Stocks Surging into Afternoon on Diminished Fed Taper Fears, Economic Optimism, Dollar Weakness, Tech/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 16.3 -9.4%
• Bloomberg Global Risk On/Risk Off Index 3,535.0 +72.0 points

• Euro/Yen Carry Return Index 137.69 -.41%

• Emerging Markets Currency Volatility(VXY) 9.0 -.6%

• S&P 500 Implied Correlation 49.9 -1.6%

• ISE Sentiment Index 105.0  -38.0 points
  

• Total Put/Call .85 +28.8%

• NYSE Arms .99 +4.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.22 -1.1%
  

• US Energy High-Yield OAS 421.23 +.58%

• European Financial Sector CDS Index 57.73 -.98%

• Italian/German 10Y Yld Spread 109.0 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 84.76 -2.87%
  

• Emerging Market CDS Index 157.33 -2.1%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.11 -.36%

• 2-Year Swap Spread 7.75 -.25 basis point

• TED Spread 11.5 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 +.5 basis point
  
• MBS  5/10 Treasury Spread  66.0 +1.25 basis points
  
• IHS Markit CMBX BBB- 6 73.75 +1.25 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.72 +.60%
• 3-Month T-Bill Yield .02% unch.
  

• Yield Curve 146.0 +2.0 basis points
  

• China Iron Ore Spot 200.0 USD/Metric Tonne +2.1%

• Citi US Economic Surprise Index 10.5 -2.8 points

• Citi Eurozone Economic Surprise Index 146.0 -6.3 points
  

• Citi Emerging Markets Economic Surprise Index 59.60 +.1 point

• 10-Year TIPS Spread 2.42 -3.0 basis points
• 93.0% chance of no change at Sept. 22nd meeting, 93.0% chance of no change at Nov. 3rd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +203 open in Japan 
• China A50 Futures: Indicating -1 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Higher: On gains in my tech/industrial/biotech/commodity/medical sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long
  

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.4%

Sector Outperformers:

• 1) Semis +2.3% 2) Software +2.3% 3) Video Gaming +1.9%

Stocks Rising on Unusual Volume:

• AMSC, JOAN, DOCU, CGEM, ENV, FATE, SUMO, MDB, TRGP, PDAC, ASAN, PCT, ODP, UPST, AMCX, ATHA, RBLX, SYNA, PSAC, BIIB, FIVE, CMBM, AVIR, CRNC, ZUMZ, VLDR, NVDA and CIEN
  

Stocks With Unusual Call Option Activity:

• 1) SENS 2) FIVE 3) LODE 4) ADMP 5) DOCU

Stocks With Most Positive News Mentions:

• 1) HOFT 2) DOCU 3) MDB 4) FIVE 5) SUMO
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +10.1% Below 100-Day Average 
• 8 Sectors Rising, 3 Sectors Declining
• 51.9% of Issues Advancing, 43.5% Declining
• 208 New 52-Week Highs, 5 New Lows
• 88.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.3%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,513.0 +50.0 points
• Vix 16.6 -8.2%
• Total Put/Call .88 +33.3%
• TRIN/Arms 1.21 +27.4%

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 87.75 +1.75 basis points.

• China Sovereign CDS 37.5 +.5 basis point
  

• Bloomberg Emerging Markets Currency Index 61.31 -.06%.
• Bloomberg Global Risk-On/Risk Off Index 3,381.0 -81.0 points.
• Volatility Index(VIX) futures 21.45 +.30%.
• FTSE 100 futures -.27%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures -.16%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• None of note
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for May is estimated to rise to 674K versus 266K in April.
• The Unemployment Rate for May is estimated to fall to 5.9% versus 6.1% in April.
• Average Hourly Earnings MoM for May is estimated to rise +.2% versus a +.7% gain in April.
  

10:00 am EST:

• Factory Orders for April is estimated to fall -.3% versus a +1.1% gain in March.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking, Eurozone retail sales report and the ASCO annual meeting could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by consumer and technology 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 Lower into Final Hour on Inflation Worries, Less Dovish Fed Commentary, Dollar Strength, Tech/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 17.9 +26%
• Bloomberg Global Risk On/Risk Off Index 3,456.0 -4.0 points

• Euro/Yen Carry Return Index 138.20 -.04%

• Emerging Markets Currency Volatility(VXY) 9.04 -.44%

• S&P 500 Implied Correlation 50.7 +.2%

• ISE Sentiment Index 152.0  -18.0 points
  

• Total Put/Call .61 -11.6%

• NYSE Arms .50 -24.24%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.84 +1.46%
  

• US Energy High-Yield OAS 419.32 -.98%

• European Financial Sector CDS Index 58.3 +1.7%

• Italian/German 10Y Yld Spread 108.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 87.28 +1.20%
  

• Emerging Market CDS Index 160.46 +2.3%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.29 -.09%

• 2-Year Swap Spread 8.0 -.25 basis point

• TED Spread 11.25 -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.5 +.25 basis point
  
• MBS  5/10 Treasury Spread  64.75 unch.
  
• IHS Markit CMBX BBB- 6 72.5 +.5 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.33 -.57%
• 3-Month T-Bill Yield .02% +1.0 basis point
  

• Yield Curve 144.0 -2.0 basis points
  

• China Iron Ore Spot 196.50 USD/Metric Tonne unch.

• Citi US Economic Surprise Index 13.3 +4.1 points

• Citi Eurozone Economic Surprise Index 152.3 +1.3 points
  

• Citi Emerging Markets Economic Surprise Index 59.50 unch.

• 10-Year TIPS Spread 2.45 -1.0 basis point
• 93.0% chance of no change at Sept. 22nd meeting, 93.0% chance of no change at Nov. 3rd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -66 open in Japan 
• China A50 Futures: Indicating -109 open in China

• DAX Futures: Indicating -3 open in Germany

Portfolio:

• Slightly Lower: On losses in my technology/industrial sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long
  

Bear Radar

 Style Underperformer:

• Mid-Cap Growth -.8%

Sector Underperformers:

• 1) Gold & Silver -3.4% 2) Airlines -2.2% 3) Homebuilding -1.9%

Stocks Falling on Unusual Volume: 

• CDZI, INSP, OII, UBSI, BNFT, CWK, CMBM, DLTH, SPLK, REPL, FEYE, KOSS, BBBY and PETS
  

Stocks With Unusual Put Option Activity:

• 1) PETS 2) NTAP 3) EXPR 4) BBBY 5) AMC
  

Stocks With Most Negative News Mentions:

• 1) SKLZ 2) DDD 3) PTON 4) PROG 5) SNAP
  

Charts:

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