Bull Radar

Style Outperformer:

• Large-Cap Growth +.4%

Sector Outperformers:

• 1) Computer Services +1.0% 2) Software +.8% 3) Disk Drives +.6%

Stocks Rising on Unusual Volume:

• HFWA, CAVM, RPM, MSG, MKC, MRVL, GBT, SPAR, RILY, APOG, PRGS, CGC, NTRA, MSGN, APU, FBC, ACN, LNN, SCG, NOMD, CCXI, NFLX, FIZZ, CCXI, ATSG, CARA, ABR, LGND and CORT

Stocks With Unusual Call Option Activity:

• 1) BLL 2) DVN 3) LCI 4) TRGP 5) CI

Stocks With Most Positive News Mentions:

• 1) PRGS 2) CAVM 3) APOG 4) ACN 5) MKC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +5.6% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 42.5% of Issues Advancing, 52.7% Declining
• 20 New 52-Week Highs, 101 New Lows
• 44.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.9%
• Vix 18.4 +2.6%
• Total Put/Call 1.75 +62.0%
• TRIN/Arms .86 -7.2%

Thursday Watch

Evening Headlines

Bloomberg:

• Mnuchin Wins a Round in the White House Battle Over China.  

• China Slowdown Deepens on Trade Tensions and Weak Credit Growth.  

• China Think Tank Warns of Potential ‘Financial Panic’ in Leaked Note.

• Japan’s Retail Sales Drop by Most in Nearly Two Years in May.  

• China's Sliding Yuan Is Bad News for These Companies. 

• Our Guide to What the World’s Top Central Banks Will Do Next.

• Asian Stocks Open Lower as Yen Advances on Trade. Asian stocks fell Thursday and the yen pushed higher as traders remained skeptical about the Trump administration’s announcement of less harsh measures on Chinese investments. Treasury yields steadied and the dollar pared gains. Stocks declined in Japan, Australia and South Korea as the S&P 500 Index reversed gains to close lower after White House economic adviser Larry Kudlow said the decision not to adopt a more stringent approach on trade did not represent a softer stance on China. Treasuries surged as the comments kept alive concern over the tensions between the world’s two biggest economies. Anxiety remains around Chinese assets after stocks lost almost $2 trillion in five months and the yuan remained under pressure. Japan’s Topix index fell 0.6 percent as of 9:30 a.m. in Tokyo. Australia’s S&P/ASX 200 Index lost 0.2 percent. South Korea’s Kospi index declined 0.6 percent. Futures on Hong Kong’s Hang Seng advanced 0.5 percent. S&P 500 futures rose 0.1 percent.

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

• FBI Has 130 Cryptocurrency-Related Investigations, Agent Says.

Wall Street Journal:

• Kennedy’s Exit Sets Up Battle for Court.

• Apple, Samsung Settle 7-Year-Old iPhone Patent Dispute.

• Crowley Upset Reverberates Among Democrats.

• U.S. Gives Approval for Disney’s $71 Billion Deal for Fox Assets.

• Facebook’s(FB) Latest Problem: Tracking Where the Data Went. 

• Lyft Valuation Doubles to $15.1 Billion Over One Year in Battle With Uber 

• Why Investors Aren’t Worried China Will Weaponize Its Treasurys Hoard.

• The Fed’s Latest Challenge: Keeping Benchmark Rate in Check.

MarketWatch.com:

• Despite surge of market volatility, ‘junk’ corporate bonds are beating high-grade debt. What gives?

• Nine hot IPOs show it’s still a ‘risk-on’ stock market.

Fox News:

• Longtime Supreme Court justice's retirement could change both parties' strategies ahead of midterms.

CNBC:      

• White House may be using a softer tone, but it's still targeting Chinese investment in the US.

• In a blow to public sector unions, Supreme Court overturns 40-year-old precedent.

• After-hours buzz: PIR, BBBY & more.

• Five energy stocks to buy right now as crude oil hits 2014 highs.
  Fear of trade wars turned this risky stock group into the latest safety play.

• Debt for US corporations tops $6 trillion.

• Oil and gas drilling stocks are having their best quarter since 2011.

• Fed's Bullard warns there's a risk the Fed is raising rates 'too fast'.

Zero Hedge:

• Democrats Melt Down Over Supreme Court Vacancy.

