Stocks Reversing Higher into Afternoon on US Economic "Soft-Landing" Hopes, Less European/Emerging Markets/US High-Yield Debt Angst, Month-End Positioning, Transport/Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.1 -5.3%
• DJIA Intraday % Swing 1.05%
  
• Bloomberg Global Risk On/Risk Off Index 55.3 -3.1%

• Euro/Yen Carry Return Index 157.0 +1.6%

• Emerging Markets Currency Volatility(VXY) 9.9 -.9%

• CBOE S&P 500 Implied Correlation Index 33.5 +.3% 

• ISE Sentiment Index 109.0 +3.0 points
  

• Total Put/Call .94 -4.1%

• NYSE Arms 1.15 +105.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 75.4 -1.8%
  

• US Energy High-Yield OAS 381.05 -.50%
• Bloomberg TRACE # Distressed Bonds Traded 400.0 -13.0
  

• European Financial Sector CDS Index 97.9 -1.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 357.15 -1.8%
  

• Italian/German 10Y Yld Spread 186.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 129.17 -1.6%
  

• Emerging Market CDS Index 238.2 -2.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.7 -.3%

• 2-Year Swap Spread 29.25 basis points unch.
  

• TED Spread 22.5 basis points +12.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.75 +.5 basis point
  
• MBS  5/10 Treasury Spread 170.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 696.0 -1.0 basis point
  
• Avg. Auto ABS OAS 94.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.7 +.02%
• 3-Month T-Bill Yield 5.07% -7.0 basis points
  

• China Iron Ore Spot 104.5 USD/Metric Tonne -.3%
• Dutch TTF Nat Gas(European benchmark) 38.5 euros/megawatt-hour -1.7%

• Citi US Economic Surprise Index 22.0 +1.0 point

• Citi Eurozone Economic Surprise Index 15.2 -6.3 points
  

• Citi Emerging Markets Economic Surprise Index 35.6 +3.1 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 226.73 +.39:  Growth Rate +1.9% +.2 percentage point, P/E 18.3 +.2
  
• S&P 500 Current Year Estimated Profit Margin 12.29% +1.0 basis point
  
• Bloomberg US Financial Conditions Index .06 -10.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.49 -13.0 basis points
  
• US Yield Curve -60.0 basis points (2s/10s) -5.0 basis points
• US Atlanta Fed 2Q GDPNow Forecast +1.66% n/a
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.66% +8.0 basis points: CPI YoY +5.19% unch.
  
• 10-Year TIPS Spread 2.22 -6.0 basis points
  
• Highest target rate probability for June 14th FOMC meeting: 66.0%(+3.8 percentage points) chance of 5.0%-5.25%. Highest target rate probability for July 26th meeting: 55.4%(+.2 percentage point) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +183 open in Japan 
• China A50 Futures: Indicating +45 open in China

• DAX Futures: Indicating +129 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth +.3%
  

Sector Underperformers:

• 1) Internet -1.4% 2) Cyber Security -.9% 3) Steel -.2%

Stocks Falling on Unusual Volume: 

• X, ELME, AON, FHI, TMUS, ZS, AMZN, NVT, HRT, COLM, KMPR, LAZ, PBR, SONY, DOCN, HUBG, ASND, FSLR, RNA, ACCD, UVE, PINA, AYX and NET
  

Stocks With Unusual Put Option Activity:

• 1) BLUE 2) OWL 3) IMGN 4) ALGM 5) PBR/A
  

Stocks With Most Negative News Mentions:

• 1) FSLR 2) SNAP 3) PINS 4) NET 5) AMZN
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.1%
  

Sector Outperformers:

• Airlines +4.3% 2) Gambling +2.5% 3) Oil Service +2.4%

Stocks Rising on Unusual Volume:

• SKYW, COUR, BZH, SAIA, PRCT, NYCB, CHTR, SKT, BJRI, RMD, MHK, PMT, PI, SKX, MGI, INTC, MDLZ, CL and CC
  

Stocks With Unusual Call Option Activity:

• 1) PETS 2) PNR 3) TAK 4) ENLC 5) GSAT

Stocks With Most Positive News Mentions:

• 1) IMGN 2) APYX 3) SKYW 4) TNC 5) AX
  

Charts:

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

Monday's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open: 

• (AMG)/4.15
• (CHKP)/1.73
• (BEN)/.56
• (GPN)/2.31
• (KBR)/.58
• (NCLH)/-.43
• (ON)/1.08
• (SOFI)/-.08
• (WEC)/1.58
  

After the Close: 

• (ANET)/1.35
• (CAR)/3.35
• (CF)/2.56
• (CHGG)/.26
• (FANG)/4.33
• (RE)/12.54
• (FWRD)/1.30
• (LSCC)/.50
• (LOGI)/.29
• (MGM)/.16
• (MSTR)/.18
• (NXPI)/3.02
• (RMBS)/.42
• (SBAC)/2.91
• (SFM)/.85
• (SYK)/2.01
• (TEX)/1.04
• (RIG)/-.22
• (VRTX)/3.02
• (VNO)/.62
  

Economic Releases

10:00 am EST

• ISM Manufacturing for April is estimated to rise to 47.0 versus 46.3 in March.
• ISM Prices Paid for April is estimated to fall to 49.0 versus 49.2 in March.
• ISM Employment.
  

Upcoming Splits

• (SMH) 2-for-1
  

Other Potential Market Movers

• The China Manufacturing PMI report could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running -4.7% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.1 unch.
  
• 3 Sectors Declining, 8 Sectors Rising
• 75.9% of Issues Advancing, 21.8% Declining
• 41 New 52-Week Highs, 18 New Lows
• 40.8%(+1.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.0 +9
  
• Bloomberg Global Risk-On/Risk-Off Index 56.3 -1.5%
  
• Russell 1000: Growth/Value 15,961.4 -.22%
• 1-Day Vix 11.8 -22.9%
  
• Vix 16.4 -3.6% 
  
• Total Put/Call .85 -13.2%
• TRIN/Arms 1.40 +150.0%
  

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 129.5 -2.0 basis points. 

• China Sovereign CDS 72.5 -3.0 basis points.
  
• China Iron Ore Spot 104.4 USD/Metric Tonne +.4%.

• Bloomberg Emerging Markets Currency Index 47.6 unch.
• Bloomberg Global Risk-On/Risk Off Index 58.7 +2.6%. 
• Bloomberg US Financial Conditions Index .12 -4.0 basis points.
  
• Volatility Index(VIX) futures 19.6 +.5%.
• Euro Stoxx 50 futures +.37%.

• S&P 500 futures -.14%.

• NASDAQ 100 futures -.19%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by technology and consumer shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the day.