Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Oil Service +3.0% 2) Social Media +2.0% 3) Airlines +1.8%

Stocks Rising on Unusual Volume:

• PTHN, TRVG, ASH, ALNY, MIME, FEYE, HTGC, PFPT, QLYS, QRVO, XON, FTNT, HTHT, CTRL, RRGB, SYMC, OC, LPSN, PHH, TOT, DDD, RARX, RPD, CIBR, TTD, SNAP, KEM, WDAY, NVDA and EXCU

Stocks With Unusual Call Option Activity:

• 1) SIRI 2) OCN 3) STZ 4) THC 5) MXIM

Stocks With Most Positive News Mentions:

• 1) VJET 2) ALNY 3) NVDA 4) FOLD 5) HELE

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +4.9% Above 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 79.4% of Issues Advancing, 17.3% Declining
• 88 New 52-Week Highs, 24 New Lows
• 46.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.1%
• Vix 10.6 +1.6%
• Total Put/Call .77 -9.4%
• TRIN/Arms .83 -31.5%

Monday Watch

Today's Headlines

Bloomberg:

• China's Premier Li Reiterates Prudent Monetary Policy, Stability. China’s Premier Li Keqiang said the nation will continue with its prudent monetary policy and will be able to maintain stability in the financial markets, according to China Central Television. The nation will prioritize preventing financial risks while continuing with market-based, managed floating exchange rate, Li said in a meeting with International Monetary Fund Managing Director Christine Lagarde, according to the state-run television channel. China will keep the yuan at a reasonable and equilibrium level, Li said.

• Macron Takes Charge of Divided France as Youngest President. Emmanuel Macron became the youngest president of France on Sunday, leading a country where economic malaise and security concerns drove extremist parties to their highest-ever scores in this year’s election. Macron, 39, is the eighth directly elected president of the Fifth Republic, after assuming the role in a ceremony at the Elysee Palace in Paris.

• Merkel Party Humiliates SPD Rivals in Last Pre-Election Test. Chancellor Angela Merkel’s party decisively won an election in Germany’s most populous state, handing her Social Democratic opponents a humiliating defeat and further boosting her momentum as she seeks a fourth term in September.

• China Watchers Caught Off Guard as End to Bond Rout Hard to Call. The ferocity of China’s bond rout is surprising some of the market’s top observers. The yield on sovereign debt due in a decade surged to a two year high of 3.7 percent last week, wrong-footing analysts from Citic Securities Co. and Haitong Securities Co. -- the country’s two biggest brokerages -- who had in April predicted a maximum level of 3.6 percent in the near term. The tumble comes amid intensifying efforts to crack down on excessive borrowing, a drive that has beaten down stocks and pressured the yuan.

• China Eyes U.S. Energy After Inking $20 Billion in Deals. China is setting it sights on U.S. energy as a growing reliance on imports forces it to look beyond traditional suppliers, according to the head of the country’s biggest oil and gas company. China National Petroleum Corp. will import more crude oil and natural gas from the U.S. and will consider participating in America’s growing liquefied natural gas export industry, Chairman Wang Yilin said in an interview Sunday with Bloomberg TV on the sidelines of the Belt and Road Forum in Beijing. The energy giant will sign $20 billion in deals during the two-day event, a meeting of countries involved in China’s initiative to connect Europe, Asia and Africa through infrastructure and investment.

• Libyan Oil Output Creeps Higher Ahead of OPEC Decision on Cuts. Libya is ratcheting up oil output with less than two weeks to go before the world’s biggest exporters decide whether to extend production cuts to clear a supply glut. The OPEC member with Africa’s largest crude reserves is pumping more than 814,000 barrels a day, thanks partly to rising output from two fields that re-started last month, Jadalla Alaokali, a board member at the National Oil Corp., said Sunday by phone. Libya was producing about 700,000 barrels a day at the end of April, he said at that time. Output from the politically divided country is at its highest since October 2014 when it pumped 850,000 barrels a day, data compiled by Bloomberg show.

