Monday, July 02, 2018

Stocks Reversing Slightly Higher into Final Hour on Economic Optimism, Stable Long-Term Rates, Bargain-Hunting, Tech/Biotech Sector Strength

 Broad Equity Market Tone:
  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Mixed
  • Volume: Below Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 16.3 +.87%
  • Euro/Yen Carry Return Index 133.98 -.44%
  • Emerging Markets Currency Volatility(VXY) 9.95 +2.1%
  • S&P 500 Implied Correlation 39.23 +4.2%
  • ISE Sentiment Index 69.o -25.8%
  • Total Put/Call 1.09 -11.4%
  • NYSE Arms 1.87 +42.7%
Credit Investor Angst:
  • North American Investment Grade CDS Index 68.21 +.76%
  • America Energy Sector High-Yield CDS Index 402.0 +1.07%
  • European Financial Sector CDS Index 92.16 +2.44%
  • Italian/German 10Y Yld Spread 234.75 -3.0 basis points
  • Asia Pacific Sovereign Debt CDS Index 15.50 +3.65%
  • Emerging Market CDS Index 191.16 +.38%
  • iBoxx Offshore RMB China Corporate High Yield Index 147.88 +.06%
  • 2-Year Swap Spread 26.25 unch.
  • TED Spread 41.5 -.75 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -3.75 -2.75 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 69.13 -.51%
  • 3-Month T-Bill Yield 1.92% +1.0 basis point
  • Yield Curve 31.75 -.75 basis point
  • China Iron Ore Spot 64.18 USD/Metric Tonne +.20%
  • Citi US Economic Surprise Index 5.50 +10.4 points
  • Citi Eurozone Economic Surprise Index -52.40 +8.6 points
  • Citi Emerging Markets Economic Surprise Index -11.20 +.5 point
  • 10-Year TIPS Spread 2.14 +2.0 basis points
  • 78.3% chance of Fed rate hike at Sept. 26th meeting, 79.5% chance at November 8th meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +18 open in Japan 
  • China A50 Futures: Indicating -75 open in China
  • DAX Futures: Indicating +27 open in Germany
Portfolio: 
  • Higher: On gains in my tech/biotech/medical sector longs and emerging market shorts
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 75% Net Long

Morning Market Internals

NYSE Composite Index:

Sunday, July 01, 2018

Monday Watch

Today's Headlines
Bloomberg:
  • Asian Stocks Face Mixed Start to Week; Oil Drops. Stocks in Asia looked set to kick off the second half of 2018 in a mixed fashion, while oil declined and the euro came under pressure over German political concerns. Investors will be focused again on Chinese assets after the biggest weekly drop in the yuan since the 2015 devaluation stoked concerns about the currency’s use as a tool in the trade spat. Equity futures in Japan were little changed ahead of the quarterly Tankan survey of business confidence. Australian futures rose. Hong Kong is closed for a holiday. Oil slid below $74 a barrel in New York after U.S. President Donald Trump called for higher production. Crude surged more than 8 percent last week. Futures on the S&P 500 rose less than 0.1 percent as of 7:05 a.m. in Tokyo. The gauge closed up 0.1 percent on Friday. Futures on Japan’s Nikkei 225 Stock Average were little changed. Futures on Australia’s S&P/ASX 200 Index added 0.4 percent.
MarketWatch.com:
Zero Hedge:     
Night Trading
  • Asian indices are -.25% to +.245% on average.
  • Asia Ex-Japan Investment Grade CDS Index 94.0 -1.5 basis points.
  • Asia Pacific Sovereign CDS Index 15.0 +.25 basis point.
  • Bloomberg Emerging Markets Currency Index 69.51 +.04%.
  • FTSE 100 futures -.55%
  • S&P 500 futures -.04%.
  • NASDAQ 100 futures -.03%.

Earnings of Note
Company/Estimate
Before the Open:
  • None of note
After the Close:
  • (MLHR)/.58 
Economic Releases
10:00 am EST
  • Construction Spending MoM for May is estimated to rise +.5% versus a +1.8% gain in April.
  • ISM Manufacturing for June is estimated to fall to 58.2 versus 58.7 in May.
  • ISM Prices Paid for June is estimated to fall to 74.3 versus 79.5 in May..
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China Manufacturing PMI report, Eurozone PMI report and the Eurozone PPI report could also impact trading today.
BOTTOM LINE: Asian indices are mostly 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 week.

Weekly Outlook

BOTTOM LINE: I expect US stocks to finish the week mixed as stable long-term rates, US economic optimism and yen weakness offsets trade war fears, European/Emerging Markets debt angst and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Saturday, June 30, 2018

Today's Headlines

Barron's:
  • Had bullish commentary on  (COST), (EA), (MA), (GGG), (DNKN), (VC), (BLK), (FB), (VZ), (MNST) and (UTX).
Zero Hedge: