Tuesday Watch

Night Trading 

• Asian equity indices are -1.0% to unch. on average. 
• Asia Ex-Japan Investment Grade CDS Index 67.75 -.25 basis point. 
• China Sovereign CDS 38.0 -.5 basis point.
• China Iron Ore Spot 97.8 USD/Metric Tonne -.5%. 
• Crude Oil 73.98/bbl. -.12% 
• Gold 4,174.0 USD/t oz. -.67%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.38 -.02%.
• Bloomberg Emerging Markets Currency Index 34.92 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 124.8 +.2%.
• US 10-Year Yield 4.50% -1.0 basis point.
• Japan 30-Year Yield 3.85% -2.0 basis points. 
• Volatility Index(VIX) futures 18.6 +.8%.
• Euro Stoxx 50 futures -.38%. 
• S&P 500 futures -.19%.
• NASDAQ 100 futures -.47%.

Morning Preview Links

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

Stocks Reversing Lower into Final Hour on Higher Long-Term Rates, Sector Rotation, Technical Selling, Tech/Consumer Discretionary Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 50.3 -.1%
• BofA Private Credit Proxy Index 67.8 -1.3% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .26 +3.0 basis points
• BofA Global Financial Stress Indicator -.27 unch.
• European Financial Sector CDS Index 54.0 -.9%
• Emerging Market CDS Index 140.47 -1.3%
• Israel Sovereign CDS 52.3 +.1% 
• Bloomberg Global Trade Policy Uncertainty Index .5 +.1
• US Morning Consult Daily Consume Sentiment Index 88.2 -2.1

• Citi US Economic Surprise Index 47.5 -1.2

• Citi Eurozone Economic Surprise Index -26.1 +.4

• Citi Emerging Markets Economic Surprise Index 40.5 -.7
• S&P 500 Current Quarter EPS Growth Rate YoY(5 of 500 reporting) +16.1% -2.7 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 366.75 +1.47:  Growth Rate +24.7% +.5 percentage point, P/E 20.4 -.2
• S&P 500 Current Year Estimated Profit Margin 15.52% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 935.83 +16.68: Growth Rate +80.5% +3.3 percentage points, P/E 18.3 -.6 
• Bloomberg US Financial Conditions Index 1.14 -1.0 basis point
• US Yield Curve 27.0 basis points (2s/10s) -1.5 basis points
• Bloomberg Industrial Metal Index 179.7 -.6%
• Dutch TTF Nat Gas(European benchmark) 42.20 euros/megawatt-hour +.2%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 13.1% -1.7 percentage points
• US Atlanta Fed GDPNow Q2 Forecast +3.0% unch.
• US 10-Year T-Note Yield 4.51% +5.0 basis points
• 1-Year TIPS Spread 1.78 -9.0 basis points

• Highest target rate probability for September 16th FOMC meeting: 51.6% (+1.7 percentage points) chance of 3.75%-4.0%. Highest target rate probability for Oct. 28th meeting: 43.8%(-1.1 percentage points) chance of 3.75%-4.0%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +720 open in Japan 
• China A50 Futures: Indicating -70 open in China

• DAX Futures: Indicating +125 open in Germany

Portfolio:

• Higher: On gains in my industrial/financial/biotech sector longs and index hedges
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.1%

Sector Underperformers:

• 1) Space -3.7% 2) Internet -2.4% 3) Software -2.2%

Stocks Falling on Unusual Volume: 

• TEO, AZO, LGND, PKX, SKM, NFLX, FOXA, CTSH, ACN, SUV, RBLX, AVAV, WBI, AGI and ARQQ

Stocks With Unusual Put Option Activity:

• 1) PZZA 2) WMB 3) ACN 4) ASHR 5) SOC

Stocks With Most Negative News Mentions:

• 1) AVAV 2) RBLX 3) BRCB 4) RGC 5) NFLX

Sector ETFs With Most Negative Money Flow:

• 1) XLK 2) SMH 3) XLF 4) RSPT 5) XAR

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.3%

Sector Outperformers:

