Bull Radar

Style Outperformer:

• Large-Cap Growth +.6%

Sector Outperformers:

• 1) Social Media +1.8% 2) Biotech +1.6% 3) Semis +1.6%

Stocks Rising on Unusual Volume:

• SNDX, ATHN, PLCE, SHPG, SOHU, CYOU, WB, INCY, MZOR, CUK, PERY, LB, NEWM, TIS, WMT, NVS, KMX, NVDA, LSXMA, MOMO, AMAT, BKE, TTD and SHAK

Stocks With Unusual Call Option Activity:

• 1) K 2) HPE 3) PLCE 4) DOW 5) LB

Stocks With Most Positive News Mentions:

• 1) SHAK 2) INCY 3) KMX 4) WMT 5) VRTX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +41.4% Above 100-Day Average

• 6 Sectors Rising, 4 Sectors Declining

• 41.2% of Issues Advancing, 54.4% Declining

• 21 New 52-Week Highs, 60 New Lows

• 42.9% of Issues Above 200-day Moving Average

• Average 14-Day RSI 33.0%

• Vix 15.0 -3.6%

• Total Put/Call 1.12 +2.8%

• TRIN/Arms 1.26 +4.9%

Thursday Watch

Night Trading 

• Asian equity indices are -1.25% to -.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 92.5 +2.75 basis points. 
• Asia Pacific Sovereign CDS Index 20.75 +.75 basis point.
• Bloomberg Emerging Markets Currency Index 72.70 -.33%.
• S&P 500 futures +.04%.
• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BABA)/.66
• (BKE)/.33
• (EXP)/.85
• (HIBB)/.96
• (MNRO)/.32
• (PERY)/.84
• (RL)/.78
• (TK)/.11
• (PLCE)/1.64
• (WMT)/.96
• (AMAT)/.76
• (ADSK)/-.23
• (GPS)/.29
• (MCK)/3.01
• (ROST)/.80
• (CRM)/.26

Economic Releases 

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 240K versus 236K the prior week.
• Continuing Claims are estimated to rise to 1950K versus 1918K prior.
• Philly Fed Business Outlook Index for May is estimated to fall to 18.5 versus 22.0 in April.

10:00 am EST

• The Leading Index for April is estimated to rise +.4% versus a +.4% gain in March.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Mester speaking, Australia Employment Change report, weekly Bloomberg Consumer Comfort Index, Bloomberg Economic Expectations Index for May, weekly EIA natural gas inventory report, BofA Merrill Transports Conference, (MT) general meeting and the (DB) annual meeting could also impact trading today.

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

Stocks Falling Substantially into Final Hour on Diminishing Tax/Healthcare Reform Hopes, Less Economic Optimism, Yen Strength, Financial/Technology Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.5 +35.5%

• Euro/Yen Carry Return Index 129.27 -1.19%

• Emerging Markets Currency Volatility(VXY) 7.69 +2.81%

• S&P 500 Implied Correlation 46.01 +16.9%

• ISE Sentiment Index 108.0 +1.0%
  

• Total Put/Call 1.04 +33.3%

• NYSE Arms 1.25 +10.72%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.73 +5.0%
  

• America Energy Sector High-Yield CDS Index 361.0 -.39%

• European Financial Sector CDS Index 70.2 +5.26%

• Western Europe Sovereign Debt CDS Index 7.85 +.58%

• Asia Pacific Sovereign Debt CDS Index 20732 +3.55%

• Emerging Market CDS Index 195.39 +2.99%
  

• iBoxx Offshore RMB China Corporate High Yield Index 138.11 +.02%

• 2-Year Swap Spread 22.5 -.75 basis point

• TED Spread 28.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -31.50 -2.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.96 -.31%

• 3-Month T-Bill Yield .89% -1.0 basis point
  

• Yield Curve 98.0 -5.0 basis points
  

• China Import Iron Ore Spot $62.20/Metric Tonne +1.68%

• Citi US Economic Surprise Index -37.50 -.1 point

• Citi Eurozone Economic Surprise Index 63.80 -1.6 points

• Citi Emerging Markets Economic Surprise Index 28.4 -2.1 points

• 10-Year TIPS Spread 1.80 -4.0 basis points
  

• 80.4% chance of Fed rate hike at July 26 meeting, 85.0% chance at Sept. 20 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -315 open in Japan 

• China A50 Futures: Indicating -16 open in China

• DAX Futures: Indicating -58 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:

• Merkel Says U.K. Will Pay Price If EU Immigration Is Curbed. German Chancellor Angela Merkel said the U.K. will pay a price if it curbs immigration from the European Union after Brexit, highlighting her uncompromising stance on the fundamentals of future relations. “This isn’t meant maliciously, but you can’t have all of the good things and then say there’s a limit of 100,000 or 200,000 EU citizens” allowed to enter the U.K., Merkel said on a panel in Berlin on Wednesday. “That won’t work. At that point, we’ll have to think about which restrictions we do on the European side to compensate for that.”

