.14%

• ISE Sentiment Index 66.0 +1.54%
  

• Total Put/Call 1.10 -6.56%

• NYSE Arms .99 -11.65%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.50 -.18%
  

• America Energy Sector High-Yield CDS Index 522.0 -.44%

• European Financial Sector CDS Index 81.44 +2.66%

• Italian/German 10Y Yld Spread 276.5 -8.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 71.51 +1.31%
  

• Emerging Market CDS Index 206.55 +1.44%
  

• iBoxx Offshore RMB China Corporate High Yield Index 162.84 +.12%

• 2-Year Swap Spread 6.75 -.75 basis point

• TED Spread 14.75 +2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -16.5 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.68 -.39%
• 3-Month T-Bill Yield 2.38% -1.0 basis point

• Yield Curve 19.25 -1.5 basis points

• China Iron Ore Spot 98.0 USD/Metric Tonne +4.25%

• Citi US Economic Surprise Index -31.10 +12.4 points

• Citi Eurozone Economic Surprise Index -14.60 +4.9 points

• Citi Emerging Markets Economic Surprise Index -32.90 -3.6 points

• 10-Year TIPS Spread 1.83 -2.0 basis points
• 24.0% chance of Fed rate cut at July 31st meeting, 50.0% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +45 open in Japan 
• China A50 Futures: Indicating -42 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio:

• Slightly Lower: On losses in my industrial/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 Growth -.9%

Sector Underperformers:

• 1) Gaming -2.3% 2) Social Media -2.0% 3) Oil Service -1.5%

Stocks Falling on Unusual Volume: 

• BIDU, FTSV, EOLS, DE, WB, IPHI, IQ, DESP, SINA, CMC, BE and PINS

Stocks With Unusual Put Option Activity:

• 1) TIF 2) BBBY 3) AET 4) GLUU 5) CARS

Stocks With Most Negative News Mentions:

• 1) AAC 2) PINS 3) NPTN 4) BIDU 5) TSLA

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.1%

Sector Outperformers:

• 1) Computer Hardware +2.0% 2) Healthcare Providers +.8% 3) Utilities +.4%

Stocks Rising on Unusual Volume:

• CRAY, IRWD, CAE, WTTR, COKE, BOOT, JACK, SFLY, AMAT, CYRX, ERJ, UAA, AFT, LOVE, DDS, AGYS, VCTR, SWAV, TWST and EHC

Stocks With Unusual Call Option Activity:

• 1) CC 2) CAH 3) HPE 4) UAA 5) HPE

Stocks With Most Positive News Mentions:

• 1) CRAY 2) UAA 3) AMAT 4) HPE 5) LB

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -14.2% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 45.7% of Issues Advancing, 51.0% Declining
• 113 New 52-Week Highs, 64 New Lows
• 52.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.5%
• Vix 15.0 -1.9%
• Total Put/Call 1.12 +9.8%
• TRIN/Arms .83 -18.6%

Friday Watch

Night Trading 

• Asian equity indices are -.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 70.0 -1.25 basis points.

• China Sovereign CDS 47.5 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index 65.91 -.05%.

• S&P 500 futures +.03%.

• NASDAQ 100 futures +.03%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (CAE)/.44
• (DE)/3.63

After the Close:

• None of note

Economic Releases
10:00 am EST

• The Leading Index for April is estimated to rise +.2% versus a +.4% gain in March.
• Preliminary Univ. of Mich. Consumer Sentiment for May is estimated at 97.2 versus 97.2 in April.
  

Upcoming Splits

• None of note

Other Potential Market Movers

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

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial 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.

Morning Market Internals

NYSE Composite Index:

• Volume Running -5.8% Below 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 74.0% of Issues Advancing, 22.3% Declining
• 111 New 52-Week Highs, 31 New Lows
• 51.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.1%
• Vix 15.5 -5.5%
• Total Put/Call 1.11 -3.5%
• TRIN/Arms .99 -32.2%