Stocks Slightly Higher into Final Hour on Less European/Emerging Markets/US High-Yield Debt Angst, Oil Gain, Short-Covering, Road & Rail/Networking Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.80 -1.9%

• Euro/Yen Carry Return Index 129.72 -.87%

• Emerging Markets Currency Volatility(VXY) 8.08 -1.58%

• S&P 500 Implied Correlation 39.66 +2.91%

• ISE Sentiment Index 128.0 +50.59%
  

• Total Put/Call .90 +7.14%

• NYSE Arms .87 -37.87%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.61 +.21%
  

• America Energy Sector High-Yield CDS Index 370.0 +2.65%

• European Financial Sector CDS Index 66.63 +.58%

• Western Europe Sovereign Debt CDS Index 8.68 +6.7%

• Asia Pacific Sovereign Debt CDS Index 19.38 +.08%

• Emerging Market CDS Index 192.10 -1.16%
  

• iBoxx Offshore RMB China Corporate High Yield Index 138.59 +.05%

• 2-Year Swap Spread 23.50 -.5 basis point

• TED Spread 27.50 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -35.0 -1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.10 +.03%
• 3-Month T-Bill Yield .92% unch.
  

• Yield Curve 95.0 -1.0 basis point
  

• China Import Iron Ore Spot $57.91/Metric Tonne -3.87%

• Citi US Economic Surprise Index -36.20 +1.8 point

• Citi Eurozone Economic Surprise Index 56.0 -4.3 points

• Citi Emerging Markets Economic Surprise Index 19.70 -.1 point

• 10-Year TIPS Spread 1.83 +1.0 basis point
  
• 93.4% chance of Fed rate hike at July 26 meeting, 95.5% chance at Sept. 20 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -6 open in Japan 
• China A50 Futures: Indicating -7 open in China

• DAX Futures: Indicating -13 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value -.1%

Sector Underperformers:

• 1) Hospitals -.9% 2) REITs -.7% 3) Biotech -.5%

Stocks Falling on Unusual Volume: 

• ZOES, SPLK, JKS, GME, HRTX, BZH, SHPG, FOSL, GLYC and ANF

Stocks With Unusual Put Option Activity:

• 1) SIRI 2) DECK 3) SPLK 4) ULTA 5) COG

Stocks With Most Negative News Mentions:

• 1) JKS 2) BZH 3) SIG 4) TRIP 5) GWW

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Road & Rail +.7% 2) Networking +.7% 3) Oil Service +.5%

Stocks Rising on Unusual Volume:

• NTNX, DECK, AERI, FBRC, VEEV, EGHT, SUI, ULTA, AMPH, TRUP, IMAX, VDTH, SNE, MRVL, GCO, MIME, XENT, MTDR, TPIC, RYAM, PSTG, AFSI, COST, WEB, INFN, AFSI, NTNX, LGF/A and LSXMA

Stocks With Unusual Call Option Activity:

• 1) WPX 2) D 3) SPLK 4) AFSI 5) ULTA

Stocks With Most Positive News Mentions:

• 1) DECK 2) NTNX 3) COST 4) IMMU 5) MRVL

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -20.3% Below 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 45.3% of Issues Advancing, 50.3% Declining
• 113 New 52-Week Highs, 32 New Lows
• 45.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 37.1%
• Vix 9.8 -1.9%
• Total Put/Call 1.04 +23.8%
• TRIN/Arms .75 -46.4%

Friday Watch

Night Trading 

• Asian equity indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 90.5 unch. 
• Asia Pacific Sovereign CDS Index 19.25 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 73.04 -.05%.
• S&P 500 futures -.09%.
• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BIG)/.99

Economic Releases 

8:30 am 

• 1Q GDP is estimated to rise +.9% versus a prior estimate of a +.7% gain.
• 1Q Personal Consumption is estimated to rise +.4% versus a prior estimate of a +.3%  gain.
• The 1Q GDP Price Index is estimated to rise +2.3% versus a prior estimate of a +2.3% gain.
• The 1Q Core PCE is estimated to rise +2.0% versus a prior estimate of a +2.0% gain.
• Preliminary Durable Goods Orders for April are estimated to fall by -1.5% versus a +1.7% gain in March.
• Preliminary Durables Ex Transports for April are estimated to rise +.4% versus a +.8% gain in March.
• Preliminary Cap Goods Orders Non-Defense Ex-Air for April are estimated to rise +.5% versus a +.5%Gain in March.

10:00 am EST

• Final Univ. of Mich. Consumer Sentiment for May is estimated to fall to 97.5 versus a prior estimate of 97.7.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan inflation data 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 modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

Stocks Higher into Final Hour on Earnings Optimism, Yen Weakness, Technical Buying, Transport/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.86 -1.6%

• Euro/Yen Carry Return Index 130.79 +.17%

• Emerging Markets Currency Volatility(VXY) 8.26 +1.10%

• S&P 500 Implied Correlation 38.79 -.1%

• ISE Sentiment Index 79.0 +17.9%
  

• Total Put/Call .83 -10.75%

• NYSE Arms 1.61 +34.53%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.19 -.21%
  

• America Energy Sector High-Yield CDS Index 360.0 +.12%

• European Financial Sector CDS Index 66.25 -2.56%

• Western Europe Sovereign Debt CDS Index 8.14 -.59%

• Asia Pacific Sovereign Debt CDS Index 19.38 -.59%

• Emerging Market CDS Index 193.34 +.73%
  

• iBoxx Offshore RMB China Corporate High Yield Index 138.52 +.02%

• 2-Year Swap Spread 24.0 +1.5 basis points

• TED Spread 27.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -33.75-.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.04 -.04%
• 3-Month T-Bill Yield .92% -1.0 basis point
  

• Yield Curve 96.0 -.5 basis point
  

• China Import Iron Ore Spot $60.24/Metric Tonne -.46%

• Citi US Economic Surprise Index -38.10 +.7 point

• Citi Eurozone Economic Surprise Index 60.30 -.6 point

• Citi Emerging Markets Economic Surprise Index 19.80 -2.0 points

• 10-Year TIPS Spread 1.82 -2.0 basis points
  
• 95.3% chance of Fed rate hike at July 26 meeting, 96.7% chance at Sept. 20 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +2 open in Japan 
• China A50 Futures: Indicating unch. open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long