Bull Radar

Style Outperformer:

• Small-Cap Growth +.7%

Sector Outperformers:

• 1) Biotech +3.2% 2) Steel +1.6% 3) Social Media +1.2%

Stocks Rising on Unusual Volume:

• REGN, TWTR, SYNA, LZB, WGO, RHT, CA, AVXS, KMX, BB, CLVS, IBB, TDOC, INWK, ADBE, CELG, ARNA, AMD, GLNG, EXEL, FDX, MYGN, CWH, KFY, OTIC, BGNE, CARA, GRUB, BMRN, ACAD, BIIB, CLM and LOXO

Stocks With Unusual Call Option Activity:

• 1) LQD 2) FLEX 3) PFE 4) RHT 5) MYGN

Stocks With Most Positive News Mentions:

• 1) LZB 2) RHAT 3) AMD 4) VMW 5) KMX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -8.3% Below 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 46.0% of Issues Advancing, 48.7% Declining
• 57 New 52-Week Highs, 39 New Lows
• 46.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.4%
• Vix 10.8 -1.0%
• Total Put/Call 1.25 +47.1%
• TRIN/Arms 1.17 -33.1%

Wednesday Watch

Night Trading 

• Asian equity indices are -.75% to -.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 84.5 +1.5 basis points. 
• Asia Pacific Sovereign CDS Index 18.0 +.25 basis point.
• Bloomberg Emerging Markets Currency Index 72.42 -.02%.
• S&P 500 futures -.11%.
• NASDAQ 100 futures -.21%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ATU)/.31
• (KMX)/.99
• (WGO)/.68
• (ORCL)/.78
• (SCS)/.19

Economic Releases 

10:00 am EST

• Existing Home Sales for May is estimated to fall to 5.55M versus 5.57M in April.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,128,570 barrels versus a -1,661,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +114,430 barrels versus a +2,096,000 barrel gain the prior week. Distillate inventories are estimated to rise by +860,140 barrels versus a +328,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.14% versus a +.3% gain the prior week.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Machine Orders report, weekly MBA Mortgage Applications report and the (CI) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by commodity and consumer 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 Lower into Final Hour on Emerging Markets Debt Angst, Less Economic Optimism, Oil Decline, Retail/Transport Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.48 +1.06%

• Euro/Yen Carry Return Index 129.45 -.23%

• Emerging Markets Currency Volatility(VXY) 7.55 +.67%

• S&P 500 Implied Correlation 36.92 +2.6%

• ISE Sentiment Index 48.0 +4.35%
  

• Total Put/Call .85 +6.25%

• NYSE Arms 1.42 +60.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.16 +1.38%
  

• America Energy Sector High-Yield CDS Index 437.0 +2.79%

• European Financial Sector CDS Index 61.29 +1.63%

• Western Europe Sovereign Debt CDS Index 6.58 -.08%

• Asia Pacific Sovereign Debt CDS Index 17.64 +.91%

• Emerging Market CDS Index 201.08 +2.64%
  

• iBoxx Offshore RMB China Corporate High Yield Index 139.37 +.08%

• 2-Year Swap Spread 20.25 +.25 basis point

• TED Spread 26.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -32.75 -.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.46 -.66%

• 3-Month T-Bill Yield 1.01% +1.0 basis point
  

• Yield Curve 81.0 -2.0 basis points

• China Import Iron Ore Spot $56.45/Metric Tonne +.27%

• Citi US Economic Surprise Index -77.20 +.3 point

• Citi Eurozone Economic Surprise Index 22.80 -2.8 points

• Citi Emerging Markets Economic Surprise Index 9.4 -.3 point

• 10-Year TIPS Spread 1.67 -2.0 basis points
  

• 26.1% chance of Fed rate hike at Sept. 20 meeting, 27.6% chance at Nov. 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -30 open in Japan 

• China A50 Futures: Indicating -29 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• U.S. Expands Russia Sanctions as Trump Meets Ukrainian Head. The U.S. Treasury Department imposed sanctions on more Russian companies and individuals as well as separatists in rebel-held areas of eastern Ukraine as President Donald Trump held White House talks with Ukrainian leader Petro Poroshenko. The measures “are consistent with the U.S. commitment to seek a diplomatic resolution to the crisis in Ukraine,” the Treasury said in a statement Tuesday. Sanctions over the fighting in eastern Ukraine “will remain in place until Russia fully honors its obligations under the Minsk Agreements,” while measures “related to Crimea will not be lifted until Russia ends its occupation of the peninsula.”