• Bets on OPEC Rally Are Gone and That May Be a Good Thing for Oil. Hedge funds have undone all their wagers on an OPEC-driven oil rally, and that could be good for prices. Bets on West Texas Intermediate futures have all gone back to where they were before OPEC agreed to cut output, data from the U.S. Commodity Futures Trading Commission show. The silver lining is that this is how money managers lay the groundwork for a rebound, and the steady drop in U.S. supplies may be just the fodder optimists needed to start anew.

Wall Street Journal:

• Officials Expect Cyberattacks to Spread on Monday. Hackers may release an updated version of worm without kill switch, experts say.

• Inside North Korea’s Accelerated Plan to Build a Viable Missile. Kim Jong Un has modernized the weapons program, sped test launches and forced Western leaders to worry more about Pyongyang’s intentions than ever.

• As Streaming Services Amp Up, Not all TV Channels Make the Cut. Cord-cutting is at record pace as viewers ditch pricey pay-TV subscriptions and seek online alternatives.

• Opinion on Trump Stable Despite Tumult Over Comey Firing, Poll Finds. More Americans disapprove than approve of president’s decision to fire FBI director, Wall Street Journal/NBC News survey shows.

Fox News:

• Haley says US will 'tighten the screws' on North Korea, after recent missile test. (video)

CNBC: 

• Bark app helps protect kids from cyberbullying and suicide, while safeguarding their privacy.

• China pledges more than $100 billion in Belt and Road projects.

Zero Hedge: 

• "He's Angry At Everyone": Trump Said To Plan "Huge Reboot" - Priebus, Bannon, Spicer Could May Be Fired.

• "Caution Ahead" Citi Urges As Four Key Chinese Indicators Are "Starting To Wave Red Flags". (graph)

• North Korea Test-Fires 7th Ballistic Missile Of 2017, Projectile Flew 700Km, Landed In Sea Of Japan.

• What Do Rate Hikes Have To Do With Crashing Libor-OIS Spreads? (graph)

• Scandal At China's Grand Silk Road Summit As India Skips, Warns Of "Unsustainable Debt". 

• New Private Terminal At LAX Allows Oligarchs To Mock Debt-Serfs Hauling Luggage Via Telescreen.

• Asia Braces For Ransomware Fallout As Workweek Begins: "Hong Kong Will Get Hammered".

• North Korea: Test To Deliver "Large Scale Heavy Nuclear Warhead" Was Successful.

• Morgan Stanley(MS): "Book Your Summer Holidays, But Put These Trades On First".

• Europol Fears Computers Simply Won't Start Monday: Over 200,000 Infected In "Unprecedented" Global Cyberattack. (video)

• "It Fell Off A Cliff": Morgan Stanley's Macro Indicator Just Crashed The Most Since Dec. 2008. (graph)

Business Insider:

• A new high-profile hedge fund has just made a big hire.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 89.50 +.75 basis point.

• Asia Pacific Sovereign CDS Index 20.50 unch.

• Bloomberg Emerging Markets Currency Index 72.47 unch.

• S&P 500 futures +.03%.

• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note

Company/Estimate

• None of note

Economic Releases
8:30 am EST

• Empire Manufacturing for May is estimated to rise to 7.0 versus 5.2 in April.

10:00 am EST

• The NAHB Housing Market Index for May is estimated at 68 versus 68 in April.
  

4:00 pm EST

• Net Long-Term TIC Flows for March.
  

Upcoming Splits

• (BLL) 2-for-1

Other Potential Market Movers

• The China Retail Sales/Industrial Production/Fixed Assets reports and the Piper Jaffray Financial Institutions Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down 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 week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on yen weakness, oil strength, less European/Emerging Markets/US High-Yield Debt Angst, earnings optimism, technical buying and short-covering. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:

• Trump Says 'Fast Decision' Likely on FBI Comey Replacement. Donald Trump said he expects to make a “fast decision” on a replacement for fired FBI Director James Comey, perhaps before he departs the U.S. on May 19 for his first foreign trip as president. “Even that is possible,” Trump told reporters in a brief visit to the press cabin of Air Force One as he departed for Liberty University in Lynchburg, Virginia, to deliver his first commencement address in office. Trump fired Comey on May 9, citing frustrations with the FBI director’s conduct. The move prompted an uproar among Democrats and some Republicans because Comey’s agency is leading an investigation into whether there were connections between Russian interference in last year’s presidential election and people associated with Trump’s campaign. Trump has said that wasn’t the reason for his decision.

