Friday, July 25, 2014

Bull Radar

Style Outperformer:
  • Mid-Cap Value -.53%
Sector Outperformers:
  • 1) Gold & Silver +1.93% 2) Airlines +.48% 3) Steel -.07%
Stocks Rising on Unusual Volume:
  • LOGM, MLNX, RBS, QLIK, ACRX, DECK, BIDU, VRSN, GALT, LPNT, ACTG, AWAY, NR, UHS, THC, SWK, SWI, ALGN and UAL
Stocks With Unusual Call Option Activity:
  • 1) ACAS 2) PVA 3) DECK 4) RMD 5) XLU
Stocks With Most Positive News Mentions:
  • 1) XRX 2) T 3) UHS 4) Z 5) AAPL
Charts:

Friday Watch

Evening Headlines 
Bloomberg:
  • U.S. Says Russia Firing Artillery Into Ukraine. The U.S. said Russia is firing artillery across its border into Ukraine, the first time American officials have publicly alleged such direct participation in fighting on behalf of separatists. “Russia is firing artillery from within Russia to attack Ukrainian military positions,” State Department spokeswoman Marie Harf told reporters today in Washington, offering no evidence for what she described only as information “from our intelligence friends.” 
  • Obama Says Jet Downing Pushing EU Toward Russia Sanctions. President Barack Obama said he expects the shooting down of the Malaysian airliners to push European nations toward tougher sanctions against Russia. Obama said the “intertwined” economies of the European Union and Russia has been a concern for U.S. allies as they respond to Russian involvement in the turmoil in Ukraine. 
  • Asian Stocks Rise After S&P 500 Record; Won, Copper Slip. Asian stocks climbed, with the regional index at a six-year high and headed for its 10th advance in 11 weeks. The South Korean won weakened a second day versus the dollar, while copper pared its weekly gain. The MSCI Asia Pacific Index rose 0.1 percent by 9:59 a.m. in Tokyo, set for a weekly climb of 1.2 percent.
  • Coal Company Pain Accelerates as Bankruptcy Cases Rise. The coal business, after fueling the Industrial Revolution and powering U.S. growth for much of the past century, is now beset by a glut of cheap natural gas and tighter regulation. James River Coal Co. in many ways epitomizes these ills. After filing for bankruptcy almost four months ago with plans to sell its business, the Richmond, Virginia-based company has delayed an auction twice without announcing a buyer.
Wall Street Journal:
  • Islamist Militants Gain in Syria. Islamic State militants launched assaults on Syrian forces across three provinces on Thursday that killed key government figures, including two brigadier generals, said activists and residents, in a rare confrontation between the two sides during the war. In one assault, the jihadists besieged two military bases outside Hasakah city in Syria's east, killing a commanding brigadier general, according to the Syrian Observatory for Human... 
  • The ObamaCare-IRS Nexus. The supposedly independent agency harassed the administration's political opponents and saved its health-care law.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Telegraph:
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.50% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 101.0 -.75 basis point.
  • Asia Pacific Sovereign CDS Index 70.0 unch.
  • FTSE-100 futures -.21%.
  • S&P 500 futures -.07%.
  • NASDAQ 100 futures  -.24%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (AEP)/.75
  • (AON)/1.20
  • (AVY)/.79
  • (B)/.59
  • (COV)/1.00
  • (IDXX)/1.06
  • (LEA)/1.97
  • (LPNT)/.55
  • (LYB)/1.93
  • (MCO)/1.01
  • (SLAB)/.46
  • (TYC)/.54
Economic Releases
8:30 am EST
  • Durable Goods Orders for June are estimated to rise +.5% versus a -1.% decline in May.
  • Durables Ex Transports for June are estimated to rise +.5% versus a -.1% decline in May.
  • Cap Goods Orders Non-defense Ex Air for June is estimated to rise +.5% versus a +.7% gain in May.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The German IFO, UK gdp and the (SCHW) business update could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Thursday, July 24, 2014

