Bull Radar

Style Outperformer:

• Large-Cap Growth -1.0%

Sector Outperformers:

• 1) Gold & Silver +1.4% 2) REITs +.5% 3) Utilities +.2%

Stocks Rising on Unusual Volume:

• SNDX, RRGB, JACK, CHRS, QIWI, CL, OMER, TGT, CYOU, WBMD, DKS, GOLD, MZOR, NVRO, TJX, AKAO, DVA, DISH, SBAC, PBYI, EXR and WWW

Stocks With Unusual Call Option Activity:

• 1) CL 2) WYN 3) DISH 4) JACK 5) KRE

Stocks With Most Positive News Mentions:

• 1) WWW 2) RRGB 3) CLVS 4) TGT 5) TJX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +23.3% Above 100-Day Average
• 0 Sectors Rising, 10 Sectors Declining
• 22.0% of Issues Advancing, 75.6% Declining
• 26 New 52-Week Highs, 64 New Lows
• 46.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.5%
• Vix 12.7 +19.5%
• Total Put/Call .97 +24.4%
• TRIN/Arms 1.24 +9.2%

Wednesday Watch

Evening Headlines

Bloomberg:

• Nikki Haley Tells Countries to Choose Between U.S., North Korea. The U.S. ambassador to the United Nations urged other countries to do more to pressure North Korea over its weapons program, saying, “You either support North Korea or you support us, you are either with North Korea or not.” Ambassador Nikki Haley made the comments Tuesday, two days after Kim Jong Un’s regime launched a rocket it said could carry a “large-size heavy nuclear warhead.” The launch was the latest defiance of UN sanctions and provides an early challenge for South Korea’s new leader, Moon Jae-in, who has vowed to engage with the regime to bring peace to the peninsula.

• Risk Off With U.S. Political Concern Center Stage. Growing concerns over the turmoil engulfing President Donald Trump’s administration weighed on risk appetite, boosting the yen and gold and sending U.S. stock futures lower. Contracts on the S&P 500 Index declined and stocks in Asia slid on reports that Trump asked FBI Director James Comey to drop an investigation into former National Security Adviser Michael Flynn. The dollar was already in retreat after a report that the U.S. president shared terrorism intelligence with Russian officials, an action he has since defended. The Bloomberg Dollar Spot Index dropped for a sixth day to the lowest since November. Crude extended losses. Japan’s Topix slid 0.5 percent, while Australia’s S&P/ASX 200 Index lost 0.7 percent. South Korea’s Kospi index fell 0.1 percent and Singapore’s Straits Times Index declined 0.5 percent.

• Five Things You Need to Know to Start Your Day.

• These Charts Show There's More to U.S. Factory Gains Than Autos.

Wall Street Journal:

• Car Makers, Despite Promises to Donald Trump, Set on Job Cuts. GM, Ford plan to cut U.S. workforce amid slump in automobile sales, outpacing recent job commitments.

Fox News: 

• White House disputes explosive report that Trump asked Comey to end Flynn probe. (video) The White House grappled late Tuesday with the political ghost of James Comey, as an explosive new report said a memo written by the ousted FBI chief claimed President Trump once asked him to end the probe into former national security adviser Michael Flynn. The White House sharply disputed the report, as Democrats seized on it as potential proof of "obstruction" of justice.

CNBC: 

• Amazon(AMZN) is hiring people to break into the multibillion-dollar pharmacy market.

• Jack in the Box(JACK) leaps 10% as it evaluates potential alternatives for Qdoba.

• There are 'signs of life' in small-business loans, LendingTree CEO says. (video)

Zero Hedge:

• Comey's Revenge: Leaks Memo To NYT Saying Trump Asked Him To End Flynn Investigation.

• "Risk Off": Futures Slide, USDJPY Drops As Trump "Memo-Gate" Spooks Markets.

• Chaffetz Demands FBI Hand Over All Comey's Notes, Memos, & Recordings Related To Trump.

• US Government Officials Admit GDP, Inflation Measurements Are Incorrect.

