Bear Radar

Style Underperformer:

• Small-Cap Value -1.3%

Sector Underperformers:

• 1) Alt Energy -2.3% 2) Computer Hardware -2.2% 3) Oil Service -2.0%

Stocks Falling on Unusual Volume: 

• ZUO, NTNX, GPS, RRGB, MPAA, HYGS, DELL, CONN, STZ, CAPL, TPIC, ZS, WUBA, MOV, IOVA, TX, SCHL, NXGN, JWN, MAT, BGS, YEXT, KSU, ENPH, SCWX, AYI, MOV, VMW, CATO and BOOT

Stocks With Unusual Put Option Activity:

• 1) AVYA 2) CZR 3) AET 4) EWW 5) DELL

Stocks With Most Negative News Mentions:

• 1) ZUO 2) GPS 3) FCAU 4) STZ 5) KSU

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.5%

Sector Outperformers:

• 1) Gold & Silver +4.0% 2) Video Gaming +.4% 3) REITs +.4%

Stocks Rising on Unusual Volume:

• WSM, QTRX, BIG, SPNS, OKTA, SOLY, GCO, PLAN, TWLO, MDCO, AVDR, VEEV, AEM, PAYC, AU, WPM, SUI, AAXN, NGG and FOLD

Stocks With Unusual Call Option Activity:

• 1) WPX 2) DELL 3) HYG 4) ALLY 5) WSM

Stocks With Most Positive News Mentions:

• 1) WSM 2) GCO 3) BIG 4) LYFT 5) MOH

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +18.1% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 17.1% of Issues Advancing, 80.2% Declining
• 40 New 52-Week Highs, 215 New Lows
• 43.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.4%
• Vix 19.1 +10.5%
• Total Put/Call 1.45 +33.0%
• TRIN/Arms 1.1 -11.3%

Friday Watch

Evening Headlines
Bloomberg:      

• U.S. to Impose 5% Tariff on All Goods From Mexico, Trump Says.

• Trump Pushes USMCA Approval Plan in Move That Irks Pelosi.  

• China Revamps Its Tools for Controlling Capital Outflows.

• North Korea Envoy Executed Over Trump-Kim Summit, Chosun Reports.

• Corn That Won't Get Planted This Year Could Shatter All U.S. Records. 

• Stock Futures Drop as Trump Plans Mexico Tariffs. U.S. equity futures fell after President Donald Trump said he will place tariffs on all goods coming from Mexico. The yen edged higher and Mexico’s peso slumped. Trump tweeted that the taxes would take effect June 10 at a rate of 5%. That may hit sentiment for Asian stocks, which were heading for modest gains after U.S. shares edged higher on Thursday. Treasury futures rose. Earlier, the bond rally that’s taken yields to a 20-month low on 10-year Treasuries extended amid concern the trade spat with China could derail global growth. Futures on Japan’s Nikkei 225 added 0.1% in Singapore earlier. Hang Seng futures rose 0.3%. Futures on Australia’s S&P/ASX 200 Index gained 0.3%. Futures on the S&P 500 fell 0.5%.  

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

• Credit Investors Pull Most From High-Grade Funds Since 2015.

Wall Street Journal:

• College Enrollments Fall Again, With Some Notable Exceptions.

• Fed’s Patience Tested as Trade Spat Clouds Growth Outlook.

• Stacey Abrams Won’t Go Away.

• FedEx(FDX) to Deliver 7 Days a Week.

• Juul Explores Opening Its Own E-Cigarette Stores in U.S.

Fox News:

• Chicago police release trove of Jussie Smollett documents in ‘hoax’ case.

MarketWatch.com:

• Trade issues ‘won’t cause a bear market’ as U.S. economy is in ‘very good shape,’ says this famed strategist.

• Tech investors are buying the dip, even as trade concerns unsettle the overall stock market.

CNBC:

• Here’s why China’s trade war threat to restrict rare earth minerals is so serious.

• Vice President Mike Pence plans hawkish China speech as trade tensions boil.

• White House kickstarts USMCA trade deal approval process.

• Stocks making the biggest moves after hours: Uber, Gap, Zuora and more.

