Stocks Reversing Slightly Higher into Final Hour on Global Stimulus, Economy Re-Opening Hopes, Oil Gain, Energy/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 37.3 +.3%

• Euro/Yen Carry Return Index 120.72 -.8%

• Emerging Markets Currency Volatility(VXY) 12.1 +2.1%

• S&P 500 Implied Correlation 76.49 -1.3%

• ISE Sentiment Index 77.0 +20.0 points

• Total Put/Call .99 -15.4%

• NYSE Arms 1.14 -40.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 90.26 +.53%
  

• US Energy High-Yield OAS 1,359.29 +.38%

• European Financial Sector CDS Index 108.42 +2.50%

• Italian/German 10Y Yld Spread 233.0 -2.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 121.30 +3.1%
  

• Emerging Market CDS Index 348.15 -.42%
  

• iBoxx Offshore RMB China Corporate High Yield Index 163.64 +.02%

• 2-Year Swap Spread 13.0 unch.

• TED Spread 44.25 -3.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap 4.0 -2.0 basis points
• MBS  5/10 Treasury Spread  109.0 +4.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.21 -.17%
• 3-Month T-Bill Yield .09% unch.

• Yield Curve 44.0 +1.0 basis point

• China Iron Ore Spot 80.31 USD/Metric Tonne +.23%

• Citi US Economic Surprise Index -140.10 -12.1 points

• Citi Eurozone Economic Surprise Index -267.40 -.4 point

• Citi Emerging Markets Economic Surprise Index 9.90 +.9 point

• 10-Year TIPS Spread 1.08 +3.0 basis points
• 99.3% chance of no change at July 29th meeting, 99.3% chance of no change at Sept. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -260 open in Japan 
• China A50 Futures: Indicating -660 open in China

• DAX Futures: Indicating +58 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/biotech/consumer staple sector longs

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

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.5%

Sector Underperformers:

• 1) Airlines -5.4% 2) Defense -3.0% 3) Agriculture -3.0%

Stocks Falling on Unusual Volume: 

• CINF, TRN, BRK/B, UTG, REXR, PKI, HOG, ARVN, KSU, SWK, WDC, SPR, BA, VNO, TSE, TDG, SNDR, SAVE, CALX, FIXX, GWB, DSPG, CHWY, CVM, ALK, LUV, UAL, ATRC, TSN, DAL, CATS, EAT, KRMD, LYFT, DKL and PLAY

Stocks With Unusual Put Option Activity:

• 1) CVM 2) RRC 3) ACWI 4) SWKS 5) EMB

Stocks With Most Negative News Mentions:

• 1) AAL 2) DAL 3) NAT 4) SBUX 5) BRK/A

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth unch.

Sector Outperformers:

• 1) Gold & Silver +2.1% 2) Energy +1.4% 3) Software +1.4%

Stocks Rising on Unusual Volume:

• ZYXI, OSTK, TREX, DKNG, TWOU and MRTX

Stocks With Unusual Call Option Activity:

• 1) RRC 2) BGS 3) FEYE 4) APC 5) NOW

Stocks With Most Positive News Mentions:

• 1) PSX 2) KR 3) TMUS 4) ALNY 5) CCJ

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +5.6% Above 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 30.9% of Issues Advancing, 68.6% Declining
• 5 New 52-Week Highs, 11 New Lows
• 10.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.7%
• Vix 37.7 +1.2%
• Total Put/Call .98 -16.3%
• TRIN/Arms 1.08 -43.5%

Monday Watch

Today's Headlines

Bloomberg:    

• Pompeo Says ‘Enormous Evidence’ Links Virus to Wuhan Laboratory.   

• China Hid Coronavirus' Severity to Hoard Supplies, AP Reports.

• Here’s Why European Stock Market Is Losing to U.S. in This Rally.  

• U.S.-China Angst Tests ‘Sell in May’ Mantra for Emerging Markets.    