• WTI/RBOB Extened Losses After Unexpected Crude Build. (graph)

• Dollar Slumps To 6-Month Lows As Stocks Do Something They Haven't Done Since 1969. (graph)

Business Insider:

• Democrat lawmakers target Trump's favorite deregulation tool.

• An unnamed OPEC source says floating oil storage is down by a third.

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 89.75 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 20.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 73.17 -.02%.

• S&P 500 futures -.57%.

• NASDAQ 100 futures -.48%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AEO)/.17

• (CTRN)/.68

• (TGT)/.91

• (CSCO)/.58

• (LB)/.30

• (SMRT)/.18

• (SNPS)/.86

Economic Releases 
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,693,130 barrels versus a -5,247,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,199,380 barrels versus a -150,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,601,750 barrels versus a -1,587,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.41% versus a -1.8% decline the prior week.

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Jobless Claims report, weekly MBA Mortgage Applications report, Keefe Bruyette Financials conference, Goldman Sachs Industrials conference, BMO Farm conference, JPMorgan Homebuilding/Products conference, (TMO) analyst meeting, (BP) annual meeting, (FL) annual meeting and the (GPS) annual meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by financial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the day.

Stocks Slightly Lower into Final Hour on Less Economic Optimism, Oil Decline, Yen Strength, Healthcare/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 10.67 +2.4%

• Euro/Yen Carry Return Index 130.88 +.44%

• Emerging Markets Currency Volatility(VXY) 7.49 -.4%

• S&P 500 Implied Correlation 41.67 +8.26%

• ISE Sentiment Index 122.0 +23.23%
  

• Total Put/Call .79 +5.33%

• NYSE Arms 1.04 +27.12%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.84 +.03%
  

• America Energy Sector High-Yield CDS Index 361.0 -2.1%

• European Financial Sector CDS Index 66.70 +.93%

• Western Europe Sovereign Debt CDS Index 7.80 -10.14%

• Asia Pacific Sovereign Debt CDS Index 20.02 -2.39%

• Emerging Market CDS Index 188.94 -.86%
  

• iBoxx Offshore RMB China Corporate High Yield Index 138.08 +.19%

• 2-Year Swap Spread 23.25 -.25 basis point

• TED Spread 28.0 -2.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -29.50 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.21 +.44%
• 3-Month T-Bill Yield .90% +2.0 basis points
  

• Yield Curve 103.0 -1.0 basis point
  

• China Import Iron Ore Spot $61.17/Metric Tonne +.61%

• Citi US Economic Surprise Index -37.60 -5.6 points

• Citi Eurozone Economic Surprise Index 65.40 -2.1 points

• Citi Emerging Markets Economic Surprise Index 30.5 +1.7 points

• 10-Year TIPS Spread 1.84 -1.0 basis point
  
• 90.2% chance of Fed rate hike at July 26 meeting, 93.5% chance at Sept. 20 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -74 open in Japan 
• China A50 Futures: Indicating +4 open in China

