Bear Radar

Style Underperformer:

• Large-Cap Value +.43%

Sector Underperformers:

• 1) Steel -1.60% 2) Coal -1.54% 3) Computer Hardware -.73%

Stocks Falling on Unusual Volume:

• MDSO, ALSN, LXK, FMER, PNR, ASTE, AZN, ATI, BIS, FSS, RUSHA, PHG, KMB, HSTM, ATHN, RCI, HXL, KPTI, ERJ, OMC, BRO, EDU, FWRD and SBNY

Stocks With Unusual Put Option Activity:

• 1) AGN 2) RSH 3) CTIC 4) YUM 5) DO
  

Stocks With Most Negative News Mentions:

• 1) ACI 2) LXK 3) PNR 4) LMT 5) VRX
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.93%

Sector Outperformers:

• 1) Gaming +4.66% 2) Biotech +2.98% 3) HMOs +1.88%
  

Stocks Rising on Unusual Volume:

• WB, GWPH, AGN, VRX, CNC, HOG, RCII, NFLX, HLX, JNS, IPG, ICPT, AMBC, SGMS, NKTR, DDS, CLDX, SRPT, CE, LVS, SGMO, FEYE, PRGO, XON, JNS, ANGI and THRX

Stocks With Unusual Call Option Activity:

• 1) HD 2) AGN 3) RDN 4) VRX 5) CAG

Stocks With Most Positive News Mentions:

• 1) TWC 2) TSLA 3) NFLX 4) AGN 5) DDD
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg: 

• Russia, U.S. Trade Blame as Ukraine Accord Nears Collapse. Russia and the U.S. traded blame for failing to rein in extremists in Ukraine, as a diplomatic accord reached last week all but collapsed. U.S. Secretary of State John Kerry warned Russian Foreign Minister Sergei Lavrov today that “there will be consequences” if Russia fails to act “over the next pivotal days” to restrain pro-Russian militants in eastern Ukraine, spokeswoman Jen Psaki said in Washington.
• Obama Faces Asia Allies Uncertain of U.S. Commitment. President Barack Obama’s trip to Asia this week brings him face-to-face with allies who have grown uncertain about his commitment to the region. Even with the president’s pledge to continue “rebalancing” U.S. policy toward Asia, the region’s leaders have been unnerved by Obama’s focus on the crises in Syria and Ukraine, military budget cuts, and that the U.S. wants a new “great power relationship” with China that they worry will reduce Japan and other U.S. allies to second-class status.
• Chinese Steel Industry Won't Turn Around Soon, UBS Says. Remains "relatively cautious" as Angang, Maanshan could record losses in 1Q due to weak steel market, UBS analyst Mick Mi writes in note to clients.
• Japan’s Abe Sends Traditional Offering to Yasukuni Shrine. A group of 146 lawmakers visited the Yasukuni Shrine in Tokyo, after China and South Korea rebuked Prime Minister Shinzo Abe for sending a traditional offering to the site that honors Japan’s war dead.
• Plane Hunt Yields No Debris as Search Enters Last Zone. An international team hunting for the missing Malaysian passenger jet is trawling the last third of a search zone for wreckage after an unmanned submarine failed to find traces of the aircraft.
• Asian Stocks Rise as Japan Exporters Gain on Weaker Yen. Asian stocks rose as U.S. equities capped their longest stretch of gains since October and the yen extended losses, boosting the outlook for Japanese exporters. Komatsu Ltd. (6301), a maker of construction equipment that gets about 80 percent of sales overseas, added 0.8 percent, pacing gains among Japanese exporters. NHN Entertainment Corp. climbed 3 percent after the South Korean online gaming company said it’s considering a share buyback. Newcrest Mining Ltd., Australia’s biggest gold producer, slipped 2.2 percent after the bullion fell to a two-week low as signs of an improving U.S. economy reduced the appeal of haven assets. The MSCI Asia Pacific Index added 0.2 percent to 139.17 as of 10:52 a.m. in Tokyo, with all 10 industry groups on the gauge rising.
• Dividend Deal 'Epidemic' Intensifies Junk Alarm: Credit Markets. Companies owned by private-equity firms are borrowing money to pay dividends like it's 2007, adding to concern among regulators that excesses are emerging in the riskier parts of the debt markets. Borrowers including Madison Dearborn Partners LLC's mobile-phone insurer Asurion LLC obtained almost $21 billion in junk-rated loans this year to enrich their owners, the most in seven years, according to S&P's Capital IQ LCD. Some of the least-creditworthy companies are even selling notes that may pay interest with more debt, which BMC Software Inc. did for its $750 million payout to a group led by Bain Capital LLC. With defaults by the neediest U.S. borrowers approaching record lows, buyout firms are taking advantage of the Fed's easy-money policies to extract payouts by piling more junk debt onto the companies they own. The central bank, the FDIC and the Office of the Comptroller of the Currency have warned in recent months that underwriting standards for speculative-grade issuers are weakening as investors become more willing to accept looser terms.
• Keystone Route Ruling Should Be Overturned, Nebraska Says. A court challenge holding up TransCanada Corp. (TRP)’s Keystone XL pipeline should be dismissed, Nebraska’s governor said, urging his state’s high court to allow the project to move forward.