• Meet Trump's Next Supreme Court Nominee (According To The Online Bookies).

• One-Third Of Voters Think Civil War "Likely Soon" While 59% Say Anti-Trump Liberals Will Resort To Violence.

• "Just An Intimate Conversation": Strzok "Explains" Anti-Trump Texts During Closed Door Testimony.

• Humpday Humor: 'The Deportables' & The Media's Fake Outrage At Obama-Era Immigration Policy.

• Pelosi Pissed As Liberal Media Loves Socialist Millennial Who Beat Democratic Leader.

• Weak Dollar Policy And Commodities.

• Bank Bloodbath Batters Stocks Below Key Support As Yield Curve Crashes.

Business Insider:

• Democrats need to choose: Are they the party of Alexandria Ocasio-Cortez or the party of Michael Bloomberg?

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 94.75 +8.75 basis points. 

• Asia Pacific Sovereign CDS Index 14.25 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 69.33 -.03%.

• FTSE 100 futures -.23%.

• S&P 500 futures +.19%.

• NASDAQ 100 futures +.21%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (ACN)/1.72

• (APOG)/.53

• (LNN)/1.43

• (MKC)/1.27

• (WBA)/1.48

After the Close:

• (KBH)/.48

• (NKE)/.64

• (SNX)/2.30

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 220K versus 218K the prior week.

• Continuing Claims are estimated to fall to 1718K versus 1723K prior.

11:00 am EST

• Kansas City Fed Manufacturing Activity for June is estimated to fall to 26.0 versus 29.0 in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bullard speaking, Eurozone Retail Sales report, Japan CPI report, $30B 7Y T-Note auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Credit Suisse Leisure Conference and the (MCK) investor day could also impact trading today.

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

Stocks Reversing Lower into Afternoon on Trade War Concerns, Emerging Markets Debt Angst, Technical Selling, Tech/Biotech Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.2 +8.5%

• Euro/Yen Carry Return Index 132.90 -.36%

• Emerging Markets Currency Volatility(VXY) 9.85 +3.9%

• S&P 500 Implied Correlation 40.16 +6.8%

• ISE Sentiment Index 83.0 -29.1%
  

• Total Put/Call 1.06 +16.5%

• NYSE Arms .89 -10.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.48 +2.29%
  

• America Energy Sector High-Yield CDS Index 400.0 -1.06%

• European Financial Sector CDS Index 88.92 +.77%

• Italian/German 10Y Yld Spread 248.75 -6.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 14.31 +1.78%

• Emerging Market CDS Index 191.52 +3.48%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.37 unch.

• 2-Year Swap Spread 25.75 -.25 basis point

• TED Spread 41.75 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -5.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 69.38 -.56%
• 3-Month T-Bill Yield 1.92% unch.
  

• Yield Curve 32.75 -2.25 basis points

• China Iron Ore Spot 64.37 USD/Metric Tonne +.58%

• Citi US Economic Surprise Index 1.10 -2.4 points

• Citi Eurozone Economic Surprise Index -62.10 -3.1 points

• Citi Emerging Markets Economic Surprise Index -12.50 -.5 point

• 10-Year TIPS Spread 2.12 -1.0 basis point
  
• 77.3% chance of Fed rate hike at Sept. 26th meeting, 78.5% chance at November 8th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -27 open in Japan 
• China A50 Futures: Indicating -43 open in China

• DAX Futures: Indicating -60 open in Germany

Portfolio: 

• Higher: On gains in my industrial sector longs, index hedges and emerging market shorts

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

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

•   Small-Cap Growth -.7%

Sector Underperformers:

• 1) Steel -1.5% 2) Semis -1.3% 3) Biotech -1.1%

Stocks Falling on Unusual Volume: 

• CNXM, PF, TUSK, SBLK, CAG, SONC, FIZZ, CGC, NTRA, IQ, RHT, GWPH, YPF, WUBA, WAGE, COOL, GMED, SUPV, SCG and PBYI

Stocks With Unusual Put Option Activity:

• 1) XHB 2) GBT 3) S 4) QEP 5) OIH

Stocks With Most Negative News Mentions:

• 1) HMNY 2) GMED 3) COOL 4) TECH 5) SCG

Charts:

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