Bear Radar

Style Underperformer:

• Large-Cap Value +.5%

Sector Underperformers:

• 1) Utilities -.9% 2) Shipping -.3% 3) Energy -.1%

Stocks Falling on Unusual Volume: 

• EOLS, IQV, OMER, SFIX and PRTY

Stocks With Unusual Put Option Activity:

• 1) TBT 2) ZNGA 3) TUR 4) GME 5) M

Stocks With Most Negative News Mentions:

• 1) RYB 2) AVT 3) CVG 4) AES 5) MMM

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Steel +2.3% 2) Airlines +2.2% 3) Retail +1.8%

Stocks Rising on Unusual Volume:

• ABAX, FARM, GTXI, BOOT, M, ANIK, SE, HEAR, AYX, BOLD, CSTE, PETQ, NEWR, ORIG, COOL, EIGR, VIPS, MCFT, HF, GGAL, KELYA, CHDN, AIZ, AMBA, TTD, JNCE, RCKT, IOVA, CCXI and HRC

Stocks With Unusual Call Option Activity:

• 1) NRG 2) ANF 3) LQD 4) LYB 5) ITB

Stocks With Most Positive News Mentions:

• 1) BLNK 2) BOOT 3) M 4) URBN 5) IP

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -8.2% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 62.4% of Issues Advancing, 33.1% Declining
• 74 New 52-Week Highs, 28 New Lows
• 45.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.5%
• Vix 13.9 -5.0%
• Total Put/Call 1.15 +4.6%
• TRIN/Arms 1.02 +21.0%

Wednesday Watch

Evening Headlines

Bloomberg:    

• Global Funds Are Now the Dominant Force in China's Debt Market.

• Asian Stocks Decline as U.S. Treasury Yields Climb. Stocks in Asia followed their American counterparts lower as geopolitical developments and rising benchmark U.S. yields spurred a return of risk aversion. Equities in Japan and Korea were lower after U.S. stocks halted a four-day rally with the steepest slide in almost two weeks. Australian shares bucked the trend. Earlier, yields on 10-year Treasury notes rose to 3.07 percent, the highest since 2011, after upbeat U.S. retail sales data fueled bets the Federal Reserve may raise interest rates three more times this year. Bloomberg’s dollar index steadied close to a 2018 high. In emerging-markets, equities dropped the most since March and currencies slumped the most in a year. The MSCI Asia Pacific Index fell 0.1 percent as of 9:21 a.m. Tokyo time. Topix index fell 0.2 percent. Kospi index fell 0.4 percent. Australia’s S&P/ASX 200 Index rose 0.1 percent. Futures on the S&P 500 Index fell less than 0.05 percent.

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

Wall Street Journal:

• Trump’s Goal for Nafta Rewrite Looks Unattainable in 2018.

• Making Movies in the Trump Era for the Audience Hollywood Ignored.

• Haspel Wins Key Democrat’s Backing, Paving Way to CIA Confirmation.

Fox News:

• North Korea warns US-South Korea military drills could scuttle talks.

• Disgraced Parkland school cop starts pocketing hefty pension.

CNBC:  

• After-hours buzz: TEVA, MON, MU & more.

• US intelligence reports: Russia's new hypersonic weapon will likely be ready for war by 2020.

• 10-year Treasury yield can get to 4 percent before it punishes stocks: J.P. Morgan strategist. 

• Hedge-fund manager Stanley Druckenmiller bets big on chip stocks.

Zero Hedge:     

• Global Synchronous Recovery Collapses As Japanese GDP Plunges In Q1.

• Cell Phone Carriers Are Secretly Selling Your Real-Time Location Data.

• Mueller Trying To Shut Down Investigation Into Special Counsel Leaks.

• Tepper Dumps Entire Apple Stake, Doubles Down On Top Holding Micron: 13F Summary.

• Millennial Candidates Embrace Socialism, While Venezuela Chokes On It.

• "It's A Shell Game" - Neighborhood Nonprofit Sues Chicago To Block Obama's Presidential Library.  

