Stocks Higher into Final Hour on Less European Debt Angst, Oil Gain, Short-Covering, Energy/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) 15.3 -6.1%

• Euro/Yen Carry Return Index 129.51 +.18%

• Emerging Markets Currency Volatility(VXY) 8.61 +1.18%

• S&P 500 Implied Correlation 40.57 +.35%

• ISE Sentiment Index 109.0 +87.9%
  

• Total Put/Call .93 +8.14%

• NYSE Arms .71 -31.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.23 -.64%
  

• America Energy Sector High-Yield CDS Index 529.0 +1.52%

• European Financial Sector CDS Index 85.33 -4.45%

• Italian/German 10Y Yld Spread 248.25 -4.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 71.55 -1.12%
  

• Emerging Market CDS Index 176.45 -.19%
  

• iBoxx Offshore RMB China Corporate High Yield Index 160.73 +.06%

• 2-Year Swap Spread 8.75 +2.0 basis points

• TED Spread 16.75 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -15.25 -2.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.71 +.08%
• 3-Month T-Bill Yield 2.44% -1.0 basis point

• Yield Curve 15.75 -.5 basis point

• China Iron Ore Spot 82.22 USD/Metric Tonne +.13%

• Citi US Economic Surprise Index -40.30 -6.4 points

• Citi Eurozone Economic Surprise Index -53.80 +.1 point

• Citi Emerging Markets Economic Surprise Index -18.80 +.2 point

• 10-Year TIPS Spread 1.86 -2.0 basis points
• 22.6% chance of Fed rate cut at June 19th meeting, 30.8% chance of cut at July 31st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -168 open in Japan 
• China A50 Futures: Indicating +74 open in China

• DAX Futures: Indicating +15 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.5%

Sector Underperformers:

• 1) Healthcare Providers -1.9% 2) Homebuilders -.8% 3) Alt Energy -.6%

Stocks Falling on Unusual Volume: 

• NEOG, CRTO, BECN, CCL, JKS, ABMD, AXSM, IQ, QTT, TDOC and MOH

Stocks With Unusual Put Option Activity:

• 1) GPOR 2) AET 3) BHF 4) CCL 5) WAB

Stocks With Most Negative News Mentions:

• 1) CMCM 2) BECN 3) CRTO 4) THO 5) UAL

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.1%

Sector Outperformers:

• 1) Oil Service +1.9% 2) Biotech +1.7% 3) Energy +1.6%

Stocks Rising on Unusual Volume:

• ALDX, TIGR, BBBY, NOBL, EFAV, YMAB, SYNA, TCDA, VIAB, INDB, ZS, BIIB, EVOP, NVS, FTCH, APPF, SAP, KRYS, DSW, XBIT, SVMK, WCN, FTC, MGTA, PCMI and EQH

Stocks With Unusual Call Option Activity:

• 1) ALDX 2) BBBY 3) LQD 4) XLP 5) CCL

Stocks With Most Positive News Mentions:

• 1) ALDX 2) MBRX 3) CASH 4) NVDA 5) FDS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -7.6% Below 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 75.3% of Issues Advancing, 21.3% Declining
• 79 New 52-Week Highs, 12 New Lows
• 44.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.6%
• Vix 15.2 -7.2%
• Total Put/Call .95 +10.5%
• TRIN/Arms 1.17 +13.6%

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 72.75 +.75 basis point. 

• China Sovereign CDS 47.75 -.75 basis point.
  

• Bloomberg Emerging Markets Currency Index 67.69 +.05%.

• FTSE 100 futures -.32%.

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (CCL)/.44
• (FDS)/2.34
• (MKC)/1.04

After the Close:

• (KBH)/.25
• (OLLI)/.70
• (SCVL)/.06
  

Economic Releases
8:30 am EST

• Housing Starts for Feb. are estimated to fall to 1210K versus 1230K in Jan.
• Building Permits for Feb. are estimated to fall to 1305K versus 1345K in Jan.
  

9:00 am EST

• The FHFA House Price Index MoM for Jan. is estimated to rise +.4% versus a +.3% gain in Dec.

Upcoming Splits

• None of note

Other Potential Market Movers

• The $40B 2Y T-Note auction, France GDP report, weekly US retail sales reports and the Scotiabank TMT conference could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by commodity and industrial 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 Slightly Lower into Final Hour on Global Growth Concerns, China Trade Deal Worries, Profit-Taking, Tech/Healthcare Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 16.95 +2.85%

• Euro/Yen Carry Return Index 129.40 +.25%

• Emerging Markets Currency Volatility(VXY) 8.55 +1.91%

• S&P 500 Implied Correlation 41.33 +2.66%

• ISE Sentiment Index 54.0 -8.47%
  

• Total Put/Call .88 -1.12%

• NYSE Arms 1.12 -30.86%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.92 +2.35%
  

• America Energy Sector High-Yield CDS Index 522.0 +.48%

• European Financial Sector CDS Index 89.30 +1.29%

• Italian/German 10Y Yld Spread 253.0 +6.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 72.45 +.56%
  

• Emerging Market CDS Index 177.58 -.86%
  

• iBoxx Offshore RMB China Corporate High Yield Index 160.63 +.19%

• 2-Year Swap Spread 6.75 -2.0 basis points

• TED Spread 17.0 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -12.50 -.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.63 +.60%
• 3-Month T-Bill Yield 2.44% -1.0 basis point

• Yield Curve 16.25 +3.25 basis points

• China Iron Ore Spot 84.45 USD/Metric Tonne +.90%

• Citi US Economic Surprise Index -33.90 -.1 point

• Citi Eurozone Economic Surprise Index -53.90 +6.1 points

• Citi Emerging Markets Economic Surprise Index -19.0 +1.9 points

• 10-Year TIPS Spread 1.88 -3.0 basis points
• 30.8% chance of Fed rate cut at June 19th meeting, 37.4% chance of cut at July 31st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -42 open in Japan 
• China A50 Futures: Indicating +45 open in China

• DAX Futures: Indicating +12 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long