Stocks Surging into Afternoon on US Economic Optimism, Dollar Weakness, Oil Gain, Financial/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Light

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.0 -9.0%
• Bloomberg Global Risk On/Risk Off Index 3,193.0 +170.0 points

• Euro/Yen Carry Return Index 134.78 +.57%

• Emerging Markets Currency Volatility(VXY) 9.9 -1.1%

• S&P 500 Implied Correlation 50.0 +1.0%

• ISE Sentiment Index 117.0 -18.0 points
  

• Total Put/Call .77 -3.8%

• NYSE Arms .95 -12.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.27 -1.28%
  

• US Energy High-Yield OAS 452.90 -.94%

• European Financial Sector CDS Index 59.29 -1.6%

• Italian/German 10Y Yld Spread 104.0 +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 81.25 +2.25%
  

• Emerging Market CDS Index 165.14 -1.11%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.23 +.1%.

• 2-Year Swap Spread 12.0 -.25 basis point

• TED Spread 16.0 -.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.75 +.25 basis point
  
• MBS  5/10 Treasury Spread  64.75 +.5 basis point
  
• IHS Markit CMBX BBB- 6 71.5 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.82 unch.
• 3-Month T-Bill Yield .02% unch.
  

• Yield Curve 141.0 +2.0 basis points
  

• China Iron Ore Spot 183.6 USD/Metric Tonne +1.4%

• Citi US Economic Surprise Index 43.80 +15.5 points

• Citi Eurozone Economic Surprise Index 144.5 +12.5 points
  

• Citi Emerging Markets Economic Surprise Index 40.4 +2.3 points

• 10-Year TIPS Spread 2.34 +1.0 basis point
• 89.4% chance of no change at June 16th meeting, 89.4% chance of no change at Sept. 22nd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +160 open in Japan 
• China A50 Futures: Indicating +77 open in China

• DAX Futures: Indicating +23 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long
  

Morning Market Internals

NYSE Composite Index:

• Volume Running -30.7% Below 100-Day Average 
• 11 Sectors Rising, 0 Sectors Declining
• 75.5% of Issues Advancing, 21.0% Declining
• 193 New 52-Week Highs, 10 New Lows
• 88.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.9%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,143.0 +119.0 points
• Vix 17.2 -8.1%
• Total Put/Call .79 -1.3%
• TRIN/Arms .83 -23.9%

Friday Watch

Night Trading 

• Asian equity indices are -.75% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 80.5 +3.0 basis points.

• China Sovereign CDS 38.5 +1.0 basis point.

• Bloomberg Emerging Markets Currency Index 60.81 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 2,977.0 -47.0 points.
• Volatility Index(VIX) futures 21.0 -.64%.
• FTSE 100 futures -.37%.

• S&P 500 futures +.14%.

• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (AXP)/1.48
• (ALV)/1.47
• (AZZ)/.57
• (GNTX)/.49
• (HON)/1.79
• (KMB)/1.94
• (RF)/.47
• (SLB)/.18
  

After the Close:

• None of note
  

Economic Releases

9:45 am EST

• The Markit US Manufacturing PMI for April is estimated to rise to 61.0 versus 59.1 in March. 
• The Markit US Services PMI for April is estimated to rise to 61.5 versus 60.4 in March.
  

10:00 am EST

• New Home Sales for March is estimated to rise to 885K versus 775K in Feb.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The UK Services PMI report and the FDA/CDC meeting on JNJ vaccine could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down 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.

Stocks Reversing Substantially Lower into Final Hour on Tax Hike Fears, Dollar Strength, Technical Selling, Metals&Mining/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 18.5 +5.9%
• Bloomberg Global Risk On/Risk Off Index 3,045.0 -28.0 points

• Euro/Yen Carry Return Index 134.06 -.22%

• Emerging Markets Currency Volatility(VXY) 10.0 +.3%

• S&P 500 Implied Correlation 51.7 +4.6%

• ISE Sentiment Index 135.0 -15.0 points
  

• Total Put/Call .76 +8.6%

• NYSE Arms .82 +51.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.06 +.99%
  

• US Energy High-Yield OAS 456.46 +.10%

• European Financial Sector CDS Index 59.29 -.24%

• Italian/German 10Y Yld Spread 102.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 79.5 +1.5%
  

• Emerging Market CDS Index 166.65 +.58%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.10 unch.

• 2-Year Swap Spread 12.25 +.25 basis point

• TED Spread 16.75 -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.0 +1.0 basis point
  
• MBS  5/10 Treasury Spread  64.25 -.25 basis point
  
• IHS Markit CMBX BBB- 6 71.5 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.78 -.13%
• 3-Month T-Bill Yield .02% +1.0 basis point
  

• Yield Curve 139.0 -3.0 basis points
  

• China Iron Ore Spot 180.0 USD/Metric Tonne unch.

• Citi US Economic Surprise Index 28.30 -.6 point

• Citi Eurozone Economic Surprise Index 132.0 +.4 point
  

• Citi Emerging Markets Economic Surprise Index 37.7 +3.2 points

• 10-Year TIPS Spread 2.33 -1.0 basis point
• 89.4% chance of no change at June 16th meeting, 89.4% chance of no change at Sept. 22nd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -198 open in Japan 
• China A50 Futures: Indicating -68 open in China

• DAX Futures: Indicating -37 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/energy sector longs
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Growth -.9%

Sector Underperformers:

• 1) Semis -2.3% 2) Gaming -2.1% 3) Gold & Silver -2.1%

Stocks Falling on Unusual Volume: 

• WBT, SMAR, SKLZ, NTGR, HBAN, PLBY, DOW, EBS, DNMR, FSR, SEIC, SNBR and TIPT
  

Stocks With Unusual Put Option Activity:

• 1) IRBT 2) HIG 3) KSU 4) DISH 5) TJZ
  

Stocks With Most Negative News Mentions:

• 1) FSR 2) RIDE 3) IPG 4) MO 5) EBS
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.8%

Sector Outperformers:

• 1) Alt Energy +2.0% 2) Retail +.9% 3) Airlines +.9%

Stocks Rising on Unusual Volume:

• TDC, XM, CVM, NKLA, EFX, HZO, REKR, KRA, MVIS, GTLS, WISH, FUBO, ORIC, ARRY, POOL, LESL, MWK, GBX, ENPH, CRCT, CHPT, MTW, TRU, RPAY, ENPH, REPL, WISH, TWI, CRWD, LTHM, FSLR, T, AMRS, MUDS, TSCO, DHR, BX, ACEL, CHPT, MWK, WSO, CYH, HZAC, CROX and NDLS
  

Stocks With Unusual Call Option Activity:

• 1) CMG 2) DISH 3) LQD 4) LVS 5) IRBT

Stocks With Most Positive News Mentions:

• 1) XM 2) EFX 3) DHR 4) RHI 5) TDC
  

Charts:

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