Thursday Watch

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 72.25 +.5 basis point.

• China Sovereign CDS 51.0 +.75 basis point.

• Bloomberg Emerging Markets Currency Index 66.63 unch.

• S&P 500 futures +.17%.

• NASDAQ 100 futures +.25%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (DLTH)/-.22

After the Close:

• (AVGO)/5.18

Economic Releases
8:30 am EST

• The Import Price Index MoM for May is estimated to fall -.2% versus a +.2% gain in April.
• The Import Price Index ex Petro MoM for May is estimated to fall -.2% versus a -.6% decline in April.
• The Export Price Index MoM for May is estimated to fall -.2% versus a +.2% gain in April.
• Initial Jobless Claims for last week are estimated to fall to 215K versus 218K the prior week.
• Continuing Claims are estimated to fall to 1660K versus 1682K prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI report, $16B 30Y T-Note auction, Bloomberg June US Economic Survey, weekly Bloomberg Consumer Comfort Index and the (CPB) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial 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 50% net long heading into the day.

Stocks Lower into Final Hour on China Trade Deal Concerns, Oil Drop, Technical Selling, Energy/Tech Energy Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 16.0 +.06%

• Euro/Yen Carry Return Index 127.22 -.37%

• Emerging Markets Currency Volatility(VXY) 8.31 -1.42%

• S&P 500 Implied Correlation 39.81 +1.43%

• ISE Sentiment Index 79.0 +9.72%
  

• Total Put/Call .97 +1.04%

• NYSE Arms 1.34 +139.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.05 +1.61%
  

• America Energy Sector High-Yield CDS Index 614.0 -.08%

• European Financial Sector CDS Index 79.04 +2.13%

• Italian/German 10Y Yld Spread 267.0 +4.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 72.47 +1.56%
  

• Emerging Market CDS Index 192.29 +1.38%
  

• iBoxx Offshore RMB China Corporate High Yield Index 163.62 -.01%

• 2-Year Swap Spread 5.0 unch.

• TED Spread 19.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -12.0 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.65 -.26%
• 3-Month T-Bill Yield 2.22% -4.0 basis points

• Yield Curve 24.0 +2.0 basis points

• China Iron Ore Spot 103.29 USD/Metric Tonne +.98%

• Citi US Economic Surprise Index -52.20 n/a

• Citi Eurozone Economic Surprise Index -25.5 n/a

• Citi Emerging Markets Economic Surprise Index -28.40 n/a

• 10-Year TIPS Spread 1.71 -2.0 basis point
• 82.3% chance of Fed rate cut at July 31st meeting, 94.4% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -101 open in Japan 
• China A50 Futures: Indicating -113 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio:

• Higher: On gains in my industrial/biotech/medical sector longs and index hedges

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.3%

Sector Underperformers:

• 1) Oil Service -4.4% 2) Semis -2.2% 3) Gaming -2.1%

Stocks Falling on Unusual Volume: 

• PLAY, MDSO, GTLS, HOFT, SSL, PBA, APA, ACA, TOT, LOVE, UPLD, SFIX, BP, EPZM, OXM, AABA, BGNE, TTD, EWBC, USCR, STT, GBT, THO, CHTR, TSLA, NYCB and UPLD

Stocks With Unusual Put Option Activity:

• 1) APA 2) PLAY 3) PSTG 4) LQD 5) HAL

Stocks With Most Negative News Mentions:

• 1) PLAY 2) PTEN 3) CSCO 4) MAN 5)TTD

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.2%

Sector Outperformers:

• 1) Gold & Silver +1.5% 2) Utilities +1.2% 3) Drugs +1.1%

Stocks Rising on Unusual Volume:

• DESP, EDN, LOMA, PAM, GGAL, TEO, YPF, AYX, CMA, TGS, MAT, KLM, RESI and AB

Stocks With Unusual Call Option Activity:

• 1) BKLN 2) APA 3) PLAY 4) AMBC 5) PG

Stocks With Most Positive News Mentions:

• 1) SYBX 2) AYX 3) JCI 4) PFE 5) FTNT

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -16.9% Below 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 40.2% of Issues Advancing, 55.5% Declining
• 79 New 52-Week Highs, 57 New Lows
• 52.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.9%
• Vix 16.2 +1.0%
• Total Put/Call 1.0 +4.2%
• TRIN/Arms 1.18 +110.7%

Wednesday Watch

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 71.75 -.5 basis point.

• China Sovereign CDS 50.25 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 66.82 unch.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.16%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• None of note

After the Close:

• (LULU)/.70
• (OXM)/1.21
• (RH)/1.53

Economic Releases

8:30 am EST

• The CPI MoM for May is estimated to rise +.1% versus a +.3% gain in April.
• The CPI Ex Food and Energy MoM for May is estimated to rise +.2% versus a +.1% gain in April.
• Real Avg Weekly Earnings YoY for May.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -894,110 barrels versus a +6,771,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +468,130 barrels versus a +3,205,000 barrel gain the prior week. Distillate inventories are estimated to rise by +957,750 barrels versus a +4,572,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.51% versus a +.6% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The China inflation data reports, $24B 10Y T-Note auction, weekly MBA Mortgage Applications report and the (CTXS) financial analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.