Wall Street Journal: 

• Federal Plans That Forgive Student Debt Skyrocket. Government officials are trying to rein in increasingly popular federal programs that forgive some student debt, amid rising concerns over the plans' costs and the possibility they could encourage colleges to push tuition even higher. Enrollment in the plans—which allow students to rack up big debts and then forgive the unpaid balance after a set period—has surged nearly 40% in just six months, to include at least 1.3 million...
• Ackman, Valeant Team Up to Pursue Takeover of Botox Maker Allergan. Valeant, Allergan Each Worth More Than $40 Billion.
• Hedge Funds Drive to Another Record. Assets Climbed to $2.7 Trillion in First Quarter.
• By One Measure, Last Week Was the Worst for IPOs in a Decade. 
• Obama's China Challenge. U.S. allies look for support against Beijing's new aggression.

Fox News:

• Fox News Poll: Independents more likely to back anti-ObamaCare candidates.

CNBC:

• Keystone delay about politics:Shell's ex-president. (video)

Zero Hedge:

• How China's Commodity-Financing Bubble Becomes Globally Contagious.
• Shrine Visit Retribution? China Seizes Japanese Cargo Vessel (Over War-Debts).
• The Earnings Season: "House Of Cards". (graph)
• "Faith" In One Chart.
• John Hussman On The Federal Reserve's Two Legged Stool.
• Netflix(NFLX) Rises On EPS And Intl Sub Beat, In-Line Revenues, And Domestic Subs Miss; Price Increase.
• Furious Chinese Rioters Beat Corrupt Policemen To Death.

ValueWalk:

• Japan Contending With Surging Trade Deficit As Challenges Mount.

Evening Recommendations
CSFB:

• Raised (FB) to Outperform, target $87.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 120.50 -4.0 basis points.

• Asia Pacific Sovereign CDS Index 87.5 -.75 basis point.

• FTSE-100 futures +.42%.

• S&P 500 futures +.01%.

• NASDAQ 100 futures  +.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SPG)/2.24
• (RF)/.20
• (LMT)/2.53
• (MCD)/1.24
• (LXK)/.87
• (AKS)/-.43
• (HOG)/1.09
• (OMC)/.79
• (GPC)/1.02
• (BK)/.54
• (UTX)/1.27
• (ITW)/.98
• (CREE)/.38
• (GILD)/.91
• (JNPR)/.29
• (ISRG)/3.28
• (IGT)/.19
• (T)/.70
• (AMGN)/1.94
• (VMW)/.79
• (ILMN).44
• (YUM)/.84
• (TRV)/2.16
• (ETH)/.21
• (CMCSA)/.64

Economic Releases
9:00 am EST

• FHFA House Price Index MoM for February is estimated to rise +.5% versus a +.5% gain in January.
  

10:00 am EST

• The Richmond Fed Manufacturing Index for April is estimated to rise to 2.0 versus -7.0 in March.
• Existing Home Sales for March are estimated to fall to 4.56M versus 4.6M in February. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The China HSBC Manufacturing PMI, Australia CPI, Eurozone Construction Output, $32B 2Y T-Note auction, weekly retail sales report and the (MED) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by real estate 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 75% net long heading into the day.

Stocks Rising into Final Hour on Yen Weakness, Short-Covering, Technical Buying, Biotech/Drug Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Gaining
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.21 -1.12%

• Euro/Yen Carry Return Index 147.68 +.04%

• Emerging Markets Currency Volatility(VXY) 8.27 -1.73%

• S&P 500 Implied Correlation 56.21 -.44%

• ISE Sentiment Index 165.0 +77.42%

• Total Put/Call .71 -15.49% 

• NYSE Arms 1.09 +26.73% 

Credit Investor Angst:

• North American Investment Grade CDS Index 66.85 -1.28%

• European Financial Sector CDS Index 79.89 -.08%

• Western Europe Sovereign Debt CDS Index 35.11 -.07%
• Asia Pacific Sovereign Debt CDS Index 87.67 -.70%

• Emerging Market CDS Index 272.68 -1.61%

• China Blended Corporate Spread Index 351.19 -.91%
• 2-Year Swap Spread 14.50 -.5 basis point

• TED Spread 20.0 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 unch.

Economic Gauges:

• 3-Month T-Bill Yield .03% +1.0 basis point

• Yield Curve 233.0 unch.