Stocks Slightly Lower into Final Hour on Global Growth Worries, Russia-Ukraine Tensions, Technical Selling, Homebuilding/Oil Service Sector Weakness

Broad Equity Market Tone:
  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Slightly Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 11.82 +2.60%
  • Euro/Yen Carry Return Index 143.11 +.31%
  • Emerging Markets Currency Volatility(VXY) 5.81 +.17%
  • S&P 500 Implied Correlation 55.12 +3.14%
  • ISE Sentiment Index 93.0 -39.22%
  • Total Put/Call .90 +20.0%
  • NYSE Arms .68 -47.36% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 58.69 +.47%
  • European Financial Sector CDS Index 66.30 -.42%
  • Western Europe Sovereign Debt CDS Index 34.86 -.56%
  • Asia Pacific Sovereign Debt CDS Index 69.84 -.39%
  • Emerging Market CDS Index 239.69 +.25%
  • China Blended Corporate Spread Index 303.44 -.12%
  • 2-Year Swap Spread 20.25 +.75 basis point
  • TED Spread 21.5 unch.
  • 3-Month EUR/USD Cross-Currency Basis Swap -6.5 +.75 basis point
Economic Gauges:
  • 3-Month T-Bill Yield .02% unch.
  • Yield Curve 202.0 +3.0 basis points
  • China Import Iron Ore Spot $93.60/Metric Tonne -.74%
  • Citi US Economic Surprise Index -26.0 -2.7 points
  • Citi Emerging Markets Economic Surprise Index -.7 +2.3 points
  • 10-Year TIPS Spread 2.24 +3.0 basis points
Overseas Futures:
  • Nikkei Futures: Indicating +80 open in Japan
  • DAX Futures: Indicating -12 open in Germany
Portfolio: 
  • Higher: On gains in my retail/tech sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg: 
  • Yatsenyuk Resigns as Ukraine’s Premier After Coalition Dissolves. Ukrainian Prime Minister Arseniy Yatsenyuk resigned after two parties quit the ruling coalition and President Petro Poroshenko signaled his support for early elections. Yatsenyuk told the parliament in Kiev today that he’s stepping down after losing his allies’ backing and failing to pass legislation. Former world boxing champion Vitali Klitschko’s UDAR and Svoboda, a nationalist group, said they’d leave the coalition and seek a snap parliamentary ballot, according to statements today on their websites. 
  • EU May Target Putin’s Spy Chiefs as U.S. Calls for MH17 Response. The European Union is preparing to sanction Russia’s most senior spies and security officials, some of whom served alongside President Vladimir Putin in the Cold War, as it seeks to step up its response to the conflict in Ukraine, according to a draft document obtained by Bloomberg. Alexander Bortnikov, director of the Federal Security Service which replaced the Soviet-era KGB, and Mikhail Fradkov, the head of the Foreign Intelligence Service, are on the provisional list of sanctioned Russian officials, along with the head of the Security Council, Nikolai Patrushev, and Kremlin-backed Chechen leader Ramzan Kadyrov.
  • Air Algerie-Operated Plane Disappears en Route to Algiers. An Air Algerie MD-83 carrying 116 people crashed in the desolate Sahel region of north Africa as it approached Algier en route from Burkina Faso, marking the third major civil-aviation disaster in the space of a week. Flight AH5017, which took off in the west African country shortly after midnight carrying 110 passengers and six Spanish crew, was scheduled to land at 5:10 a.m. local time, according to Swiftair, a charter company based in Spain. The jet crashed about three hours earlier, 80 kilometers (50 miles) from the town of Gossi, Mali, according to Burkinabe authorities. 
