Wednesday Watch

Night Trading 

• Asian equity indices are +.25% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 73.0 -1.75 basis points. 
• Asia Pacific Sovereign CDS Index 12.25 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 74.72 unch.
• FTSE 100 futures +.08%.
• S&P 500 futures +.15%.
• NASDAQ 100 futures +.19%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ABT)/.58
• (ASML)/1.17
• (MS)/1.25
• (TXT)/.48
• (USB)/.95
• (AA)/.63
• (AXP)/1.71
• (CP)/2.69
• (CCI)/1.19
• (KMI)/.21
• (PIR)/.19
• (STLD)/.89
• (URI)/2.55
• (VMI)/1.86

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +393,580 barrels versus a +3,306,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -103,500 barrels versus a +458,000 barrel gain the prior week. Distillate inventories are estimated to fall by -85,830 barrels versus a -1,044,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.16% versus a +.5% gain prior.
  

2:00 pm EST

• US Fed Beige Book report.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Dudley speaking, Fed's Brainard speaking, UK CPI report, Eurozone CPI report and the weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by industrial 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 100% net long heading into the day.

Stocks Surging into Final Hour on Diminishing Geopolitcal/Trade War Fears, Earnings Optimism, Technical Buying, Tech/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 15.0 -9.2%

• Euro/Yen Carry Return Index 137.74 -.25%

• Emerging Markets Currency Volatility(VXY) 8.07 -1.1%

• S&P 500 Implied Correlation 39.95 -4.69%

• ISE Sentiment Index 104.0 -3.0%
  

• Total Put/Call 1.01 +10.9%

• NYSE Arms .78 -19.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.70 -1.6%
  

• America Energy Sector High-Yield CDS Index 417.0 -1.64%

• European Financial Sector CDS Index 55.49 -1.8%

• Italian/German 10Y Yld Spread 125.25 -2.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.11 -3.23%

• Emerging Market CDS Index 137.81 -.95%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.40 +.05%

• 2-Year Swap Spread 29.0 -1.75 basis points

• TED Spread 58.25 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -4.75 +2.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.73 +.01%
• 3-Month T-Bill Yield 1.78% +4.0 basis points
  

• Yield Curve 42.5 -3.0 basis points

• China Iron Ore Spot 65.15 USD/Metric Tonne +1.18%

• Citi US Economic Surprise Index 29.40 +7.6 points

• Citi Eurozone Economic Surprise Index -91.80 -4.0 points

• Citi Emerging Markets Economic Surprise Index 5.9 -1.6 points

• 10-Year TIPS Spread 2.14 +1.0 basis point
  
• 90.0% chance of Fed rate hike at June 13 meeting, 90.7% chance at August 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +112 open in Japan 
• China A50 Futures: Indicating +177 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value +.5%

Sector Underperformers:

• 1) Banks -.6% 2) Airlines -.6% 3) Tobacco -.1%

Stocks Falling on Unusual Volume: 

• LADR, CMA, NUVA and REVG

Stocks With Unusual Put Option Activity:

• 1) IMGN 2) AVXS 3) FOXA 4) DVMT 5) PEP

Stocks With Most Negative News Mentions:

• 1) NLST 2) CHK 3) BMY 4) RRC 5) GWR

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.5%

Sector Outperformers:

• 1) Internet +3.0% 2) Steel +2.8% 3) Networking +2.2%

Stocks Rising on Unusual Volume:

• ANTX, IIN, GWPH, CBI, CLXT, CVNA, CISN, CIFS, IHG, NVCR, ROKU, PUMP, IGV, NFLX, OTEX, FMS, GLOB, GLPG, CE, QIWI, BLK, ICFI, PINC, WDAY, CYOU, SAIL and QLYS

Stocks With Unusual Call Option Activity:

• 1) MMP 2) CAR 3) URI 4) ADP 5) CIEN

Stocks With Most Positive News Mentions:

• 1) NFLX 2) TWTR 3) ROKU 4) ARQL 5) UNH

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.9% Below 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 74.1% of Issues Advancing, 23.5% Declining
• 83 New 52-Week Highs, 23 New Lows
• 43.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.5%
• Vix 15.5 -6.5%
• Total Put/Call .92 +1.1%
• TRIN/Arms .79 -18.7%

