Stocks Slightly Lower into Final Hour on China Trade Deal Concerns, Earnings Outlooks, Technical Selling, Homebuilding/Commodity Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.86 +1.09%

• Euro/Yen Carry Return Index 131.73 +.45%

• Emerging Markets Currency Volatility(VXY) 8.28 -1.19%

• S&P 500 Implied Correlation 40.34 +.17%

• ISE Sentiment Index 105.0 +6.06%
  

• Total Put/Call .91 unch.

• NYSE Arms 1.23 +53.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.16 +.37%
  

• America Energy Sector High-Yield CDS Index 505.0 -.75%

• European Financial Sector CDS Index 73.89 +.29%

• Italian/German 10Y Yld Spread 257.0 -6.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 70.07 -.67%
  

• Emerging Market CDS Index 163.56 +.67%
  

• iBoxx Offshore RMB China Corporate High Yield Index 158.57 +.03%

• 2-Year Swap Spread 9.5 +1.0 basis point

• TED Spread 19.75 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.75 -2.26 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 68.22 -.27%
• 3-Month T-Bill Yield 2.43% -1.0 basis point

• Yield Curve 20.25 +1.25 basis points

• China Iron Ore Spot 81.83 USD/Metric Tonne +.53%

• Citi US Economic Surprise Index -29.80 +3.8 points

• Citi Eurozone Economic Surprise Index -58.80 +.7 point

• Citi Emerging Markets Economic Surprise Index -14.1 -3.4 points

• 10-Year TIPS Spread 1.94 unch.
• 1.7% chance of Fed rate hike at May 1st meeting, 1.6% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +100 open in Japan 
• China A50 Futures: Indicating +17 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bull Radar

Style Outperformer:

• Small-Cap Growth +.1%

Sector Outperformers:

• 1) Education +.9% 2) Telecom +.8% 3) Drugs +.8%

Stocks Rising on Unusual Volume:

• HZNP, WIFI, WTW, WBC, GTN, ALDR, JD, COLL, CVNA, TWNK, SVMK, ICPT, CRC, AMCX, HAIN, MNST, GKOS, FOE, BID, TNDM, TPC, DY, NSTG, LUV, SQ and KHC

Stocks With Unusual Call Option Activity:

• 1) YINN 2) LUV 3) CELG 4) VMC 5) HPQ

Stocks With Most Positive News Mentions:

• 1) MNST 2) JCP 3) JD 4) NOMD 5) TRS

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +2.4% Above 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 46.2% of Issues Advancing, 50.9% Declining
• 102 New 52-Week Highs, 15 New Lows
• 50.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 55.7%
• Vix 14.6 -1.0%
• Total Put/Call .87 -4.4%
• TRIN/Arms 1.18 +47.5%

Thursday Watch

Night Trading 

• Asian equity indices are -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 69.75 -.5 basis point. 

• China Sovereign CDS 49.75 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 68.38 -.06%.

• FTSE 100 futures -.74%.

• S&P 500 futures -.13%.

• NASDAQ 100 futures -.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (ABB)/.33
• (BUD)/.96
• (CARS)/.57
• (FSS)/.31
• (FRO)/.18
• (ICPT)/-2.49
• (JCP)/.18
• (PRTY)/1.09
• (PDCO)/.38
• (BID)/1.48
• (JD)/-.27

After the Close:

• (DDD)/.07
• (ALRM)/.24
• (ADSK)/.42
• (DELL)/1.85
• (GPS)/.69
• (MAR)/1.40
• (JWN)/1.42
• (NTNX)/-.25
• (SPLK)/.76
• (SRCL)/.95
• (VMW)/1.88
• (WDAY)/.32
• (ZS)/-.01

Economic Releases
8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 220K versus 216K the prior week.
• Continuing Claims are estimated to rise to 1737K versus 1725K prior 
• Advance 4Q GDP QoQ is estimated to rise +2.2% versus a +3.4% gain in 3Q.
• Advance 4Q Personal Consumption is estimated to rise +3.0% versus a +3.5% gain in 3Q.
• Advance 4Q GDP Price Index is estimated to rise +1.7% versus a +1.8% gain in 3Q.
• Advance 4Q Core PCE QoQ is estimated to rise +1.6% versus a +1.6% gain in 3Q.

9:45 am EST

• Chicago Purchasing Manager for February is estimated to rise to 57.5 versus 56.7 in January.

11:00 am EST

• The Kansas City Fed Manufacturing Index for Feb. is estimated to rise to 6.0 versus 5.0 in January.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI report, China Manufacturing PMI report, Japan Unemployment Rate/CPI reports, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Keefe Bruyette Woods Cards/Payments/Financial Tech symposium,  (CR) investor day, (WAT) investor day and the (PGR) 4Q Investor Event 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 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