Stocks Reversing Slightly Higher into Final Hour on China Trade Deal Hopes, Earnings Outlooks, Oil Gain, Biotech/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.93 -1.58%

• Euro/Yen Carry Return Index 131.18 +.22%

• Emerging Markets Currency Volatility(VXY) 8.40 -1.52%

• S&P 500 Implied Correlation 40.50 -.61%

• ISE Sentiment Index 95.0 +26.7%
  

• Total Put/Call .93 +10.7%

• NYSE Arms .71 -35.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.01 -.94%
  

• America Energy Sector High-Yield CDS Index 510.0 -5.29%

• European Financial Sector CDS Index 73.67 -3.62%

• Italian/German 10Y Yld Spread 263.75 +5.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 70.46 -.18%
  

• Emerging Market CDS Index 163.56 -.88%
  

• iBoxx Offshore RMB China Corporate High Yield Index 158.52 -.10%

• 2-Year Swap Spread 8.5 -.25 basis point

• TED Spread 19.25 -1.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -7.5 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 68.38 -.06%
• 3-Month T-Bill Yield 2.44% +1.0 basis point

• Yield Curve 19.0 +3.25 basis points

• China Iron Ore Spot 81.70 USD/Metric Tonne +1.13%

• Citi US Economic Surprise Index -33.60 -3.1 points

• Citi Eurozone Economic Surprise Index -59.50 +2.2 points

• Citi Emerging Markets Economic Surprise Index -10.70 -1.8 points

• 10-Year TIPS Spread 1.94 +2.0 basis points
• 1.6% chance of Fed rate hike at May 1st meeting, 1.6% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +34 open in Japan 
• China A50 Futures: Indicating +30 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth unch.

Sector Underperformers:

• 1) Healthcare Providers -2.2% 2) Gold & Silver -1.9% 3) Airlines -1.9%

Stocks Falling on Unusual Volume: 

• WTW, DY, INGN, PEN, MYL, AAXN, VICR, CLGX, LIVN, PGTI, EVH, BNFT, WLL, DIOD and LASR

Stocks With Unusual Put Option Activity:

• 1) EPI 2) AET 3) WTW 4) IMGN 5) WLL

Stocks With Most Negative News Mentions:

• 1) WTW 2) MYL 3) EVH 4) KHC 5) TOL

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.4%

Sector Outperformers:

• 1) Biotech +1.5% 2) Retail +1.3% 3) Oil Service +.9%

Stocks Rising on Unusual Volume:

• VSM, SE, TNDM, GCP, MGTX, PVTL, MIDD, WBC, DHR, GWPH, BBY, RARE, IONS, MELI, LLY, SRPT, ELAN, WAB, PANW, CPB, MED, SUPN, FBM, GKOS, FRPT, DRQ, OSTK, GCP, IONS, SUPN, FOXF, MTDR, CDNA, INSP, SVMK, SHOO, MASI, PAN, ETSY, PLNT, OUT, TJX and MMSI

Stocks With Unusual Call Option Activity:

• 1) IVZ 2) BBY 3) TJX 4) MNST 5) PANW

Stocks With Most Positive News Mentions:

• 1) BBY 2) TNDM 3) CHK 4) ODP 5) PANW

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +7.0% Above 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 45.7% of Issues Advancing, 50.5% Declining
• 56 New 52-Week Highs, 21 New Lows
• 50.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 56.8%
• Vix 15.15 -.13%
• Total Put/Call .87 +3.6%
• TRIN/Arms .61 -44.6%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 70.25 -.5 basis point. 

• China Sovereign CDS 49.5 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 68.40 -.04%.

• FTSE 100 futures -.25%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (AES)/.34

• (AMT)/2.15

• (BBY)/2.58

• (CPB)/.70

• (CHK)/.18

• (DF)/-.26

• (LOW)/.79

• (ODP)/.08

• (RDC)/-1.09

• (TJX)/.68

• (UTHR)/2.55

• (WEX)/2.10

After the Close:

• (AMED)/.85

• (APA)/.27

• (CVNA)/-.49

• (ESV)/-.36

• (HPQ)/.52

• (LB)/2.07

• (MNST)/.41

• (NDLS)/.02

• (SQ)/.13

• (TDOC)/-.36

• (WING)/.17

Economic Releases
8:30 am EST

• The Advance Goods Trade Deficit for Dec. is estimated at -$74.1B.

• Retail Inventories MoM for Dec. are estimated to rise +.2%.

10:00 am EST

• Pending Home Sales MoM for January is estimated to rise +1.0% versus a -2.2% decline in Dec.

• Factory Orders for Dec. is estimated to rise +.6% versus a -.6% decline in Nov.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +2,633,250 barrels versus a +3,672,00 barrels the prior week. Gasoline supplies are estimated to fall by -1,381,750 barrels versus a -1,454,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,838,380 barrels versus a -1,517,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.7% versus unch. prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell testimony to House, President Trump's N. Korea summit, UK Brexit Vote, House China Trade Hearing, Eurozone Industrial Production report, weekly MBA Mortgage Applications report, BTIG Medical Tech/Life Science/Diagnostic Tools Conference, Leerink Healthcare Conference, BofA Merrill Ag/Chemicals Conference, (HAIN) investor day and the (RF) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by consumer and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

Stocks Reversing Higher into Final Hour on China Trade Deal Hopes, More Dovish FOMC Commentary, Earnings Outlooks, Tech/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.66 -1.28%

• Euro/Yen Carry Return Index 130.91 -.13%

• Emerging Markets Currency Volatility(VXY) 8.54 -.7%

• S&P 500 Implied Correlation 39.57 +.41%

• ISE Sentiment Index 78.0 -15.2%
  

• Total Put/Call .84 +7.69%

• NYSE Arms .82 -18.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.48 -.73%
  

• America Energy Sector High-Yield CDS Index 539.0 -.09%

• European Financial Sector CDS Index 75.65 -3.02%

• Italian/German 10Y Yld Spread 258.5 -8.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 70.50 +.36%
  

• Emerging Market CDS Index 164.75 -1.47%
  

• iBoxx Offshore RMB China Corporate High Yield Index 158.69 +.25%

• 2-Year Swap Spread 8.75 unch.

• TED Spread 20.75 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -7.5 -.25 basis point.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 68.44 +.10%
• 3-Month T-Bill Yield 2.43% -1.0 basis point

• Yield Curve 15.75 -.25 basis point

• China Iron Ore Spot 80.68 USD/Metric Tonne +.77%

• Citi US Economic Surprise Index -30.50 -7.1 points

• Citi Eurozone Economic Surprise Index -61.70 +.3 point

• Citi Emerging Markets Economic Surprise Index -8.90 -.6 point

• 10-Year TIPS Spread 1.92 -1.0 basis point
• 1.6% chance of Fed rate hike at May 1st meeting, 1.5% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +146 open in Japan 
• China A50 Futures: Indicating +86 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 100% Net Long