Morning Market Internals

NYSE Composite Index:

• Volume Running -13.7% Below 100-Day Average
• 6 Sectors Rising, 5 Sector Declining
• 35.2% of Issues Advancing, 61.9% Declining
• 77 New 52-Week Highs, 58 New Lows
• 52.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.0%
• Vix 14.8 -.8%
• Total Put/Call 1.05 +5.0%
• TRIN/Arms .95 +31.9%

Wednesday Watch

Evening Headlines
Bloomberg:  

• U.S. Says Europeans Coming Around on Threat Posed by Huawei.

• May’s Desperate Gamble on a New Brexit Referendum Falls Flat.  

• Short Aussie, Long Yen Is the Hot New Currency Bet for Trade War.

• Asian Stocks Point Higher After U.S. Shares Gain. Asian stocks looked set to track an advance in U.S. equities and Treasury yields climbed as investors showed some willingness to buy riskier assets despite the ongoing trade turmoil. The dollar edged up. Futures on Japanese shares rose along with those in Australia and Hong Kong. The S&P 500 Index climbed 0.9% after the U.S. decided to grant limited relief for consumers and carriers that do business with Huawei Technologies Co. -- a day after the White House’s moves against the Chinese telecom giant battered stocks. Semiconductor shares bounced back from Monday’s slide. The pound swung amid the latest Brexit developments. Futures on Japan’s Nikkei 225 rose 0.5% in Singapore. Contracts on Australia’s S&P/ASX 200 Index gained 0.2%. Hang Seng Index futures earlier added 0.1%. Futures on the S&P 500 Index were little changed.  

• Five Things You Need to Know to Start Your Day.

• House Democrats Subpoena Hope Hicks, Former McGahn Aide Annie Donaldson.

Wall Street Journal:

• Big Retailers’ Sales Lag as They Gird for Increase in Tariffs.

• Many More Students, Especially the Affluent, Get Extra Time on the SAT.

• Sanders Chooses Teachers Unions Over Black Voters.

• U.S. Slows Hiring of Chinese Nationals by Chip Makers.

• Non-Military Spending Is Sticking Point in Budget Talks.

• California Democrats Clash Over Health Care for Illegal Immigrants.

Fox News:

• Pelosi pressured to launch Trump impeachment proceedings as one angry Dem lets loose.

• BRIT HUME: Biden a ‘walking time-bomb’ despite Dem front-runner status.

MarketWatch.com:

• How robots and your smart fridge can keep you out of a nursing home.

• ‘Medicare for All’ plans proposed by some Democrats are more lavish than similar programs in other countries.

CNBC:

• At all-hands meeting Jeff Bezos tells employees he’s ‘very excited’ about the auto industry.

• Stocks making the biggest moves after hours: Nordstrom, Urban Outfitters, Pure Storage and more.

• Jim Cramer: Any US-China trade deal will send the market into an ‘epic rebound’.

Zero Hedge:

• Mueller Refuses To Testify Publicly Before Congress, Infuriating Democrats.

• To Beat The Market In China, Smart Investors Force Themselves To Think Stupid.

• China's Economic "Super-Weapon" Would Devastate Its Rare-Earth Exporters.

• WTI Slides Below $63 After Surprise Crude & Gasoline Builds.

• Nordstrom Crashes To 8 Year Lows After Slashing Guidance.  

• Stocks Bounce As Huawei Hope Trumps Home Sales Horror.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 71.25 -.25 basis point.

• China Sovereign CDS 48.25 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index 65.75 -.04%.

• S&P 500 futures -.11%.

• NASDAQ 100 futures -.14%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (AAP)/2.37

• (ADI)/1.31

• (LOW)/1.33

• (TGT)/1.43

• (VFC)/.59

After the Close:

• (CPRT)/.62

• (CTRP)/.25

• (LB)/.00

• (NTAP)/1.26

• (SCVL)/.84

• (SNPS)/1.09

• (VIPS)/1.08

• (WSM)/.69

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,182,580 barrels versus a +5,431,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -677,000 barrels versus a -1,123,000 barrel decline the prior week. Distillate inventories are estimated to fall by -127,550 barrels versus an +84,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise +.48% versus a +1.6% gain prior.
  