• DAX Futures: Indicating -9 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• Goldman Builds China Financial-Stress Index and, Yes, It's Risen. (graph) With corporate bond sales being canceled, stocks sliding and government debt yields climbing in recent months, it’s no surprise that the measure shows an increase in strain. But the financial-stress index, or FSI, has dropped from the recent high in late 2016 and early 2017, and might not necessarily translate to weakness in the economy, Goldman analysis showed.
• Boom Times for Longer in EU's East as GDP Growth Quickens. The European Union’s eastern economies began 2017 with a growth flurry as resumed flows of development funds from the bloc and improving demand in the euro area gave them the edge over the rest of the region. Romania led the way, with first-quarter growth unexpectedly quickening to 5.7 percent from a year earlier, more than the 4.5 percent median estimate in a Bloomberg survey. Expansion in Poland, the east’s biggest economy, accelerated to 4 percent. Even at the bottom of the pack, the Czech Republic’s 2.9 percent increase in gross domestic product outpaced the euro area, the region’s main trading partner.
• OPEC Prolonging Cut Would Achieve Mission to Clear Oil Glut. The world’s two biggest oil exporters seem to have finally figured out how to eliminate a global surplus that’s kept crude prices in check for almost three years. Saudi Arabia and Russia said in Beijing on Monday they favor prolonging this year’s oil curbs to the first quarter of 2018. If they convince fellow producers to adopt the strategy when OPEC and its partners meet next week, it will pare near-record inventories in developed nations by 8 percent and erase the glut weighing on the market, according to Bloomberg calculations using U.S. government data.
• Glencore Says Electric Car Boom Is Coming Faster Than Expected. (video)
• Best Earnings Growth Since 2011 Backs S&P 500 at Record: Chart.
• Wall Street Thinks Trump’s All Talk When It Comes to Breaking Up Banks. (video) On the first day of May, Donald Trump sat in the Oval Office and declared that his administration was taking a look at breaking up Wall Street’s biggest banks. If they ever took him seriously, it didn’t last. Instead of cowering, Wall Street executives and lobbyists are crowing, getting more confident about ditching rules that have annoyed them for years. That’s because the Trump administration is appointing friendly regulators and signaling it will make life easier for bankers.
• Senate GOP Won't Back Trump's Deep Spending Cuts, McConnell Says. President Donald Trump’s proposal for $54 billion in domestic spending cuts in the next fiscal year reflects priorities that “aren’t necessarily ours,” and he can expect a Republican-led Senate to make changes, Senate Majority Leader Mitch McConnell said Tuesday.
• Ford(F) Plans to Cut About 10% of Global Staff. (video)
• Here’s Where Hedge Funds Invested in the First Quarter.

Wall Street Journal:

• Trump Administration Defends Sharing Information With Russia. As controversy escalates, national-security adviser says conversation was ‘wholly appropriate’.

MarketWatch.com:

• Apple(AAPL) stock price target gets a big boost.
• Here's why your're getting so many spam phone calls.

Fox News: 

• White House says Trump info-sharing with Russia ‘wholly appropriate,’ rips leaks. (video)

CNBC:

• Meet the 2017 CNBC Disruptor 50 companies.
• Why many US start-ups are trying to crack the Indian marketplace.
• Hedge fund managers don’t always beat the market, but they still make billions.
• Goldman(GS) just put a $1,000 price target on this red-hot surgical robot maker. Goldman Sachs told investors to buy Intuitive Surgical(ISRG) shares because robot-assisted procedures will double in the next two years. The firm initiated coverage on the surgical robot maker with a buy rating.

Zero Hedge:

• Murdered DNC Staffer Seth Rich Shared 44,053 Democrat Emails With WikiLeaks: Report.
• McMaster: Trump Didn't Even Know Where Intel Came From; His Disclosure Was Appropriate.
• Israel Minister: "The Time Has Come To Assassinate Bashar Assad".
• Clothing Retailer Rue21 Files For Bankruptcy, Many More On Deck.
• Hackers Unleash Second NSA-Developed Cyber-Weapon On Dark Web.
• China Capitulates: Injects $25 Billion Into Liquidity-Starved Banks To "Appease Investors". (graph)
• Industrial Production Surges Most Since Feb 2014 As Auto Assembly Spikes. (graph)
• Goldman(GS) Turns Less Confident On June, September Rate Hikes.
• Housing 'Recovery' Stumbles As Starts, Permits Plunge In April. (graph)

The Economist:

• An index suggests the world is more stable than the news suggests.

AP:

• Clues point to possible North Korean involvement in massive cyberattack.

The Telegraph:

• New poll suggests more than two thirds of people 'now support Brexit'.

Bear Radar

Style Underperformer:

• Mid-Cap Value -.2%

Sector Underperformers:

• 1) Hospitals -1.5% 2) HMOs -.8% 3) Oil Service -.7%

Stocks Falling on Unusual Volume: 

• KRNT, DKS, FRTA, VRTU, LQ, TGNA, PEI, EDIT and CBI

Stocks With Unusual Put Option Activity:

• 1) URBN 2) DKS 3) WU 4) EPD 5) SM

Stocks With Most Negative News Mentions:

• 1) FRTA 2) NK 3) KRNY 4) MEEC 5) VLO

Charts:

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