• 1) Shipping +2.3% 2) Lithography/Photonics +3.0% 3) Biotech +1.9%

Stocks Rising on Unusual Volume:

• DFTX, APGE, HQ, BWIN, SSTK, WYFI, ORKA, DMRA, SMCI, JBIO, AVTX, TE, MLTX, UMC, SYRE, BHVN, CGEM, FDMT, MANE, CRDO, COHR, FENB, RCUS, PAYP, RIGL, KYMR, INFQ, AAOI, ALOY, IMVT, VERA, GLW, CHRN, NOK, SPRY, MESO, CLYM, NKTR, ABBV, VKTX, MARA, ASX, MPLT, AUPH, OXM, VC, ACA, OUST, LQDA, CCOI, SSL PRAA, ECO, SFL, BWLP, DYN, GSHD, SMMT, XENE, BOOT, ARLP, QRVO, GSHD, NWG, AVBP, COGT, DHT, CBL, PENG, RYTM, ARGX, CXW, CBOE, USAC, AIG, DRUG, RYTM, VIK, ABVX and DIOD

Stocks With Unusual Call Option Activity:

• 1) DFTX 2) GETY 3) EH 4) PGEN 5) GDS 

Stocks With Most Positive News Mentions:

• 1) GETY 2) DFTX 3) RGNX 4) APGE 5) BWIN

Sector ETFs With Most Positive Money Flow:

• 1) QTUM 2) DRAM 3) HACK 4) IYW 5) XBI

Charts: 

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

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (CCL)/.34
• (KFY)/1.38 

After the Close: 

• (FDX)/5.96
• (KBH)/.45
• (WOR)/1.06 

Economic Releases 

8:30 am EST

• Philly Fed Non-Manufacturing Activity Index for June is estimated to rise to -17.3 versus -23.6 in May. 

9:45 am EST

• S&P Global US Manufacturing PMI for June is estimated to fall to 54.6 versus 55.1 in May.
• S&P Global US Services PMI for June is estimated to rise to 51.0 versus 50.7 in May.
• S&P Global US Composite PMI for June is estimated to rise to 52.1 versus 51.5 in May. 

10:00 am EST

• Richmond Fed Manufacturing Index for June is estimated to fall to 8.0 versus 13.0 in May. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The 2Y T-Note auction, M2 Money Supply MoM for May, ADP weekly employment change, weekly US retail sales reports, API weekly crude oil stock report, JPMorgan Energy/Power/Renewables/Mining Conference, Morgan Stanley Consumer/Retail Summit, (QCOM) investor day, (KMX) annual meeting and the Northland Growth Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +5.6% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 21.1 +1.1
• 8 Sectors Rising, 3 Sectors Declining
• 44.9% of Issues Advancing, 53.0% Declining 
• TRIN/Arms .83 -50.6%
• Non-Block Money Flow -$58.1M
  
• 114 New 52-Week Highs, 86 New Lows
• 55.2% (-.7%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 58.3 +3.3

Polymarket: 

• Will China invade Taiwan by end of 2026? 6.0% unch. 
• Strait of Hormuz traffic returns to normal by July 15th 32.0% -11.0 percentage points 
• Iran agrees to end enrichment of uranium by July 31st 9.0% -28.0 percentage points
• Israel withdraws from Lebanon by July 31st 11.0% -3.0 percentage points
• US Invades Iran before 2027 14.0% +1.0 percentage point

Other:

• Bloomberg Global Risk-On/Risk-Off Index 124.4 +.2%
• Global Monitor Iran Instability Index 63.0 -1.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 80.0% -16.0 percentage points
• US High-Yield Tech Sector OAS Index 443.0 +1.25 basis points
• Bloomberg Cyclicals/Defensives Index 260.4 -.9%
• Morgan Stanley Growth vs Value Index 166.0 -1.0%
• CNN Fear & Greed Index 36.0 (FEAR) -1.0
• 1-Day Vix 11.7 -25.4%
• Vix 17.5 +4.1%
  
• Total Put/Call .83 -17.0%