• China Import Iron Ore Spot $113.30/Metric Tonne -2.75%

• Citi US Economic Surprise Index -23.60 +2.5 points

• Citi Emerging Markets Economic Surprise Index -24.80 -1.1 points

• 10-Year TIPS Spread 2.21 unch.

Overseas Futures:

• Nikkei Futures: Indicating +83 open in Japan

• DAX Futures: Indicating n/a open in Germany

Portfolio: 

• Higher: On gains in my tech/medical/biotech/retail sector longs and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Today's Headlines

Bloomberg: 

• Russia Says Ukraine Failing to Halt Extremists Seeking Civil War. Russia accused the Ukrainian government of failing to rein in extremists as escalating tensions threaten to undermine a diplomatic accord reached last week and stoke calls in the U.S. for economic sanctions. Ukrainian and Russian officials traded accusations about responsibility for attacks that killed three during the weekend. Foreign Minister Sergei Lavrov in Moscow called on the U.S. to hold the Ukrainian authorities accountable for observing the agreement signed in Geneva, which calls for all illegal groups to disarm and seized buildings to be returned.
• Copper Seen Falling as Stronger Dollar Cuts Demand for Metals. Copper futures, trading little changed, were poised to decline for the first time in three sessions as gains in the dollar reduced the metal’s appeal as an alternative investment. The Bloomberg Dollar Spot Index, a gauge against 10 major trading partners, rose for a seventh session, heading for the longest streak since May. Through April 17, copper dropped 11 percent this year amid signs that slowing economic growth would reduce metals consumption in China, the world’s top consumer. 
• Gold Falls to Two-Week Low as Platinum, Palladium Slump. Gold futures for June delivery fell 0.6 percent to $1,285.60 an ounce at 10:39 a.m. on the Comex in New York.
• Keystone Pipeline Fate Now in Hands of Nebraskan Jurists. The focus of the Keystone XL debate has shifted from a fierce lobbying war in Washington to Lincoln, Nebraska, where the state Supreme Court has been asked to weigh a legal challenge to the pipeline.

Wall Street Journal:

• Russia, U.S. Trade Charges of Violating Ukraine Deal. Vice President Biden Arrives in Kiev Amid Threats of New Sanctions on Moscow. 
• China Warns of Rising Risks From 'P2P' Lending. More Headwinds for Sector Expected as Government Curbs Shadow Banking.

Fox News: 

• Meb Keflezighi becomes first American male to win Boston Marathon since 1983.
• Experts warn civilian world not ready for massive EMP-caused blackout.

MarketWatch: 

• Fannie, Freddie cut housing-market forecasts for 2014.

CNBC:

• Watch Art Cashin: This is what we want to see. (video)
• Why Obama's Keystone opposition reeks of politics. (video)

ZeroHedge:

• A Summary Of What Hedge Funds Are Buying And Selling.
• Fukushima Manager Admits Water Woes "Out Of Control", Refutes Lies By PM Abe.
• Sorry Janet: Technology Is Deflationary. Only bankers, governments and other parasites that live off the carrion of debt fear deflation and try to destroy the purchasing power of wages with everything in their power. 
• APC Sporting Russian Flag Parades Around Separatist Occupied Slavyansk. (video)
• Russia Warns It May Enter Recession As Soon As This Quarter.
• John Kerry Admits Geneva "Deal" Worthless.
• Keynesian Knightmare: US Savers Outnumber Spenders By Record Numbers. (graph)

ValueWalk:

• US Large Cap Banks Stuck In A Growth Quagmire: Credit Suisse.

Business Insider:

• A BNP Paribas Banker, His Wife, And His Nephew Were Fatally Shot Outside Their Home.
• This One Chart Shows Which Stores Will Survive The Brick-And-Mortar Apocalypse.
• CHART OF THE DAY: The Escalating Dangerous Game Of Military Chicken Between China And Japan.
• The Average Stock Is More Expensive Now Than It Was At The Peak Of The Dot-Com Bubble In 2000. (graph)

Reuters:

• China steps up purge of online porn amid wider censorship push.

Bear Radar

Style Underperformer:

• Small-Cap Value -.15%

Sector Underperformers:

• 1) Gold & Silver -2.33% 2) Homebuilders -1.0% 3) Gaming -.72%

Stocks Falling on Unusual Volume:

• MGI, ATLS, ARP, LII, RUSHA, APL, TRP, ACTG, CMG, CNSI, ATHN, CPHD, LULU, GLOG, MAC, ABX, TNC, CBF, GPOR, GDOT, UMPQ and GLNG

Stocks With Unusual Put Option Activity:

• 1) KMI 2) MBI 3) FITB 4) KRE 5) DXJ
  

Stocks With Most Negative News Mentions:

• 1) DISCA 2) GM 3) WLT 4) YHOO 5) JBL
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume