Stocks Falling into Final Hour on Global Growth Worries, European/Emerging Markets/US High-Yield Debt Angst, Earnings Outlook Concerns, Commodity/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Slightly Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.76 +7.44%

• Euro/Yen Carry Return Index 128.63 +.47%

• Emerging Markets Currency Volatility(VXY) 10.89 +2.45%

• S&P 500 Implied Correlation 57.87 +1.94%

• ISE Sentiment Index 71.0 +20.34%

• Total Put/Call .99 -10.0%

• NYSE Arms 1.51 -22.44% 

Credit Investor Angst:

• North American Investment Grade CDS Index 83.31 +2.25%
  

• America Energy Sector High-Yield CDS Index 1,125.0 +3.01%

• European Financial Sector CDS Index 99.05 +3.83%

• Western Europe Sovereign Debt CDS Index 25.70 +.19%

• Asia Pacific Sovereign Debt CDS Index 54.61 +1.26%

• Emerging Market CDS Index 295.25 +1.80%
  

• iBoxx Offshore RMB China Corporate High Yield Index 127.14 +.09%

• 2-Year Swap Spread 14.0 -.25 basis point
  

• TED Spread 43.25 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -24.50 -.5 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.24 -.67%
• 3-Month T-Bill Yield .19% -1.0 basis point
  

• Yield Curve 105.0 +1.0 basis point
  

• China Import Iron Ore Spot $60.09/Metric Tonne -5.24%

• Citi US Economic Surprise Index -28.40 +3.0 points

• Citi Eurozone Economic Surprise Index -12.50 -2.2 points

• Citi Emerging Markets Economic Surprise Index 11.0 -1.6 points

• 10-Year TIPS Spread 1.64% -1.0 basis point
  
• 22.6% chance of Fed rate hike at July 27 meeting, 35.0% chance at September 21 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -207 open in Japan 
• China A50 Futures: Indicating -69 open in China

• DAX Futures: Indicating +14 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges and emerging markets shorts
  

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.5%

Sector Underperformers:

• 1) Gold & Silver -5.2% 2) Biotech -2.9% 3) Oil Service -2.8%

Stocks Falling on Unusual Volume:

• RUBI, CRAY, MBUU, OZRK, SERV, KFRC, MDCA, TMUSP, PCLN, HTWR, CALD, BNK, CHEF, GTMED, ANTX, TARO, Q, HSNI, AVD, SFS, FSTR, SHOP, CFX, IMS, SUM, VIRT, TREE, WD, KTWO, MYGN, UA, XPO, CFX, SERV, AMAG, ESPR, GMED, NKTR and RLYP

Stocks With Unusual Put Option Activity:

• 1) Z 2) BBT 3) XLV 4) JWN 5) XLB

Stocks With Most Negative News Mentions:

• 1) DNR 2) VALE 3) UA 4) FSTR 5) RLYP

Charts:

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

Bull Radar

Style Outperformer: 

• Small-Cap Value -.5%

Sector Outperformers:

• 1) Utilities +1.1% 2) REITs +1.1% 3) Restaurants +.6% 

Stocks Rising on Unusual Volume: 

• GKOS, KRA, Z, MTCH, PLT, ZG, TSE, NTRI, HAIN, QUAD, TGI, PZZA, KAR, IAC, ICE, PRO, CHUY, VSI, FTK, FMI, KAR, HYH and CAR

Stocks With Unusual Call Option Activity: 

• 1) WTW 2) EMN 3) NRG 4) BAX 5) RTN

Stocks With Most Positive News Mentions: 

• 1) Z 2) NTRI 3) SKYW 4) FDX 5) CDW

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +4.1% Above 100-Day Average
• 1 Sector Rising, 9 Sectors Declining
• 36.6% of Issues Advancing, 60.3% Declining
• 74 New 52-Week Highs, 22 New Lows
• 54.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.0%
• Vix 16.6 +6.3%
• Total Put/Call .88 -20.0%
• TRIN/Arms 1.62 -16.5%

