Morning Market Internals

NYSE Composite Index:

• Volume Running -16.5% Below 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 63.3% of Issues Advancing, 33.3% Declining
• 61 New 52-Week Highs, 6 New Lows
• 54.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.5%
• Vix 11.2 -3.3%
• Total Put/Call .70 -19.5%
• TRIN/Arms .72 -11.5%

Wednesday Watch

Evening Headlines

Bloomberg: 

• Japan Retail Sales Rise Less Than Forecast, Slowing From January. Japan’s retail sales rose less than economists forecast in February, signaling that consumer spending is struggling to gain traction.

• Putting All Our Eggs in China's Basket Was a Mistake: UBS.

• Asia Stocks Outside Japan Rise, Oil Extends Gains. Asian stocks outside Japan built on gains for a second day as a rise in consumer confidence rekindled optimism in the strength of the U.S. economy. Equities in Australia, South Korea and New Zealand all rose after the S&P 500 Index posted its biggest gain in two weeks, lifted by data showing American consumers are more upbeat than any time since 2000. Energy producers climbed in Asia as crude topped $48 a barrel. Japanese stocks were lower. The yen traded at 111.17 per dollar as of 9:17 a.m. in Tokyo, after dropping 0.4 percent on Tuesday. The Topix fell 0.1 percent. Australia’s S&P/ASX 200 Index added 0.6 percent and South Korea’s Kospi index rose 0.2 percent. Hang Seng Index futures climbed 0.5 percent.

Wall Street Journal:

• Russia Investigation Stalls in House. Lawmakers have called for GOP chairman to step aside.

• After GOP Health Bill’s Demise, More States Weigh Expanding Medicaid. Virginia, Maine and North Carolina are among the states taking steps toward growing their programs.

Fox News:

• Shutdown threat returns after ObamaCare repeal meltdown. (video)

CNBC:

• After-hours buzz: RH, SONC, VRTX & more.

• Congress just cleared the way for internet providers to sell your web browsing history.

• Fed's Powell says central bank still in 'wait-and-see' stance regarding Trump policies.

Zero Hedge:

• DNC Asks Entire Staff For Resignation Letters.

• The Robots Win: Blackrock Bets On Computers Over Human Stock Pickers, Fires Dozens.

• Equity Research Faces "Major Disruption" As Study Finds "Less Than 1%" Of Reports Are Actually Read.

• And Now Fake Consumer Confidence Too: Gallup Says Confidence In The Economy "Tumbled". (graph)

• RBOB Tumbles After Lower Than Expected Gasoline Draw. (graph)

• 4 Factors Driving Oil Prices This Summer. (graph)

• Biggest VIX Crash Since Election Saves Dow From Worst Losing Streak In 39 Years. (graph)

Business Insider:

• Mark Cuban says healthcare 'should be a right'.

• Here are 48 hedge fund terms every investor should know.

Telegraph: 

• Britain is 
the least of Europe’s problems.

Night Trading 

• Asian equity indices are unch. to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 95.25 -1.0 basis point. 

• Asia Pacific Sovereign CDS Index 21.25 unch.

• Bloomberg Emerging Markets Currency Index 72.19 unch. 

• S&P 500 futures +.03%. 

• NASDAQ 100 futures +.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (PAYX)/.54

• (FUL)/.45

• (PRGS)/.27

• (WOR)/.64

Economic Releases
10:00 am EST 

• Pending Home Sales MoM for February are estimated to rise +2.5% versus a -2.8% decline in January. 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,027,780 barrels versus a +4,954,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,877,780 barrels versus a -2,811,000 barrel decline the prior week. Distillate supplies are estimated to fall by -1,250,000 barrels versus a -1,910,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.33% versus a +2.3% gain prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by financial and commodity 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 Surging into Final Hour on Economic Optimism, Oil Gain, Yen Weakness, Tranport/Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 11.52 -7.84%

• Euro/Yen Carry Return Index 125.42 -.09%

• Emerging Markets Currency Volatility(VXY) 9.20 unch.

• S&P 500 Implied Correlation 44.98 -2.7%

• ISE Sentiment Index 83.0 unch.
  

