Stocks Surging into Afternoon on Infrastructure Deal Hopes, Stable Long-Term Rates, Short-Covering, Commodity/Construction 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) 15.8 -3.0%
• Bloomberg Global Risk On/Risk Off Index 3,400.0 +40.0 points

• Euro/Yen Carry Return Index 136.72 -.07%

• Emerging Markets Currency Volatility(VXY) 8.7 -1.6%

• S&P 500 Implied Correlation 47.1 +2.4%

• ISE Sentiment Index 136.0  +7.0 points
  

• Total Put/Call .7 -1.5%

• NYSE Arms .74 -22.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 48.39 -.9%
  

• US Energy High-Yield OAS 385.85 -.65%

• European Financial Sector CDS Index 53.4 -1.0%

• Italian/German 10Y Yld Spread 105.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 84.17 -.56%
  

• Emerging Market CDS Index 152.86 -1.75%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.15 -.22%

• 2-Year Swap Spread 6.75 +.25 basis point

• TED Spread 9.0 -1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.5 -.5 basis point
  
• MBS  5/10 Treasury Spread  67.0 -2.25 basis points
  
• IHS Markit CMBX BBB- 6 73.25 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.80 +.17%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 122.0 unch.
  

• China Iron Ore Spot 206.05 USD/Metric Tonne -.33%

• Citi US Economic Surprise Index 26.5 -3.7 points

• Citi Eurozone Economic Surprise Index 97.20 +3.1 points
  

• Citi Emerging Markets Economic Surprise Index 78.1 +1.2 points

• 10-Year TIPS Spread 2.33 -2.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +135 open in Japan 
• China A50 Futures: Indicating +50 open in China

• DAX Futures: Indicating -9 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long
  

Bear Radar

 Style Underperformer:

• Mid-Cap Value +.6%

Sector Underperformers:

• 1) REITs -.5% 2) Utilities -.2% 3) Airlines -.2%

Stocks Falling on Unusual Volume: 

• SEMR, RCUS, TTD, SHAK, LLY, MGNI, AACQ, LAZR, PSAC, RAMP, ARCH, ATHA, SAVA, FSLR, AOSL, FRX, GRUB, SCS, AVXL, MRC and VMC
  

Stocks With Unusual Put Option Activity:

• 1) KBH 2) CRBP 3) RAD 4) TTD 5) KMX
  

Stocks With Most Negative News Mentions:

• 1) RAD 2) DLTR 3) BB 4) LMNL 5) CCL
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Shipping +2.9% 2) Steel +2.8% 3) Oil Service +1.9%

Stocks Rising on Unusual Volume:

• SEMR, TTD, RCUS, SHAK, MGNI, AACQ, LAZR, RAMP, BEAM, PSAC, VZIO, FSLR, AMEH, CLPT, LLY, UPWK, FROG, ATHA, FSLY, TSLA, SAVA, SPT, ARCH, AVXL, BBBY, GRUB, AERI, AOSL, SPWR, RGNX, LESL, ITOS, SCS, MGM, NTRA, DRI, SCPL, CLII, NTLA, FWONK and EWTX
  

Stocks With Unusual Call Option Activity:

• 1) RAD 2) TTD 3) KBH 4) KMX 5) PIRS

Stocks With Most Positive News Mentions:

• 1) MRIN 2) TTD 3) RCUS 4) CFLT 5) SEMR
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -20.2% Below 100-Day Average 
• 9 Sectors Rising, 2 Sectors Declining
• 60.4% of Issues Advancing, 34.9% Declining
• 138 New 52-Week Highs, 6 New Lows
• 84.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.2%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,382.0 +23.0 points
• Vix 15.8 -3.3%
• Total Put/Call .69 unch.
• TRIN/Arms .75 -21.0%

Thursday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 84.5 unch.

• China Sovereign CDS 36.0 -.5 basis point.
  

• Bloomberg Emerging Markets Currency Index 60.71 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 3,348.0 -10.0 points.
• Volatility Index(VIX) futures 18.32 -.66%.
• FTSE 100 futures -.01%.

• S&P 500 futures +.18%.

• NASDAQ 100 futures +.21%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ACN)/2.24
• (DRI)/1.79
• (FIZZ)/.41
• (RAD)/.22
• (WOR)/1.75
  

After the Close:

• (BB)/-.05
• (FDX)/5.00
• (NKE)/.51
• (PRGS)/.73
• (SNX)/1.93
  

Economic Releases

8:30 am EST

• The Advance Goods Trade Balance for May is estimated at -$87.5B versus -$85.2B in April.
• Retail Inventories MoM for May is estimated to fall -.5% versus a -1.6% decline in April.
• Wholesale Inventories MoM for May is estimated to rise +.8% versus a +.8% gain in April.
• Durable Goods Orders for May is estimated to rise +2.8% versus a -1.3% decline in April.
• Durables Ex Transports for May is estimated to rise +.7% versus a +1.0% gain in April.
• Cap Goods Orders Non-Defense Ex-Air for May is estimated to rise +.6% versus a +2.2% gain in April.
• Initial Jobless Claims for last week are estimated to fall to 380K versus 412K the prior week.
• Continuing Claims is estimated to fall to 3460K versus 3518K prior.
  

11:00 am EST

• The Kansas City Fed Manufacturing Index for June is estimated to fall to 24.0 versus 26.0 in May.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Williams speaking, Fed stress test results, Eurozone GDP report, BofE rate decision, weekly Langer Consumer Comfort Index, (PKI) analyst day, (MSFT) Windows Event, (HIBB) investor day and the (UNFI) investor day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are slightly lower, weighed down 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 100% net long heading into the day.

Stocks Slightly Higher into Final Hour on Stable Long-Term Rates, Short-Covering, Technical Buying, Alt Energy/Retail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.3 -2.5%
• Bloomberg Global Risk On/Risk Off Index 3,374.0 +17.0 points

• Euro/Yen Carry Return Index 136.89 +.22%

• Emerging Markets Currency Volatility(VXY) 8.9 -.7%

• S&P 500 Implied Correlation 45.9 -1.9%

• ISE Sentiment Index 134.0  +39.0 points
  

• Total Put/Call .7 -14.1%

• NYSE Arms .77 -36.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 48.78 -.43%
  

• US Energy High-Yield OAS 389.50 -1.1%

• European Financial Sector CDS Index 54.0 -.9%

• Italian/German 10Y Yld Spread 107.0 +1.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 84.59 -.54%
  

• Emerging Market CDS Index 155.59 -.69%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.25 +.29%

• 2-Year Swap Spread 6.5 -.5 basis point

• TED Spread 10.0 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.0 +.75 basis point
  
• MBS  5/10 Treasury Spread  69.25 -3.0 basis points
  
• IHS Markit CMBX BBB- 6 73.25 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.69 +.06%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 122.0 -2.0 basis points
  

• China Iron Ore Spot 208.35 USD/Metric Tonne +2.7%

• Citi US Economic Surprise Index 30.2 -16.0 points

• Citi Eurozone Economic Surprise Index 94.10 +5.0 points
  

• Citi Emerging Markets Economic Surprise Index 76.9 +.4 point

• 10-Year TIPS Spread 2.35 +3.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -104 open in Japan 
• China A50 Futures: Indicating -88 open in China

• DAX Futures: Indicating +27 open in Germany

Portfolio:

• Higher: On gains in my commodity/tech/medical sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long