  • European Stocks Rise on Euro-Area Manufacturing, Services. European stocks rose for a third day as manufacturing gains in China and the euro area boosted investors’ confidence that the economic recovery is on track. Nokia Oyj jumped to a three-year high after it posted second-quarter earnings that topped estimates. Danske Bank A/S rallied the most since August after raising its annual earnings projection. BASF SE fell 1.5 percent as earnings trailed analysts’ predictions. EasyJet Plc dropped 5 percent after saying fares out of London are under pressure. The Stoxx Europe 600 Index climbed 0.4 percent to 344.33 at the close of trading.
  • Iron Ore Drops to One-Month Low as Goldman Keeps Bearish View. Iron ore extended losses to the lowest level in a month after Goldman Sachs Group Inc. said increasing production from Australia and Brazil will deepen a global glut every year through 2018. Ore with 62 percent iron content at the Chinese port of Tianjin fell 0.7 percent to $93.60 a dry ton today, the lowest since June 24, according to data from The Steel Index Ltd. The raw material will average $80 in 2015 from $107 this year, Goldman said in a report, reiterating previous forecasts. Prices tumbled 30 percent in 2014 as companies from Rio Tinto Group to BHP Billiton Ltd. (BHP) increased output.
  • Wall Street Junk Euphoria Backs Ackman’s Allergan Dreams. While hedge-fund manager Bill Ackman has repeatedly failed to persuade Allergan Inc. (AGN) to sell itself, that hasn’t stopped Wall Street bankers from lining up to fund a potential deal with more than $20 billion of junk debt. Banks including Barclays Plc and Royal Bank of Canada raised loan commitments to $8 billion from $7 billion and pledged to arrange $12.4 billion of high-yield bonds to finance Valeant Pharmaceuticals International Inc. (VRX)’s unsolicited $54 billion bid, a filing showed yesterday. The bank debt includes a $5 billion term loan, which would be the biggest of its kind backing a takeover this year, data compiled by Bloomberg show. The commitments reflect how unprecedented demand for high-yield, high-risk debt has made it easy for a junk-rated borrower such as Valeant (VRX) to finance an acquisition that exceeds the combined value of all other takeovers it’s ever attempted.
  • Shorting Junk Loans Just Got Easier as New Derivatives Unveiled. Wall Street has turned to financial engineering to solve one of junk-debt investors’ biggest problems: They can’t make wagers quickly enough in these illiquid markets where trades are completed over the phone. Banks are again resorting to derivatives to make it easier to place bullish and bearish bets amid a credit boom, allowing traders to amplify their profits or losses on debt rated below investment grade. In the latest innovation in this push, the biggest lenders are creating total-return swaps that seek to mimic the risk and reward tied to high-yield loans. JPMorgan Chase & Co. created a total-return swap based on Markit Group Ltd.’s iBoxx USD Liquid Leveraged Loan Index in March, the first of its kind, according to Markit. Translation: There are a lot of investors out there who are considering going short.
MarketWatch.com: 
CNBC: 
ZeroHedge: 
Business Insider:

Bear Radar

Style Underperformer:
  • Small-Cap Value -.52%
Sector Underperformers:
  • 1) Homebuilders -4.30% 2) Gold & Silver -1.85% 3) Oil Service -1.71%
Stocks Falling on Unusual Volume:
  • GOV, KODK, MTRN, DNKN, TRIP, ICE, PBYI, TSC, QCOM, PCP, PNK, BBEP, SILC, EDU, TEX, DHI, IVC, NBL, CLB, TAL, IQNT, CLFD, KNDI, UFS, LTM, TER, OII, CAT, GM, ACRX, CLGX, HOT, DO, ALXN, RS, THRX, USG, TAL, VAR, CUDA, TWI, PCP, TRIP, DHI, LTM and LMCA
Stocks With Unusual Put Option Activity:
  • 1) MMM 2) IP 3) JNPR 4) DHI 5) QCOM
Stocks With Most Negative News Mentions:
  • 1) GM 2) T 3) RCII 4) SNDK 5) TOL
Charts: