Bull Radar

Style Outperformer:

• Mid-Cap Value +.7%

Sector Outperformers:

• 1) Coal +3.0% 2) Hospitals +2.2% 3) Retail +1.4%

Stocks Rising on Unusual Volume:

• SPA, PTLA, POWI, CAR, WMS, RICK, MPO, FRED, FN, CARA, SELB, SCHN, APPF, VRX, OMNT, FSTR, IMDZ, NTRA, RGEN, VCLT, DVAX, BURL, COST, NTLA, STOR, HTZ, HAIN, SCHN, WMS and RMP

Stocks With Unusual Call Option Activity:

• 1) PTLA 2) NOV 3) IYR 4) CAR 5) CSCO

Stocks With Most Positive News Mentions:

• 1) RAD 2) PTLA 3) AMID 4) MU 5) COST

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -6.4% Below 100-Day Average
• 9 Sectors Rising, 1 Sector Declining
• 68.4% of Issues Advancing, 27.6% Declining
• 114 New 52-Week Highs, 2 New Lows
• 45.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.4%
• Vix 9.9 -1.6%
• Total Put/Call .68 -28.2%
• TRIN/Arms .81 -23.6%

Monday Watch

Today's Headlines

Bloomberg:

• Brexit ‘Fight’ Looms Over Role of European Court, U.K. Warns. Britain is ready to “fight” the European Union’s demand that judges on the continent hold sway in the U.K. after Brexit, as Theresa May’s government warns that a final deal with the bloc is not certain. Brexit Secretary David Davis, in a direct challenge to officials in Brussels, said the European Court of Justice won’t have a role protecting the rights of 3.2 million EU nationals living in U.K. after the country leaves in 2019.

• U.K. Credit Binge May Spur BOE's Carney to Rein in Exuberance. What a difference a year makes. Twelve months ago, Mark Carney reassured a nation going into political paralysis following the Brexit vote that the Bank of England stood ready to flood the financial system with cash. This week, the governor will re-examine whether it’s time to start taking back some of that bank support following rapid growth in consumer credit, a first step toward normalizing policy in the U.K.

• Japanese Banks at Risk as Borrowing in Dollars Doubles, BIS Says. Japanese banks have more than doubled their borrowing and lending in dollars since 2007, leaving them vulnerable to funding shocks such as those that exacerbated the last financial crisis, the Bank for International Settlements warned in a report released Sunday. Assets denominated in dollars on the balance sheets of Japanese banks surged to about $3.5 trillion by the end of 2016, the coordinating body for the world’s central banks said in its annual report about the global economy. Those exceed liabilities in dollars by about $1 trillion, creating a massive so-called long position in the currency. The report also cited Canadian lenders for following a similar trend, almost doubling their dollar exposure since the crisis. Their net long positions reached almost $200 billion, the BIS said.

• Saudi-Led Demands ‘Difficult’ for Qatar to Meet, Tillerson Says. Qatar will find it “very difficult” to comply with some demands made by the Saudi-led bloc to end the Gulf diplomatic crisis, though they can be a basis for talks, U.S. Secretary of State Rex Tillerson said on Sunday. “A productive next step would be for each of the countries to sit together and continue this conversation,” Tillerson said in an emailed statement. “We believe our allies and partners are stronger when they are working together towards one goal which we all agree is stopping terrorism and countering extremism. A lowering of rhetoric would also help ease the tension.”

• Takata Seeks U.S. Bankruptcy Protection After Air-Bag Recalls. Takata Corp. filed for bankruptcy in the U.S., more than eight years after initial recalls involving its defective air bags spiraled into the biggest safety crisis in automotive history. The Tokyo-based supplier filed for Chapter 11 bankruptcy in Delaware, listing more than $10 billion in liabilities, according to court filings. Takata entered the bankruptcy filing with a plan to sell the company. Key Safety Systems Inc., a U.S. air-bag maker, is set to take over Takata for about 180 billion yen ($1.6 billion), people familiar with the matter have said. Shares and bonds of Takata -- whose products are used by carmakers including Honda Motor Co. and Ford Motor Co. -- have slumped as investors anticipated an imminent bankruptcy filing by the manufacturer of faulty air-bag inflators linked to at least 17 deaths worldwide.

• Asian Equities Face Flat Start as Pound Gains. An absence of catalysts over the weekend left investors awaiting clues from central bankers on policy paths for some of the world’s biggest economies. Stock-index futures in Japan, Australia and Hong Kong pointed to a flat start. The pound climbed for a fourth day amid Brexit negotiations by U.K. Prime Minster Theresa May, whose leadership remains under threat. The euro and the yen were little changed against the dollar. Futures on the S&P 500 Index slipped in early trading and oil held above $43 a barrel. Federal Reserve Bank of San Francisco President John Williams is first up with a speech in Sydney on Monday. Later on, European Central Bank President Mario Draghi will make some remarks in Portugal before Fed chair Janet Yellen makes an appearance in London on Tuesday.

• Trump to Call for U.S. ‘Dominance’ in Global Energy Production. Donald Trump will tout surging U.S. exports of oil and natural gas during a week of events aimed at highlighting the country’s growing energy dominance. The president also plans to emphasize that after decades of relying on foreign energy supplies, the U.S. is on the brink of becoming a net exporter of oil, gas, coal and other energy resources.

• Dusty Fields Signal a Peak for the Global Wheat Glut.

• Five Things You Need to Know to Start Your Day.

Wall Street Journal:

• GOP Senators Express Misgivings About Health Bill. Several don’t rule out supporting legislation that could be voted on this week.

• Facebook(FB) Is Going Hollywood, Seeking Scripted TV Programming. Social network is looking for programming aimed at audiences from 13 to 34 that avoids politics, news, nudity and rough language.

• Bankers Have Less to Fear From ‘Stress Tests’. Fed’s focus on capital ratios rather than qualitative part of stress tests likely to result in less failures. 

• The Shale Revolution’s Staggering Impact in Just One Word: Plastics. Petrochemicals, once simply a cheap byproduct, are powering a U.S. manufacturing boom and export bonanza.

• Henry Cai’s AGIC Capital to Buy Pharma Firm in First U.S. Push. Acquisition shows China still has an appetite for foreign deals, despite recent hurdles.

Fox News:

• Sanders, wife Jane, hire lawyers amid FBI probe on loan application: report. (video)

CNBC:

• Illinois debt is about to be rated 'junk.' What that means.

• The Amazon(AMZN)-Whole Foods(WFM) deal is less about stores and more about data, says data scientist.

Zero Hedge:

• Trump Accuses Hillary Of "Colluding" With Democrats "To Beat Crazy Bernie Sanders".

• Does Mueller's Team's Democratic Bias Confirm Gingrich's "Time To Rethink" Warning?

• UCLA Releases 'Resistance' Handbook; Defines Trumpism As "White Supremacy, Misogyny, Xenophobia..."

• First India Bans Cash, Now It's Targeting Gold.

• "It's A Virtual Bloodbath" - Cryptocurrency Carnage Continues.

• Japan's Bond Market Grinds To A Halt: "We'll Go Days When No Bonds Trade Hands.

• Dan Loeb Is Now Nestle's 6th Largest Shareholder; Goes Activist On World's Biggest Food Company.

• Italian Taxpayers To Foot €17 Billion Bill As Rome Bails Out Another Two Insolvent Banks.

• The EU's Greatest Achievements, According To Europeans.

• New Poll Shows Majority Of Americans Think Russia Probes Are "A Distraction".

Business Insider:

• This covert technology listens for gunshots 24/7 and calls the police on its own.

• They 'should have done a lot more': Top Democrat blasts Obama administration for its handling of Russian election meddling.

• Here's why the riskiest "tail" of the high yield market is so important.

Telegraph:

• Next global financial crisis to hit with a 'vengeance', warns BIS.

Night Trading

• Asian indices are unch. to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 87.0 -1.5 basis points.

• Asia Pacific Sovereign CDS Index 19.25 unch.

• Bloomberg Emerging Markets Currency Index 72.74 +.03%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures -.09%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (SCHN)/.56

Economic Releases 
8:30 am EST

• Durable Goods Orders for May are estimated to fall -.6% versus a -.8% decline in April.

• Durables Ex Transports for May are estimated to rise +.3% versus a -.5% decline in April.

• Cap Goods Orders Non-Defense Ex Air for May are estimated to rise +.3% versus a +.1% gain in April.

• The Chicago Fed National Activity Index for May is estimated to fall to .2 versus .49 in April.

10:30 am EST

• Dallas Fed Manufacturing for June is estimated to June fall to 16.0 versus 17.2 in May.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Williams speaking, Germany IFO Index, 2Y T-Note auction,  JPMorgan Energy Conference and the (KMX) annual meeting could also impact trading today.