• Europe Stocks Drop Most in Eight Months as Trump Concern Deepens. European stocks tumbled as the impact of a worsening U.S. political crisis spread throughout the world after a report that President Donald Trump had asked the FBI director to drop an investigation into a former top aide. The Stoxx Europe 600 Index slid 1.2 percent at the close in the biggest drop since September. The benchmark had rallied as much as 21 percent since a Nov. 4 low amid bets for stronger global growth and increased U.S. fiscal spending following Trump’s election, reaching a 21-month high earlier this month.

• Apple(AAPL) Falls on Concerns About Trump's Tax Reform. Apple has $240 billion in cash and equivalents outside the U.S., about 93 percent of its total reserves, and Trump has proposed a tax cut to repatriate offshore holdings. The stock fell as much as 3.5 percent, the most since November, to $150, while the S&P 500 fell as much as 1.4 percent.

• Fed's Cut in Its Big Bond Hoard Likely to Begin at Glacial Pace. (video) If you thought the Federal Reserve’s interest rate increases have been gradual, wait until you see what it has planned for its $4.5 trillion balance sheet. The central bank looks likely to begin reducing its bond holdings at a glacial pace given how uncertain officials are about the impact on financial markets, monetary policy and the economy. The aim, according to New York Fed President William Dudley, is to ensure that the drawdown is “a very modest, minor event.”

• Tech Stocks Surge as Hedge Funds Bail Out. The rally in America’s biggest technology companies is making the smart money look dumb. In a quarter when Apple Inc., Amazon.com Inc. and Alphabet Inc. rose three times as fast as the market, regulatory filings show hedge funds were net sellers of a combined 7.5 million shares. On paper, that’s $600 million of lost upside since March 31, since each stock has kept rising.

Wall Street Journal:

• Washington Tumult Jolts Stocks, Sends Dollar Lower. The ICE U.S. Dollar Index, a closely watched measure of the dollar’s value, is set to erase its post election gains.

• Trump Trade Reboot Spurs U.S. Push by China’s Sovereign-Wealth Fund. In an interview, CIC President Tu Guangshao says fund hopes to “significantly increase” direct investments in U.S.

• Iran Nuclear Deal in Play as Hard-Line Candidate Gains on President. Voters choose Friday between candidates with conflicting visions—President Hassan Rouhani, who has made an opening to the West, and a political newcomer wary of where such a path leads.

MarketWatch.com:

• Here’s how impeachment works — and why Trump is safe for now.

• Fed’s Kashkari says central bank should avoid fighting asset-price bubbles.

Fox News:

• Comey cracks Republican wall: GOP pols voice concerns on Trump 'drama'. (video)

CNBC:

• Real estate CEO: Record low housing inventory is 'freaking us out'.

• Euro in 'trend change,' as dollar gets thumped on US political risk, lowered Fed expectations.

• Kevin O'Leary: I'm 'extremely bullish' about the stock market — Trump crises will go away. (video)

Zero Hedge:

• Congressman Calls For Trump Impeachment For "Obstruction Of Justice". (video)

• Obama Reveals True Thoughts On Trump: "He's Nothing But A Bullshitter".

• Senate Committee Demands White House Tapes, Comey Memos On Everyone.

• JPMorgan: "A Trump Impeachment Is Very, Very Unlikely".

• Previewing The Main Event: Senate Intel Committee Asks Comey To Testify.

• US Household Debt Surpasses 2008 High, Hits Record $12.7 Trillion. (graph)

• Jack Welch Warns: "An Impeachment Proceeding Would Blow The Market Away".

• June Rate-Hike Odds Tumble. (graph)

• Putin Ready To Give Congress Transcript Of Trump-Lavrov Conversation To Prove No Secrets Were Revealed.

• WTI/RBOB Pop After 6th Weekly Crude Inventory Draw In A Row, Production Slows. (graph)

• "Take A Deep Breath": Citi Cuts Through The Political Noise.

Reuters:

• U.S. to renew sanctions waivers on Iran Wednesday -U.S. Officials. The administration of President Donald Trump on Wednesday will extend sanctions relief on Iran that was called for under the 2015 Iran nuclear deal, two U.S. officials told Reuters.

Bear Radar

Style Underperformer:

• Small-Cap Value -2.2%

Sector Underperformers:

• 1) Banks -3.8% 2) Semis -2.7% 3) Road & Rail -2.6%

Stocks Falling on Unusual Volume: 

• WSR, PLAB, BZUN, AEO, FRTA, ACXM, SSYS, FWONK, TAL, CXW, AMD, CNCE, TRVG, EXEL and HTZ

Stocks With Unusual Put Option Activity:

• 1) EXPR 2) NOW 3) JACK 4) AEO 5) URBN

Stocks With Most Negative News Mentions:

• 1) PLUG 2) SSYS 3) GLFM 4) ETSY 5) VIVO

Charts:

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