Friday Watch

Night Trading 

• Asian equity indices are -.75% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 139.5 +1.0 basis point. 
• Asia Pacific Sovereign CDS Index 52.0 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 72.36 -.16%. 
• S&P 500 futures -.11%. 
• NASDAQ 100 futures -.11%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• None of note

Economic Releases
10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for June is estimated to fall to 94.0 versus 94.7 in May. 
  

2:00 pm EST

• The Monthly Budget Deficit for May is estimated at -$56.0B. 

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Canadian unemployment rate, USDA WASDE report and the (DAL) annual meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Lower into Afternoon on Global Growth Fears, Rising European/Emerging Markets/US High-Yield Debt Angst, Oil Decline, Biotech/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.49 +2.91%

• Euro/Yen Carry Return Index 126.37 -.78%

• Emerging Markets Currency Volatility(VXY) 10.10 +1.61%

• S&P 500 Implied Correlation 53.10 -.09%

• ISE Sentiment Index 86.0 -36.76%

• Total Put/Call .93 +8.14%

• NYSE Arms 1.21 +25.47% 

Credit Investor Angst:

• North American Investment Grade CDS Index 75.87 +3.05%
  

• America Energy Sector High-Yield CDS Index 736.0 -3.14%

• European Financial Sector CDS Index 97.13 +2.08%

• Western Europe Sovereign Debt CDS Index 26.27 +2.62%

• Asia Pacific Sovereign Debt CDS Index 51.95 +1.11%

• Emerging Market CDS Index 282.86 +1.73%
  

• iBoxx Offshore RMB China Corporate High Yield Index 129.21 +.02%

• 2-Year Swap Spread 14.0 -.25 basis point
  

• TED Spread 42.25 +2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -29.0 -.5 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.50 -.46%
• 3-Month T-Bill Yield .25% +1.0 basis point

• Yield Curve 90.0 -3.0 basis points
  

• China Import Iron Ore Spot $52.56/Metric Tonne unch.

• Citi US Economic Surprise Index -23.20 +1.2 points

• Citi Eurozone Economic Surprise Index -3.30 +1.7 points

• Citi Emerging Markets Economic Surprise Index 8.90 -.1 point

• 10-Year TIPS Spread 1.59% -2.0 basis points
  
• 21.6% chance of Fed rate hike at July 27 meeting, 36.9% chance at September 21 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -63 open in Japan 
• China A50 Futures: Indicating n/a open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.1%

Sector Underperformers:

• 1) Steel -4.2% 2) Banks -1.9% 3) Retail -1.8%

Stocks Falling on Unusual Volume:

• RH, TPC, TLRD, KRG, INSM, STS, IHG, MTSC, AGIO, AHP, CMTL, TMH, GLPG, ITG, WTFC, HMNY, SHEN, CACC, FMS, INFY, CRH, CYBR, XBIT, NRG, WSM and W

Stocks With Unusual Put Option Activity:

• 1) RH 2) HLT 3) WYN 4) HCA 5) LRCX

Stocks With Most Negative News Mentions:

• 1) RH 2) DYN 3) ETE 4) STS 5) CHK

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.3%

Sector Outperformers:

• 1) Utilities +.3% 2) Restaurants +.2% 3) Medical Equipment +.3%

Stocks Rising on Unusual Volume:

• EVHC, SJM, PACB, EAT, SRPT, VRX and ABM

Stocks With Unusual Call Option Activity:

• 1) HTZ 2) GEVO 3) RH 4) UUP 5) PAY

Stocks With Most Positive News Mentions:

• 1) LNKD 2) FIT 3) EAT 4) P 5) EVHC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -12.0% Below 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 25.7% of Issues Advancing, 70.6% Declining
• 124 New 52-Week Highs, 5 New Lows
• 61.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.2%
• Vix 14.5 +3.3%
• Total Put/Call .82 -4.7%
• TRIN/Arms 1.44 +49.4%

Thursday Watch

Night Trading 

• Asian equity indices are -.50% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 138.5 -.25 basis point. 
• Asia Pacific Sovereign CDS Index 51.5 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 72.89 +.08%. 
• S&P 500 futures -.12%. 
• NASDAQ 100 futures -.09%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (CBK)/-.10
• (SJM)/1.19
• (HRB)/3.17
• (KFY)/.54
• (MFRM)/-.04

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated to rise to 270K versus 267K the prior week.
• Continuing Claims are estimated to fall to 2171K versus 2172K prior.
  

10:00 am EST

• Wholesale Inventories MoM for April are estimated to rise +.1% versus a +.1% gain in March.
• Wholesale Trade Sales MoM for April are estimated to rise +1.1% versus a +.7% gain in March. 
  

12:00 pm EST

• Household Change in Net Worth for 1Q. 

Upcoming Splits 

• None of note

Other Potential Market Movers

• The German Trade Balance report, $12B 30Y T-Bond auction, Citi Small/Mid-Cap Conference, (EAT) investor day and the (SNCR) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by industrial and technology 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.