BOTTOM LINE: Asian indices are slightly higher, boosted by commodity and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on yen weakness, oil bounce, less European/Emerging Markets/US High-Yield debt angst, technical buying, buyout speculation and more economic optimism. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Today's Headlines

Bloomberg:

• Saudi-Led Bloc Seeks Diplomatic Fix to Impasse With Qatar. Saudi Arabia and its allies want to resolve their standoff with Qatar through diplomacy and don’t seek regime change, U.A.E. Minister of State for Foreign Affairs Anwar Gargash said at a press conference in Dubai. “There is no intention for any sort of escalation,” Gargash said Saturday when asked about military intervention against Qatar if negotiations fail to end the impasse. “This is not about regime change, this is about behavioral change.”

• Hundreds Evacuated From London Towers as Fire Fallout Widens.

• Fed’s Long, Strange Inflation Trip Feels Like a 1960s Flashback.

• Health Stocks Surge, Shrugging Off Uncertainty in Washington. (video) There’s plenty of uncertainty about health policy in Washington, but on Wall Street, investors have a clear hunger for health stocks. After Republican Donald Trump’s presidential-election victory, the health-care sector trailed the pack as the wider market rallied. Heated campaign rhetoric from Trump and Democratic rival Hillary Clinton made investors wary that Washington would tamp down drug prices and take other steps to radically remake the health-care marketplace. Now, such fears are fading, and health stocks are making up for lost time. The Russell 2000 Health Care Index has gained 4.6 percent and the Standard & Poor’s Health Care Index has gained 2.2 percent since Tuesday. The jump means the sector has erased the performance gap with the broader market, according to data compiled by Bloomberg.

Wall Street Journal: 

• Heller Is Fifth GOP Senator Who Says He Won’t Vote for Health Bill in Current Form. Senate GOP leaders can afford to lose no more than two senators.

• Colleges Promise to Be Less Politically Correct. After protests shut down events hosting conservative speakers, schools reassess approach to free speech.

• Fed Officials Split on Inflation’s Path. The divide could influence the timing of the next interest-rate increase.

Barron's:

• Had bullish commentary on (BABA), (AIZ) and (NCR).

Fox News: 

• Trudeau: Trump does listen, NAFTA will remain. (video)

• Trump questions why Obama allegedly did 'nothing' about Russia hacking, in Fox interview. (video)

CNBC:

• Bitcoin speculators are the new day traders.

• Wal-Mart(WMT) not considering Whole Foods bid: Reuters. (video)

• DR Horton(DHI) to rally nearly 15% due to booming housing market, Credit Suisse says.

Zero Hedge:

• Bernie Sanders & Wife Under FBI Investigation For Bank Fraud.

• Angry Dems Turn On Obama, Pelosi, Schumer: "Talk Less About Russia".

• CIA Director Mike Pompeo: Trump's "An Avid Consumer" Of Intel, Will "Punish Leakers".

• Two Italian Zombie Banks Toppled Friday Night.

• US-China Agree On Need For "Complete, Irreversible" Korean Denuclearization.

• An Open Letter To The Fed's William Dudley.

• "They Can And Should Do More" Australian State Slams Banks With $280 Million Tax.

• Former Fed Governor: "The Fed Isn't As Independent As Many Think".

• Canary In The Coal Mine: Unfunded Liabilities Have Turned Illinois Into A "Banana Republic".

• CNN Deletes 'Fake News' Story About Russian Investment Ties To Trump.

• Exposing Our Lawless Central Bank.

• Brexit One Year On: Political Chaos, Pounded Currency, & Pressured Consumers. (graph)

• Weekend Reading: Oil Slick. (graph)

• Banks Battered, Biotechs Best As Yield Curve Crashes To 10-Year Lows. (graph)

Business Insider:

• There’s a surprising new champion of the stock market.

• 'I'm glad he got shot': Democratic Party official fired after obscene comments on Rep. Steve Scalise.

NY Times:

• A Street Fight Among Grocers to Deliver Your Milk, Eggs, Bananas. Delivering food requires military precision: Bananas can’t get cold. Produce can’t get warm. Eggs, of course, must not get broken. And people expect their food to arrive at specific times. Mr. Browne, 40, is a driver for the online grocery business Peapod. He plays the most important role in solving the biggest problem vexing the online grocery industry: moving food, undamaged and unspoiled, from the warehouse to the customer’s house. It’s known as the last-mile problem.

Market Week in Review

• S&P 500 2,438.11 +.29%*

The Weekly Wrap by Briefing.com.

*5-Day Change