• Druckenmiller Joins Tech Party: Adds To Amazon, Buys Netflix; Dumps Facebook, Energy.

• It Gets Worse: Tesla Now Has To Compete With $50,000 Electric BMWs Going For $54/Month.  

• WTI/RBOB Drop After Surprise Crude Build.

• Bonds & Bullion Bloodbath As Dow Dumps Into Red For 2018.

Night Trading 

• Asian equity indices are -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 76.0 +1.5 basis points. 

• Asia Pacific Sovereign CDS Index 12.25 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 71.47 -.07%.

• FTSE 100 futures -.03%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CSIQ)/.42

• (M)/.35

• (CSCO)/.65

• (FLO)/.31

• (JACK)/.86

• (NTES)/2.34

• (TTWO)/.63

Economic Releases

8:30 am EST

• Housing Starts for April are estimated to fall to 1310K versus 1319K in March. 

• Building Permits for April are estimated to fall to 1350K versus 1354K in March.

 9:15 am EST

• Industrial Production MoM for April is estimated to rise +.6% versus a +.5% gain in March.

• Capacity Utilization for April is estimated to rise to 78.4% versus 78.0% in March.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,170,560 barrels versus a -2,197,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,403,630 barrels versus a -2,174,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,405,880 barrels versus a -3,791,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.7% versus a -.7% decline prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bostic speaking, Fed's Bullard speaking, Japan Machine Orders report, China New Home Price report, Eurozone CPI report, weekly MBA Mortgage Applications report, JPMorgan Consumer Conference, BMO Farm to Market Conference, (HON) investor showcase, (FLIR) investor day, (ODP) investor day and the (WYN) investor meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by technology and real estate shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.

Stocks Falling into Final Hour on Trade War Worries, Rising Long-Term Rates, Geopolitical Tensions, Homebuilding/Medical Equipment Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.6 +12.9%

• Euro/Yen Carry Return Index 136.13 -.03%

• Emerging Markets Currency Volatility(VXY) 8.92 +4.2%

• S&P 500 Implied Correlation 35.89 +6.1%

• ISE Sentiment Index 116.0 -4.1%
  

• Total Put/Call 1.11 +27.6%

• NYSE Arms .88 +7.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.75 +1.98%
  

• America Energy Sector High-Yield CDS Index 368.0 -.12%

• European Financial Sector CDS Index 58.28 +1.87%

• Italian/German 10Y Yld Spread 131.0 +.75 basis point
  

• Asia Pacific Sovereign Debt CDS Index 12.29 +2.12%

• Emerging Market CDS Index 164.42 +6.12%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.39 -.05%

• 2-Year Swap Spread 21.25 +.25 basis point

• TED Spread 43.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -7.25 -4.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.48 -.96%
• 3-Month T-Bill Yield 1.90% +1.0 basis point
  

• Yield Curve 49.25 +4.5 basis points

• China Iron Ore Spot 67.73 USD/Metric Tonne -.04%

• Citi US Economic Surprise Index 17.90 -1.1 points

• Citi Eurozone Economic Surprise Index -96.90 -2.3 points

• Citi Emerging Markets Economic Surprise Index -3.9 -2.6 points

• 10-Year TIPS Spread 2.19 +3.0 basis points
  
• 100.0% chance of Fed rate hike at August 1 meeting, 100.0% chance at September 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -68  open in Japan 
• China A50 Futures: Indicating -135 open in China

• DAX Futures: Indicating +19 open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.9%

Sector Underperformers:

• 1) Homebuilders -3.9% 2) Gold & Silver -2.1% 3) Medical Equipment -1.5%

Stocks Falling on Unusual Volume: 

• VIPS, SWCH, A, DHI, AYX, ITRI, MIXT, TTM, OPTN, VOD and UGLD

Stocks With Unusual Put Option Activity:

• 1) TUR 2) A 3) EPI 4) DG 5) AMT

Stocks With Most Negative News Mentions:

• 1) VIPS 2) INSY 3) LIFE 4) MHLD 5) OHGI

Charts:

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