Stocks Surging into Final Hour on Less European/Emerging Markets/US High-Yield Debt Angst, Healthcare/Tax Reform Hopes, Earnings Optimism, Financial/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Slightly Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 11.07 -24.3%

• Euro/Yen Carry Return Index 124.50 +1.88%

• Emerging Markets Currency Volatility(VXY) 8.50 -5.76%

• S&P 500 Implied Correlation 42.21 -4.74%

• ISE Sentiment Index 82.0 +9.3%
  

• Total Put/Call 1.0 -2.91%

• NYSE Arms .71 -59.83%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.50 -4.21%
  

• America Energy Sector High-Yield CDS Index 373.0 +.28%

• European Financial Sector CDS Index 77.98 -13.50%

• Western Europe Sovereign Debt CDS Index 9.56 -18.64%

• Asia Pacific Sovereign Debt CDS Index 23.05 -4.08%

• Emerging Market CDS Index 200.41 -2.98%
  

• iBoxx Offshore RMB China Corporate High Yield Index 137.0 -.02%

• 2-Year Swap Spread 33.25 -1.5 basis points

• TED Spread 37.0 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -27.0 +6.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.68 +.05%
• 3-Month T-Bill Yield .78% unch.
  

• Yield Curve 105.0 unch.
  

• China Import Iron Ore Spot $66.53/Metric Tonne -2.48%

• Citi US Economic Surprise Index .80 -2.0 points

• Citi Eurozone Economic Surprise Index 51.40 +2.1 points

• Citi Emerging Markets Economic Surprise Index 37.4 -2.4 points

• 10-Year TIPS Spread 1.88 +2.0 basis points
  
• 66.5% chance of Fed rate hike at June 14 meeting, 69.6% chance at July 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +60 open in Japan 
• China A50 Futures: Indicating -12 open in China

• DAX Futures: Indicating +42 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.9%

Sector Underperformers:

• 1) REITs -1.1% 2) Gold & Silver -1.0% 3) Homebuilders -.1%

Stocks Falling on Unusual Volume: 

• MZOR, AKTX, KW and RLJ

Stocks With Unusual Put Option Activity:

• 1) CBS 2) AKRX 3) GGP 4) SLCA 5) GME

Stocks With Most Negative News Mentions:

• 1) CCLP 2) ICBK 3) SBH 4) TBK 5) GWW

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.5%

Sector Outperformers:

• 1) Banks +2.8% 2) Construction +1.8% 3) Alt Energy +1.8%

Stocks Rising on Unusual Volume:

• BCR, E, HAS, CAI, NOBL, TOT, APFH, EZU, CYTK, SNY, CADE, BMRN, TX, DB, ITW, RACE, POL, OPB, KNOP, SRPT, XLNX, IXUS, MAN, PRMW, BIP, SONC, WING, KNX, WERN and CTRL

Stocks With Unusual Call Option Activity:

• 1) GIS 2) HUN 3) VMW 4) KMB 5) MCD

Stocks With Most Positive News Mentions:

• 1) SONC 2) WING 3) NUE 4) GD 5) XLNX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +16.4% Above 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 67.6% of Issues Advancing, 29.3% Declining
• 211 New 52-Week Highs, 13 New Lows
• 55.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.2%
• Vix 11.6 -20.7%
• Total Put/Call .93 -9.7%
• TRIN/Arms .88 -50.4%

Monday Watch

Today's Headlines

Bloomberg:

• Macron, Le Pen in French Runoff as Establishment Crashes Out. (video) Centrist Emmanuel Macron and far-right nationalist Marine Le Pen won the first round of the French presidential election, triggering a runoff on May 7 between two radically different visions of the country’s future. Macron, a first-time candidate and political independent, was on course to take 23.8 percent in Sunday’s election, with National Front leader Le Pen on 21.7 percent, according to projections from the Interior Ministry based on more than 90 percent of votes counted. A snap poll released late Sunday suggested Macron would defeat Le Pen by more than 20 percentage points in the second round.

• Fillon Concedes Defeat in French Presidential Election. (video) Republican candidate Francois Fillon conceded defeat in the first round of the French presidential election, endorsing his centrist rival Emmanuel Macron. Macron is set to face nationalist Marine Le Pen in the final-round of voting.

• Live Coverage of France's Presidential Election Results.

• Euro Rises to Five-Month High as Le Pen, Macron Lead French Vote. (video) The euro jumped against the dollar after early counting of ballots in the first round of the French election showed that centrist Emmanuel Macron and the National Front’s Marine Le Pen were on course to reach next month’s run-off. The shared currency traded 1.7 percent higher at $1.0913 by 9:05 p.m. London time, paring gains of as much as 2 percent that took the shared currency to the highest since November. A place for Macron in the second round avoids investors’ nightmare scenario of a contest between the anti-euro Le Pen and the Communist-backed Jean-Luc Melenchon.

• What Markets Should Conclude From France's Election by Mohamed A. El-Erian.