• U.K. Business Sentiment Plunges With No Snap Recovery in Sight.

• Mexico Indefinitely Halts New Clean-Energy Plans, Blaming Virus.    

• Distressed Debt Deals May Rise to 2009 Levels in Crisis-Hit Gulf.

• U.S. Stock Futures Drop With Sentiment Fragile. U.S. equity futures declined in early trading, indicating the risk-off move that’s hit markets at the start of this month may have further to run. The dollar edged higher. S&P 500 futures opened about 1% lower after global stocks posted a more than 2% slide on Friday. The Australian dollar slipped along with the pound and euro, while Australian bonds nudged higher. Trading volumes may be light due to holidays in China and Japan, and Treasuries won’t trade until the London open. Oil began the week on the back foot. Futures on the S&P 500 Index dropped 1.3% as of 8:35 a.m. in Sydney. The gauge lost 2.8% on Friday. Futures on Australia’s S&P/ASX 200 Index slid 0.1%.

• Saudi Stocks Slump as Minister Warns of ‘Painful’ Measures Ahead. 

• Oil Falls on Ample Supply as Investors Shun Near-Term Contracts.

• Global Oil Demand Starts a Long, Painful and Uncertain Recovery.  

• U.S. Case Rise Slows; Gilead Sets Remdesivir Use: Virus Update.

• Norwegian Air Nearer to Rescue Deal as Bondholders Support Plan.

• Sunday Strategist: Tractor Supply(TSCO) Beats Amazon(AMZN) to the Heartland.

• Small Firms Still in Dark on Loan Forgiveness as Clock Ticks.  

• The Big Keep Getting Bigger in the Pandemic-Rearranged Economy. 

• Buffett’s Chance for a Blockbuster Deal Faded When Fed Stepped In.

Wall Street Journal:

• Safety Advice for Reopening: How to Reduce Your Risks as Lockdowns Ease.

• Oil’s Crash Prompts Record Push to Store Fuel at Sea.

• Biden’s #MeToo Denial.

• Roche Virus Antibody Test Wins FDA Approval for Emergency Use.

• A Guide to Grocery Delivery During the Pandemic—and After.

• Low-Quality Masks Infiltrate U.S. Coronavirus Supply.

• The Cruel Covid ‘New Normal’.

• Pelosi’s Coronavirus Power Grab.

• Smart or Lucky? How Florida Dodged the Worst of Coronavirus.

• Hedge Fund Elliott Management to Finance Lawsuit Against Streamer Quibi.

• Some Insurers Flex Balance Sheets to Help Hospitals, Doctors Amid Pandemic.

Fox News:

• Biden accuser Tara Reade tells Fox News that treatment of Anita Hill forced her to stay quiet.

CNBC:

• Coronavirus live updates: Kudlow says more PPP loans may be needed, Roche making more antibody tests.

• Putting the economy back together again: What the future holds for Americans.

• Small towns and rural hospitals brace for their coronavirus peak, which could be weeks away.

• Cuomo calls PPE shortages a national security issue: ‘You can’t be dependent on China’.

Zero Hedge:           

• China Hid Severity Of Coronavirus To Hoard Supplies, New Intelligence Shows: Live Updates.

• The FAAMGs Are Up 10% In 2020; The Remaining 495 S&P Stocks Are Down 13%.

• Newsom Says California Went From Surplus To 'Tens Of Billions In Deficit' In Weeks, Won't Get By Without Federal Help.

• China Using Alleged BuzzFeed Pedo's Wuhan Lab Article For Propaganda War Against United States.

• The Fed's Balance Sheet Will Expand By 38% Of GDP, More Than Double QE1, 2 And 3 Combined.

• Stocks, Yuan, Oil Are All Tumbling As Asia Opens.

• Tadawful: Saudi Stocks Crash After FinMin Warns Of "Biggest Crisis In Decades".