• America First Divides G-7 Even as Ministers Warm to Mnuchin. Finance ministers signaled a truce in their trade quarrel with Donald Trump’s administration as his Treasury Secretary said the Group of Seven is starting to understand where he’s coming from.

• Extortionists Mount Global Hacking Attack Seeking Ransom. (video) Extortionist hackers who may be using leaked computer exploits from the U.S. National Security Agency infiltrated computers in dozens of countries in a fast-spreading attack that forced British hospitals to turn away patients and breached systems at Spain’s Telefonica SA and organizations from Russia to Taiwan.

• Hospitals Gain Control After Ransom Hack, More Attacks May Come. Most U.K. health facilities whose computer systems were crippled in a global cyber-attack are back to normal operation, Home Secretary Amber Rudd said, even as experts warned that hackers would probably launch a new round of attacks with many computers still vulnerable. About 97 percent of facilities and doctors affected are able to work normally, Rudd said Saturday after a U.K. government meeting. At the height of the attack Friday and early Saturday, 48 organizations in the National Health Service were affected, and hospitals in London, North West England and Central England urged people with non-emergency conditions to stay away as technicians tried to stop the spread of the malicious software.

Wall Street Journal: 

• G-7 Finance Chiefs Are Reassured on U.S. Tax Plans. Ministers also agree to strengthen financial system’s defenses against cyberattacks. Finance chiefs from the world’s largest industrialized economies sounded a note of cautious optimism this weekend on U.S. plans for a tax overhaul, and agreed to bolster the financial system against increasingly sophisticated cyberattacks.

Barron's:

• Had bullish commentary on (ADI), (MSFT) and (AL).

• Had bearish commentary on (WFM) and (SNAP).

Fox News: 

• Trump says new FBI 'possible' by Friday, ahead of Saturday's commencement speech. (video)

CNBC:

• Treasury's Mnuchin says U.S. reserves right to be protectionist.

• Wal-Mart(WMT), Home Depot(HD), TJX(TJX) could reverse retail's earnings disaster.

• North Korea launches a new unidentified missile as tensions with US fester.

Zero Hedge:

• North Korea Test-Fires 7th Ballistic Missile Of 2017, Projectile Flew 700Km, Landed In Sea Of Japan.

• 24 Hours Later: "Unprecedented" Fallout From First Global, Coordinated Ransomware Attack.

• In "Escalation", Treasury's Financial Crimes Unit Will Share Records In Trump-Russia Probe.

• The Other Shoe Drops: Prime Auto Loan Losses Surge As Recoveries Tumble. (graph)

• Chart Of The Day: There Are Now More Indexes Than Stocks.

• The Great Shadow Unwind: Chinese Entrusted Loans Post First Decline In 10 Years. (graph) 

• Worst Restaurant Tailspin Since 2009/2010 Crushes Lower End.

• Why US Investors, And Especially VIX Sellers, Should Care About China In 1 Simple Chart. (graph)

• Trump Wants "Fast Decision" On Comey Replacement - Here Are The 11 Candidates.

• 3 Reasons Why James Comey Should Have Been Fired A Long Time Ago.

• "Flood Of Off-Lease Vehicles" Set To Wreak Havoc On New Car Sales.

• Weekend Reading: The Drudging Report. (graph)

• Stocks Sink Despite VIX Records As Economic Data Collapse Continues. (graph)

Business Insider: 

• French carmakers, Russian banks and German railways all hit as massive cyberattacks wreak global havoc.

• A key inflation measure just gave the Fed cover to keep raising rates.

• Trump declares James Comey 'should have never exonerated' Hillary Clinton.

• Elon Musk has discovered a new passion in life — and it could be Tesla's best product yet.

Market Week in Review

• S&P 500 2,390.14 -.39%*

The Weekly Wrap by Briefing.com.

*5-Day Change