2:00 pm EST

• FOMC Meeting Minutes.
  

Upcoming Splits

• (FAST) 2-for-1

Other Potential Market Movers

• The Fed's Bostic speaking, UK PPI report, (TMO) analyst meeting, Wells Fargo Financial Services Forum and the (ZEN) analyst day 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 modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Surging into Final Hour on Diminished China Trade Deal Fears, Less European/Emerging Markets/US High-Yield Debt Angst, Yen Weakness, Tech/Biotech 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) 14.9 -9.0%

• Euro/Yen Carry Return Index 128.20 +.04%

• Emerging Markets Currency Volatility(VXY) 8.97 -.77%

• S&P 500 Implied Correlation 37.75 -3.92%

• ISE Sentiment Index 127.0 +69.3%
  

• Total Put/Call .95 +13.1%

• NYSE Arms .77 -8.33%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.79 -2.0%
  

• America Energy Sector High-Yield CDS Index 536.0 +2.10%

• European Financial Sector CDS Index 81.97 -1.4%

• Italian/German 10Y Yld Spread 270.75 -8.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 71.20 -.75%
  

• Emerging Market CDS Index 200.31 -1.73%
  

• iBoxx Offshore RMB China Corporate High Yield Index 162.92 +.02%

• 2-Year Swap Spread 5.25 -1.0 basis point

• TED Spread 17.25 +2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -17.0 -.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.75 +.01%
• 3-Month T-Bill Yield 2.37% unch.

• Yield Curve 17.0 -2.5 basis points

• China Iron Ore Spot 96.28 USD/Metric Tonne +.12%

• Citi US Economic Surprise Index -29.70 +.2 point

• Citi Eurozone Economic Surprise Index -16.80 -1.1 points

• Citi Emerging Markets Economic Surprise Index -33.10 unch.

• 10-Year TIPS Spread 1.84 -2.0 basis points
• 14.8% chance of Fed rate cut at July 31st meeting, 36.3% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +113 open in Japan 
• China A50 Futures: Indicating -124 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.9%

Sector Underperformers:

• 1) Gold & Silver -.1% 2) Foods +.1% 3) Shipping +.2%

Stocks Falling on Unusual Volume: 

• KSS, SWI, INSM and HOME

Stocks With Unusual Put Option Activity:

• 1) AET 2) MNK 3) BCRX 4) KR 5) EWW

Stocks With Most Negative News Mentions:

• 1) BCRX 2) KSS 3) JCP 4) OCUL 5)MNK

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.7%

Sector Outperformers:

• 1) Steel +2.8% 2) Alt Energy +2.5% 3) Disk Drives +2.5%

Stocks Rising on Unusual Volume:

• CIR, ARWR, ARRY, FTCH, DY, NOBL, NDSN, IJT, DYNC, QRVO, ROG, BAP, OMP, KIDS, QFIN, IGV, BIDU, SOXX, GLRE, RESI, MNRO, RCI, PRNB, DAVA, TJX and LITE

Stocks With Unusual Call Option Activity:

• 1) AVYA 2) PRU 3) HOME 4) KSS 5) CSX

Stocks With Most Positive News Mentions:

• 1) DY 2) EV 3) AZO 4) MNRO 5) TRIP

Charts:

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

Afternoon Market Internals

NYSE Composite Index:

• Volume Running -11.2% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 77.1% of Issues Advancing, 20.2% Declining
• 94 New 52-Week Highs, 72 New Lows
• 48.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.1%
• Vix 15.2 -6.9%
• Total Put/Call .92 +9.5%
• TRIN/Arms .79 -6.0%