• Global US Dollar Shortage Rises As Emerging Markets Lose Reserves.

• Did FBI Operative's Lie Launch Flynn Investigation, And Did IG Horowitz Run Cover?

• "Ashy & Bloated": Analysts Pore Over Kim Jong Un Photos For Clues To Mystery Absence.

• The Case Of General Flynn: Exposing Washington's "Big Game Of Liars' Poker".

• Massachusetts Walmart Ravaged By COVID, 21% Of Employees Infected, Store Closed.

• Gunfire Exchanged Between North & South Korea Declared 'Likely Unintentional'.

• Pentagon Reviewing Hypersonic Program As Investments In Mach 5 Missiles Expected To Soar.

• Brace For A Monday Massacre: Buffett Liquidates All Airline Holdings As Berkshire Sees Another Leg Lower.

• Saudi Officials Say Whopping 70% Of Mecca's Population Likely Infected With COVID-19.

• Here Are The Key Findings From The Bombshell Government Dossier On China's Bat Virus Program.

• COVID-19 Is Changing The Way America Lives, Works, & Votes.

• Spain Seeks Another Bailout As Deficit Skyrockets.

• China's Exploiting The COVID-19 Pandemic To Expand In Asia.

• Get Ready For Slaughterhouse Robots To Ease America's Meat Processing Crisis.

• "The US Doesn't Own The UN" - Furious Beijing Blasts UN Mission's Taiwan Tweets As "Political Manipulation".

MarketWatch.com:

• S&P 500 earnings are beating estimates by the lowest rate in a decade amid COVID-19 despite earlier cuts to forecasts.

Business Insider:

• The coronavirus pandemic has fragmented Gen Z into 4 distinct groups — and each one is dealing with a different set of challenges.

• Younger adults are getting seriously sick and ending up in the hospital because of the coronavirus, and it's alarming doctors.

• Dining out in China has drastically changed since lockdown restrictions have lifted, and it offers a glimpse into what lies ahead for US restaurants.

• Fast-food chains like McDonald's and Taco Bell are betting traumatized Americans will flock to familiarity as restaurants reopen.

The Epoch Times:

• ‘No Sign of Recovery’ for Chinese Economy as Virus Cripples Export Orders.

• Leaked Government Documents Suggest Serious Virus Outbreaks at Hospitals in Northern China.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking coronavirus: Map, data and timeline.

Google Docs:

• Coronavirus Testing by State.

Night Trading

• Asian indices are -2.0% to -1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 115.5 -6.0 basis points.

• China Sovereign CDS 48.25 +3.25 basis points.

• Bloomberg Emerging Markets Currency Index 58.18 -.21%.

• FTSE 100 futures -1.4%.

• S&P 500 futures -1.4%.

• NASDAQ 100 futures -1.6%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (PETS)/.29

• (NNN)/.70

• (PBI)/.07

• (TSN)/1.12

After the Close:

• (AIG)/.82

• (CAR)/-1.83

• (CRUS)/.50

• (COHR)/.53

• (DLPH)/-.09

• (EXPE)/-1.23

• (HTZ)/-1.16

• (CLI)/.38

• (MHK)/1.67

• (MOS)/-.07

• (SHAK)/-.01

• (SWKS)/1.33

• (THC)/.32

• (VAR)/.85

• (WMB)/.26

• (WH)/.31

• (XPO)/.49

Economic Releases
10:00 am EST

• Factory Orders for March are estimated to fall -9.2% versus unch. in Feb.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone PMI report and the (ALXN) business update could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are lower, weighed down by technology and financial shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon.  The Portfolio is 25% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• The Week Ahead by Yahoo. (video)
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on earnings jitters, global recession fears, oil weakness, European/Emerging Markets/US High-Yield Debt Angst, technical selling and coronavirus worries. My intermediate-term trading indicators are giving bearish signals and the Portfolio is 25% net long heading into the week.