Wednesday Watch

Night Trading 

• Asian equity indices are -1.0% to -.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 143.0 +1.25 basis points. 
• Asia Pacific Sovereign CDS Index 55.0 +.75 basis point. 
• Bloomberg Emerging Markets Currency Index 72.51 -.31%. 
• S&P 500 futures -.15%. 
• NASDAQ 100 futures -.17%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (BUD)/.91
• (DLPH)/1.34
• (HAIN)/.49
• (HUM)/1.81
• (ICE)/3.66
• (KLIC)/.06
• (MOS)/.14
• (PCLN)/9.64
• (RDC)/.72
• (ZTS)/.41
• (CENT)/.59
• (CF)/.46
• (CB)/2.17
• (FIT)/.03
• (MTW)/-.02
• (MCK)/3.14
• (MET)/1.38
• (MCHP)/.68
• (MUR)/-.68
• (OHI)/.81
• (PRU)/2.36
• (TSLA)/-.65
• (RIG)/.28
• (WFT)/-.26
• (WBMD)/.33
• (WFM)/.41
• (WMB)/.23

Economic Releases  
8:15 am EST

• The ADP Employment Change for April is estimated to fall to 195K versus 200K in March.

8:30 am EST

• The Trade Deficit for March is estimated at -$41.1B versus -$47.1B in February.
• Preliminary 1Q Non-farm Productivity is estimated to fall -1.3% versus a -2.2% decline in 4Q.
• Preliminary 1Q Unit Labor Costs are estimated to rise +3.3% versus a +3.3% gain in 4Q.  

9:45 am EST:

• Final Markit US Services PMI for April is estimated at 52.1 versus a prior estimate of 52.1.

10:00 am EST

• ISM Non-Manufacturing for April is estimated to rise to 54.7 versus 54.5 in March.
• Factory Orders for March are estimated to rise +.6% versus a -1.7% decline in February. 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +556,250 barrels versus a +1,999,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -462,500 barrels versus a +1,608,000 barrel gain the prior week. Distillate supplies are estimated to rise by +37,500 barrels versus a -1,695,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.34% versus a -1.3% decline prior.

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking, China Services PMI, Eurozone Services PMI, weekly MBA mortgage applications report, Piper Jaffray Financial Institutions Conference,  Deutsche Bank Health Care Conference and the (HESS) annual meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and financial 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.

Stocks Falling into Final Hour on China Bubble-Bursting Fears, Emerging Market Currency Worries, Oil Decline, Commodity/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Slightly Above Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 15.72 +7.08%

• Euro/Yen Carry Return Index 127.99 -.20%

• Emerging Markets Currency Volatility(VXY) 10.61 +1.43%

• S&P 500 Implied Correlation 57.04 +4.60%

• ISE Sentiment Index 54.0 -29.87%

• Total Put/Call 1.12 +6.7%

• NYSE Arms 1.87 +40.1% 

Credit Investor Angst:

• North American Investment Grade CDS Index 81.56 +4.75%
  

• America Energy Sector High-Yield CDS Index 1,075.0 -.08%

• European Financial Sector CDS Index 95.40 +6.03%

• Western Europe Sovereign Debt CDS Index 25.66 +2.35%

• Asia Pacific Sovereign Debt CDS Index 54.80 +.75%

• Emerging Market CDS Index 290.57 +2.96%
  

• iBoxx Offshore RMB China Corporate High Yield Index 127.03 unch.

• 2-Year Swap Spread 14.25 unch.
  

• TED Spread 42.75 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -24.0 -2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.73 -1.12%
• 3-Month T-Bill Yield .20% +1.0 basis points
  

• Yield Curve 104.0 -3.0 basis points
  

• China Import Iron Ore Spot $63.41/Metric Tonne -4.27%

• Citi US Economic Surprise Index -31.40 +.3 point

• Citi Eurozone Economic Surprise Index -10.30 +.5 point

• Citi Emerging Markets Economic Surprise Index 12.60 +1.9 points

• 10-Year TIPS Spread 1.65% -4.0 basis points
  
• 24.3% chance of Fed rate hike at July 27 meeting, 37.9% chance at September 21 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +38 open in Japan 
• China A50 Futures: Indicating n/a open in China

• DAX Futures: Indicating +15 open in Germany

Portfolio: 

• Slightly Lower: On losses in my retail/tech/medical/biotech sector longs
  

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

• Market Exposure: Moved to 25% Net Long