Tuesday Watch

Evening Headlines

Bloomberg:

• Asia Stocks Rise as Earnings Eyed; Dollar Falls: Markets Wrap. Equity markets in Japan and Australia eked out feeble gains in a muted start, while Hong Kong stocks pointed higher. Futures on the S&P 500 Index climbed. The S&P 500 Index gained to the highest in almost a month and erased its loss for the year as investors turned their focus to the earnings season after there was no immediate reprisal to the U.S.-led missile strike in Syria and trade concerns took a back seat. The dollar traded at the lowest in two months as U.S. President Donald Trump accused Russia and China of devaluing their currencies, contradicting an assessment from the Treasury Department. Treasury yields were steady and West Texas crude futures traded below $67 a barrel. Japan’s Topix index fluctuated as of 9:18 a.m. in Tokyo. Australia’s S&P/ASX 200 Index rose 0.5 percent. The Kospi index rose 0.3 percent. Futures on Hong Kong’s Hang Seng Index rose 0.6 percent. S&P 500 futures rose 0.2 percent.

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

• Aluminum Hits Highest Since 2011 With Rusal Supply Seen at Risk.  

• Cantor Brokerage Chief Matthews Leaves to Start a Hedge Fund.

• Netflix(NFLX) Proves It Can Raise Prices Without Losing Customers.

Wall Street Journal:

• U.S., Britain Issue Warnings Over China’s ZTE.

• Stock Pickers Ready to Take Behind the Alliance That Hit Syria the Facebook Out of ‘FANG’.

• Behind the Alliance That Hit Syria.

• Facing Historic Labor Shortages, Companies Snap Up Teenagers.

• Trump Breaches Precedent by Commenting on Currency Values.

• Homebuilding Isn’t Keeping Up With Growth, Group Says.

• EU Support Grows for New Iran Sanctions.

Fox News:

• Judge won't let Trump attorney Cohen review seized files before the feds, as Stormy Daniels speaks out.

CNBC:

• Facebook(FB) explains how it can collect info about you even if you never post on Facebook. 

• After-hours buzz: NFLX, ROKU, CE & WTFC.

• Drug distributor and drugstore stocks rally after Amazon shelves plan to sell to hospitals.  

• Netflix(NFLX) shows it still has plenty of growth left in the U.S. 

• US reportedly weighs retaliation against China for restrictions on tech companies.

Zero Hedge:     

• Tesla(TSLA) Temporarily Shutting Down Model 3 Production: Buzzfeed.

• "Self-Centered, Self-Serving Jackass": FBI Insiders Furious After Comey Interview.

• It's Not China That's Dumping US Treasuries...

• Missile-Mania Sparks Stock-Buying Bonanza As Yield Curve Tumbles. (graph)

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 74.5 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 12.5 unch.

• Bloomberg Emerging Markets Currency Index 74.74 +.02%.

• FTSE 100 futures -.10%.

• S&P 500 futures +.04%.

• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CMA)/1.54

• (GS)/5.57

• (JNJ)/2.00

• (NTRS)/1.42

• (UNH)/2.91

• (PGR)/1.17

• (OMC)/1.05

• (BMI)/.36

• (CSX).66

• (IBM)/2.42

• (IBKR)/.59

• (ISRG)/2.06

• (LRCX)/4.37

• (UAL)/.41

Economic Releases

8:30 am EST

• Housing Starts for March is estimated to rise to 1267K versus 1236K in February.

• Building Permits for March is estimated to rise to 1321K versus 1298K in February.

9:15 am EST

• Industrial Production MoM for March is estimated to rise +.4% versus a +1.1% gain in February.

• Manufacturing Production for March is estimated to rise +.1% versus a +1.2% gain in February. 

• Capacity Utilization for March is estimated to fall to 77.9% versus 78.1% in February.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Quarles speaking, Fed's Evans speaking, China GDP report, Japan Capacity Utilization report, Japan Trade Balance report, weekly US retail sales reports, German ZEW Index and the (FDS) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by energy 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 day.