• Risk Is Back On After French Election; Euro Jumps. The euro climbed 1.5 percent to $1.0884 as of 7:03 a.m. in Tokyo. The yen fell 1 percent to 110.27 per dollar. Futures on the S&P 500 Index rose 0.9 percent. Contracts on the Nikkei 225 Stock Average traded in Chicago increased 2 percent. Gold slipped 1 percent to $1,272.01 an ounce. Treasury 10-year futures dropped, with contracts for June delivery falling 3/4 to 125 10/32.

• Israel Strikes Weapons Depot in Southern Syria, Al Jazeera Says. Israeli airstrikes killed an unknown number of Syrian soldiers at a weapons depot in rural Quneitra province, Al Jazeera TV reported. An Israeli army spokeswoman declined to comment. Sunday’s strike came after several projectiles from Syria hit the Israeli-controlled Golan Heights on Friday and the army returned fired at areas where the launching originated. Since violence in Syria began in 2011 and devolved into civil war, Israel has been accused of carrying out occasional strikes targeting weapons convoys destined for Lebanon. Israeli Prime Minister Benjamin Netanyahu has said the military acts to limit the transfer of “game-changing” weapons to Hezbollah militants in Lebanon.

• Saudi Stocks Rally as Return of State Bonuses May Boost Spending. The Tadawul All Share Index climbed as much as 1.7 percent, before paring the gain to 1 percent at the close in Riyadh.

Wall Street Journal:

• Live: French Election Results.

• French Presidential Runoff Heralds New Political Era. Advance of EU advocate Emmanuel Macron and euroskeptic Marine Le Pen makes Europe, globalism defining issues of election.

• Cheaper Mortgages Could Spur Housing Market. Drop to 3.97% for a 30-year fixed-rate mortgage could encourage home buyers.

• States Seek to Shore Up Health Insurance Markets. Amid uncertainty over the ACA, Idaho, Oklahoma and Minnesota aim to blunt insurers’ costs for covering costly customers.

Fox News:

• Carter Page: Media, 'corrupt Clinton regime' kept tying me to Trump team. (video)

CNBC:

• Markets get what they expected in Le Pen, Macron victories.

• French election looks like another setback for Europe's left. (video)

• In house of Murdoch, sons set about an elaborate overhaul.

Zero Hedge:

• Le Pen, Macron Progress To Second Round In French Presidential Election: Live Feed.

• Dow Jumps, Gold Dumps As Markets Open After French Vote. (graph)

• Macron And Le Pen Move To The 2nd Round: What Happens Next, According To Goldman And Citi.

• Trump To Discuss North Korea In Sunday Call With China's Xi, Japan's Abe.

• Bookies See Almost 90% Chance Of Macron Becoming French President. (graph)

• EURUSD Spikes To 5-Month Highs After Early French Results. (graph)

• Trump Warns Democrats "Obamacare Will Die Soon Without 'Big Money'".

• North Korea Arrests US Citizen, Threatens To Sink US Aircraft Carrier As Japan Deploys Warships.

• There Will Be Blood: Left Prepares For War After Berkeley Beat Down With "Combat Training, Better Equipment, Guns..."

Business Insider:

• Debt levels are now back where they were when Jim Cramer had his prophetic TV meltdown 10 years ago.

• Meet Emmanuel Macron, the 39-year-old former investment banker tipped to beat Marine Le Pen in the French election.

Reuters:

• BD to acquire Bard in $24 billion medical tech deal. Becton Dickinson and Co will acquire C R Bard Inc in a $24 billion cash-and-stock deal that will give shareholders of the target about 15 percent of the combined entity, the two U.S. medical technology companies said on Sunday.

• Trump to set executive orders on environment, energy this week. U.S. President Donald Trump will sign several executive orders on energy and the environment this week, which would make it easier for the United States to develop energy on and offshore, a White House official said on Sunday. "This builds on previous executive actions that have cleared the way for job-creating pipelines, innovations in energy production, and reduced unnecessary burden on energy producers," the official said on condition of anonymity.

Night Trading

• Asian indices are +.5% to +1.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 98.0 -2.5 basis points.

• Asia Pacific Sovereign CDS Index 24.0 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 72.59 -.04%.

• S&P 500 futures +.82%.

• NASDAQ 100 futures +.83%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (HAL)/.03

• (HAS)/.38

• (ITW)/1.45

• (KMB)/1.55

• (SOHU)/-1.64

• (AA)/.48

• (ABX)/.21

• (CR)/1.00

• (CCI)/1.10

• (ESRX)/1.32

• (NEM)/.22

• (OI)/.53

• (SWFT)/.11

• (WHR)/2.66

• (TMUS)/.36

• (SANM)/.70

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for March.  

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for April is estimated to fall to 16.5 versus 16.9 in March.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking and the German Import Price/IFO reports could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and industrial shares in the region. I expect US stocks to open higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.

• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on less European/Emerging Markets/US High-Yield debt angst, earnings optimism, commodity strength, healthcare/tax reform hopes, diminished government shutdown fears and technical buying. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.