• European Stocks Fall as Selloff in Oil Drags Down Energy Shares. (video)

• Oil Slips to Seven-Month Low on Signs Global Glut Will Persist. (video) Oil dropped to the lowest level in seven months, pulling energy stocks down, amid growing concerns that OPEC-led output cuts are failing to ease a global supply glut. Futures tumbled as much as 3.3 percent in New York, heading toward the first bear market since August, as investors focus on rising production from countries that are not part of OPEC’s deal. Libya is pumping the most crude in four years, and the amount of oil stored in tankers reached a 2017 high earlier this month.

• Your Evening Briefing.

• Sprint(S) Jumps on Report Deutsche Telekom Favors T-Mobile Merger.

• Boeing(BA) Overwhelms Airbus on Asian Demand for Stretched 737 Jet. (video)

Wall Street Journal:

• Five Things to Watch in the Georgia and South Carolina Special Elections. Races to fill GOP seats could provide lessons on Trump’s impact and the 2018 landscape.

• Ford(F) to Import Next-Generation Focus Compact Car to U.S. From China. The auto maker scraps plans to build Focus in Mexico amid Nafta debate.

• MSCI Could Usher China Markets Into the Big Time. Inclusion in indexes would be seen as a symbol of China’s rise as a global investment destination.

• Big Prize in Amazon-Whole Foods Deal: Data. Online retailer for years has been looking for more ways to gather information about how consumers shop.

MarketWatch.com:

• Five reasons you have to buy biotech stocks now.

Fox News:

• Illinois careens into financial meltdown – and not even the lottery is safe.

CNBC:

• A bear on the market's hottest stock, Nvidia(NVDA), just threw in the towel because of a surprising reason. (video)

• Mike Pence promises GOP will replace Obamacare by end of summer, pass 'tax cuts' this year.

• Facebook's(FB) Instagram Stories crushes Snapchat with 250 million daily active users.

• Big mergers could put Fed on hold for more rate hikes, Evans says. (video)

• McDonald's(MCD) hits all-time high as Wall Street cheers replacement of cashiers with kiosks.

• YouTube just gave a concrete example of how Google's(GOOGL) AI is helping the entire company.

Zero Hedge:

• Why The (Collapsing) Global Credit Impulse Is All That Matters: Citi Explains. (graph)

• "Provocative" Russian Jet Comes Within 5 Feet Of US Recon Aircraft.

• "Try Before You Buy": Amazon Launches Assault On Clothing Retailers With Prime Wardrobe. (video)

• In Historic "Self Bail-In" A German Bank Just Canceled Interest Payments On Two Bonds.

• Brazilian Real Tumbles After Senate Rejects Landmark Labor Reform Bill. (graph)

• The Middle East Is Blowing Up.

• WTI Plunges To 7-Month Lows - Enters Bear Market As HY Bonds Crater. (graph)

• In Warning To Wall Street, Jefferies Fixed Income Revenue Tumbles 33%.

• Russia Credit Risk Spikes To 3-Month Highs After US Expands Sanctions. (graph)

• Why The (Collapsing) Global Credit Impulse Is All That Matters: Citi Explains. (graph)

• Caterpillar(CAT) Retail Sales Rise Most In 54 Months. (graph)

• FOIA Request On Susan Rice's Unmaskings Rejected Because "Records Were Moved To Obama Library".

• SocGen: The Fed Is Raising Rates Too Slowly To Contain Asset Bubbles.

Bear Radar

Style Underperformer:

• Small-Cap Value -.9%

Sector Underperformers:

• 1) Oil Service -2.6% 2) Steel -2.1% 3) Road & Rail -2.0%

Stocks Falling on Unusual Volume: 

• CMG, CSOD, TDOC, GDI, EGN and HES

Stocks With Unusual Put Option Activity:

• 1) MPLX 2) RCII 3) VFC 4) BBBY 5) PTLA

Stocks With Most Negative News Mentions:

• 1) AIOM 2) OCN 3) OKE 4) PHH 5) CSOD

Charts:

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