• Amazon(AMZN) is interested in buying Boost from T-Mobile, Sprint, sources tell Reuters.

Zero Hedge:   

• Barr Strikes Back, Says Mueller "Could Have Reached A Decision If He Wanted To".

• iPhones Harvest And Transmit Massive Amounts Of Data While You Sleep.

• Two Reasons Why Socialism Repeatedly Fails.

• Hillary And Chelsea Clinton To Launch Feminist Production Company.

• Crypto-Crash Accelerates. Bitcoin Plunges To $8000.

• Which Chinese Banks Will Fail Next?

• New Jersey Pensions Slash Hedge Fund Allocation For 2nd Time In 3 Years.

• Uber Reports Record Cash Burn, $1 Billion Loss In First Quarter As Public Company.

• Cryptos & Crude Crack As Credit & Yield Curve Collapse Continues.

Business Insider:

• Alexandria Ocasio-Cortez and Ted Cruz say they'll team up to ban lawmakers from becoming lobbyists after they leave office.

Telegraph:

• Ambrose Evans-Pritchard:German bond yields plumb 700-year lows as deflation stalks eurozone.

Night Trading 

• Asian equity indices are -1.0% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 76.75 -.75 basis point.

• China Sovereign CDS 57.0 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 65.66 -.18%.

• S&P 500 futures -.77%.

• NASDAQ 100 futures -.82%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (BIG)/.70

• (CONN)/.53

• (GCO)/.03

After the Close:

• None of note

Economic Releases
8:30 am EST

• Personal Income for April is estimated to rise +.3% versus a +.1% gain in March.

• Personal Spending for April is estimated to rise +.2% versus a +.9% gain in March.

• The PCE Core MoM for April is estimated to rise +.2% versus unch. in March.

9:45 am EST

• MNI Chicago PMI for May is estimated to rise to 54.0 versus 52.6 in April.
  

10:00 am EST

• Final Univ. of Mich. Consumer Sentiment for May is estimated to fall to 101.5 versus a prior estimate of 102.4.
  

Upcoming Splits

• (FFIN) 2-for-1

Other Potential Market Movers

• The tariffs on $60B of US exports to China will rise to 5-25% from 5-10% prior, China Manufacturing PMI report, Eurozone CPI report, FDA hearing on products containing cannabis, ASCO 2019 and the (CI) investor day 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 lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the day.

Stocks Reversing Lower into Final Hour on China Trade War Fears, Oil Plunge, Technical Selling, Energy/Financial Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 18.1 +1.0%

• Euro/Yen Carry Return Index 126.73 +.02%

• Emerging Markets Currency Volatility(VXY) 8.35 -1.53%

• S&P 500 Implied Correlation 44.43 +2.11%

• ISE Sentiment Index 84.0 +37.7%
  

• Total Put/Call 1.08 -23.4%

• NYSE Arms 1.22 +24.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.29 +.28%
  

• America Energy Sector High-Yield CDS Index 589.0 +1.46%

• European Financial Sector CDS Index 89.61 -2.43%

• Italian/German 10Y Yld Spread 283.0 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 76.86 -.06%
  

• Emerging Market CDS Index 208.73 -.72%
  

• iBoxx Offshore RMB China Corporate High Yield Index 163.17 unch.

• 2-Year Swap Spread 5.0 +.5 basis point

• TED Spread 18.50-.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -16.5 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.53 -.12%
• 3-Month T-Bill Yield 2.36% +2.0 basis points

• Yield Curve 15.25 -.25 basis point

• China Iron Ore Spot 97.05 USD/Metric Tonne -.87%

• Citi US Economic Surprise Index -33.9 -.8 point

• Citi Eurozone Economic Surprise Index -20.90 -.7 point

• Citi Emerging Markets Economic Surprise Index -24.30 -.2 point

• 10-Year TIPS Spread 1.75 +2.0 basis points
• 29.4% chance of Fed rate cut at July 31st meeting, 58.7% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -53 open in Japan 
• China A50 Futures: Indicating -157 open in China

• DAX Futures: Indicating -15 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 25% Net Long