• Total Put/Call 1.12 -7.44%

• NYSE Arms .80 -23.97%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.24 -.77%
  

• America Energy Sector High-Yield CDS Index 387.0 -3.41%

• European Financial Sector CDS Index 86.95 -1.47%

• Western Europe Sovereign Debt CDS Index 11.19 -4.56%

• Asia Pacific Sovereign Debt CDS Index 21.46 +.56%

• Emerging Market CDS Index 212.93 -.32%
  

• iBoxx Offshore RMB China Corporate High Yield Index 136.36 +.02%

• 2-Year Swap Spread 33.25 -1.75 basis points

• TED Spread 38.0 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -22.0 -1.25 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.19 -.38%
• 3-Month T-Bill Yield .77% unch.
  

• Yield Curve 111.0 -1.0 basis point
  

• China Import Iron Ore Spot $82.01/Metric Tonne +.54%

• Citi US Economic Surprise Index 53.1 +.6 point

• Citi Eurozone Economic Surprise Index 66.50 -1.2 points

• Citi Emerging Markets Economic Surprise Index 41.80 -1.0 point

• 10-Year TIPS Spread 1.97 unch.
  
• 53.5% chance of Fed rate hike at June 14 meeting, 58.3% chance at July 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +43 open in Japan 
• China A50 Futures: Indicating +20 open in China

• DAX Futures: Indicating +50 open in Germany

Portfolio: 

• Higher: On gains in my tech/biotech/retail sector longs  

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

• Market Exposure: Moved to 100% Net Long

Today's Headlines

Bloomberg:

•  European Stocks Rebound Ahead of Article 50 Trigger. (video)
• ‘Deep Subprime’ Auto Loans Are Surging.

Wall Street Journal:

• Tesla(TSLA) Gets Backing of Chinese Internet Giant Tencent. China’s most valuable company buys 5% stake in Elon Musk’s electric-vehicle maker ahead of ambitious launch of $35,000 sedan.
• Swipe by Swipe, Chinese Smartphone Users Flock to Risky Investments. Crowdfunding boosts a million companies in China, but losses by mom-and-pop investors are piling up; pitching Elegant Villa for $15,000.

CNBC:

• Einhorn: If you believe in the Trump story, here's what you should really be investing in. (video)
• GOP House leaders say they are 'closer ' than ever to Obamacare repeal, but won't commit to timeline. (video)
• In a decade, many fast-food restaurants will be automated, says Yum Brands CEO.
• Apple(AAPL) could rally to $200 on new products, share buybacks, UBS says.

Zero Hedge:

• NYC Retail Vacancies Soar Prompting Massive Rent Concessions.
• Bloomberg Terminal Subscribers Drop For Only Second Time In History. (graph)
• Meet SAM, Brick Laying Robot That Does The Work Of 6 Humans.
• Trump To Sign "Energy Independence" Order Killing Obama's Climate Change Initiatives.
• Cable Tumbles As Scottish Parliament Votes For 2nd Independence Referendum.
• $20 Trillion Debt – It's Time To Start Believing In The Impossible.
• Tuesday Humor: Richmond Fed Smashes Expectation by Six Standard Deviations. (graph)
• Consumer Confidence Soars To Highest Since The Peak Of The Dot-Com Bubble. (graph)
• Despite Soaring Rates, US Home Prices Accelerate At Fastest Pace In 3 Years. (graph)

Bear Radar

Style Underperformer:

• Small-Cap Growth +.5%

Sector Underperformers:

• 1) Hospitals -3.7% 2) Gold & Silver -2.7% 3) Biotech -.3%

Stocks Falling on Unusual Volume: 

• FDS, PLSE, GG, FLXN and THC

Stocks With Unusual Put Option Activity:

• 1) JNK 2) RHT 3) CMCSA 4) CRC 5) EA

Stocks With Most Negative News Mentions:

• 1) EXC 2) FTD 3) STZ 4) ADPT 5) PMD

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +1.0%

Sector Outperformers:

• 1) Oil Service +2.4% 2) Road & Rail +2.0% 3) Banks +2.0%

Stocks Rising on Unusual Volume:

• CBIO, SGBK, ZIONW, OMER, DRI, STOR, MZOR, RHT, CARA, ATRO, SGMS, TPIC, SBLK, HUN, SEDG, AGU, TEDU, SONC, EDIT, SHLD, CCL and COOL

Stocks With Unusual Call Option Activity:

• 1) MNKD 2) SGMS 3) TSRO 4) KMX 5) RHT

Stocks With Most Positive News Mentions:

• 1) PSIX 2) GNK 3) CBI 4) RHT 5) SHLD

Charts:

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