Stocks Finish Slightly Lower on China Trade Deal Concerns, Oil Decline, Profit-Taking, Road & Rail/Homebuilding Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.2 +1.07%

• Euro/Yen Carry Return Index 131.36 +.05%

• Emerging Markets Currency Volatility(VXY) 7.68 -.9%

• S&P 500 Implied Correlation 38.60 -1.13%

• ISE Sentiment Index 100.0 +20.5%
  

• Total Put/Call .91 +12.4%

• NYSE Arms .89 +3.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.42 +.11%
  

• America Energy Sector High-Yield CDS Index 500.0 -1.21%

• European Financial Sector CDS Index 68.19 -2.84%

• Italian/German 10Y Yld Spread 239.75 +2.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.55 -.70%
  

• Emerging Market CDS Index 165.66 +.32%
  

• iBoxx Offshore RMB China Corporate High Yield Index 159.87 +.04%

• 2-Year Swap Spread 10.25 -1.25 basis points

• TED Spread 20.0 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.25 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.95 unch.
• 3-Month T-Bill Yield 2.45% +1.0 basis point

• Yield Curve 14.25 -.5 basis point

• China Iron Ore Spot 83.0 USD/Metric Tonne -.81%

• Citi US Economic Surprise Index -36.30 -.4 point

• Citi Eurozone Economic Surprise Index -26.40 +5.4 points

• Citi Emerging Markets Economic Surprise Index -24.70 +.4 point

• 10-Year TIPS Spread 1.95 -1.0 basis point
• .8% chance of Fed rate hike at May 1st meeting, .7% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -157 open in Japan 
• China A50 Futures: Indicating +14 open in China

• DAX Futures: Indicating -38 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/medical sector longs

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

• Market Exposure: Moved to 75% Net Long

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -12.6% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 58.0% of Issues Advancing, 39.6% Declining
• 93 New 52-Week Highs, 13 New Lows
• 49.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.9%
• Vix 12.8 -2.0%
• Total Put/Call .79 -2.47%
• TRIN/Arms .61 -29.1%

Tuesday Watch

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 64.50 -2.0 basis points. 

• China Sovereign CDS 44.5 -2.25 basis points.

• Bloomberg Emerging Markets Currency Index 67.95 unch.

• FTSE 100 futures +.85%.

• S&P 500 futures -.02%.

• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (DSW)/.05
• (HDS)/.67
• (MIK)/1.42

After the Close:

• (AIR)/.71
• (FDX)/3.12
• (SCS)/.26

Economic Releases
10:00 am EST

• Factory Orders for Jan. are estimated to rise +.3% versus a +.1% gain in Dec.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German ZEW Index, Australian Home Price report, weekly US retail sales reports, Oppenheimer Healthcare Conference, (DSW) Investor Day, (HUM) Investor Day, (NVDA) Investor Day and the (JPM) Business Update call could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by financial and industrial 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 Modestly Higher into Afternoon on Diminished Global Growth Fears, Oil Gain, Technical Buying, Financial/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.2 +2.7%

• Euro/Yen Carry Return Index 131.15 -.02%

• Emerging Markets Currency Volatility(VXY) 7.98 +1.27%

• S&P 500 Implied Correlation 39.31 -2.4%

• ISE Sentiment Index 76.0 +7.0%
  

• Total Put/Call .82 unch.

• NYSE Arms .82 -26.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.43 -1.05%
  

• America Energy Sector High-Yield CDS Index 511.0 -.33%

• European Financial Sector CDS Index 70.90 -1.10%

• Italian/German 10Y Yld Spread 237.0 -4.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 65.0 -2.53%
  

• Emerging Market CDS Index 166.25 -.92%
  

• iBoxx Offshore RMB China Corporate High Yield Index 159.80 -.04%

• 2-Year Swap Spread 11.5 unch.

• TED Spread 19.50 +1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -7.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.91 +.22%
• 3-Month T-Bill Yield 2.44% unch.

• Yield Curve 14.75 -.75 basis point

• China Iron Ore Spot 86.46 USD/Metric Tonne +.43%

• Citi US Economic Surprise Index -35.90 +.3 point

• Citi Eurozone Economic Surprise Index -31.80 +2.3 points

• Citi Emerging Markets Economic Surprise Index -25.10 +3.4 points

• 10-Year TIPS Spread 1.96 +1.0 basis point
• 0.0% chance of Fed rate hike at May 1st meeting, 0.0% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -164 open in Japan 
• China A50 Futures: Indicating +21 open in China

• DAX Futures: Indicating +28 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long