Stocks Reversing Lower into Afternoon on Coronavirus 2nd Wave Worries, Global Recession Fears, Technical Selling, Biotech/Transport Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 26.2 +5.7%

• Euro/Yen Carry Return Index 129.42 +.63%

• Emerging Markets Currency Volatility(VXY) 10.3 +1.6%

• S&P 500 Implied Correlation 64.9 +9.5%

• ISE Sentiment Index 69 .0 -77.0 points

• Total Put/Call .80 +5.3%

• NYSE Arms 1.21 -28.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.77 +1.34%
  

• US Energy High-Yield OAS 851.59 -1.3%

• European Financial Sector CDS Index 73.25 +.18%

• Italian/German 10Y Yld Spread 150.75 +.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  73.07 -1.35%
  

• Emerging Market CDS Index 191.25 -.16%
  

• iBoxx Offshore RMB China Corporate High Yield Index 176.91 +.04%

• 2-Year Swap Spread 7.25 +.5 basis point

• TED Spread 17.5 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -4.25 -.75 basis point
• MBS  5/10 Treasury Spread  87.25 -3.5 basis points
• IHS Markit CMBX BBB- 6 67.25 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.13 -.38%
• 3-Month T-Bill Yield .09% unch.

• Yield Curve 41.0 -3.25 basis points

• China Iron Ore Spot 105.90 USD/Metric Tonne -.04%

• Citi US Economic Surprise Index 246.8 -.3 point

• Citi Eurozone Economic Surprise Index 166.30 +37.5 points

• Citi Emerging Markets Economic Surprise Index -13.1 +5.0 points

• 10-Year TIPS Spread 1.55 +3.0 basis points
• 100.0% chance of no change at Nov. 5th meeting, 100.0% chance of no change at Dec. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +98 open in Japan 
• China A50 Futures: Indicating -211 open in China

• DAX Futures: Indicating -91 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -2.5%

Sector Underperformers:

• 1) Gaming -5.2% 2) Oil Service -3.8% 3) Airlines -3.3%

Stocks Falling on Unusual Volume: 

• BZH, CPT, CROX, HCAC, BAND, LRN, DSPG, CAT, ONEM, POWI, GOOG, EXAS, SYK, DVA, CRS, GILD, HTH, CVX, SGEN, LTC, XLNX, SDGR, BTAI, KRA, EXPE, AIMT, MITK, FORM, NWL, FIZZ, FLS, CHEF, ZEN, UAA, BEAT, NATI, NTUS, SHAK, SKYW, WRTC, XPO, SPAQ, PRO, HRC, BLNK and KODK
  

Stocks With Unusual Put Option Activity:

• 1) PTEN 2) EWH 3) F 4) EFA 5) GILD
  

Stocks With Most Negative News Mentions:

• 1) RFP 2) PRO 3) CVX 4) FCAU  5) PBI
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.3%

Sector Outperformers:

• 1) Gold & Silver +2.4% 2) Internet +.6% 3) Computer Hardware +.2%

Stocks Rising on Unusual Volume:

• PINS, NXGN, EBS, SEM, DLX, BRKS, FB, ATUS, SC, BNFT, AAPL, TWOU, TENB, VCYT, BERY and CHD
  

Stocks With Unusual Call Option Activity:

• 1) EXPE 2) COOP 3) EGHT 4) KODK 5) MARK

Stocks With Most Positive News Mentions:

• 1) PINS 2) JCI 3) AAPL 4) PEG 5) CHTR

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -11.7% Below 100-Day Average
• 1 Sector Rising, 10 Sectors Declining
• 27.9% of Issues Advancing, 69.1% Declining
• 58 New 52-Week Highs, 7 New Lows
• 38.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.6%
• Vix 25.3 +2.3%
• Total Put/Call .72 -5.3%
• TRIN/Arms 1.33 -21.3%

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 73.5 -.25 basis point.

• China Sovereign CDS 43.75 unch.

• Bloomberg Emerging Markets Currency Index 61.42 +.10%.
• FTSE 100 futures +.82%.

• S&P 500 futures +.56%.

• NASDAQ 100 futures +1.26%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ABBV)/2.20
• (AXL)/-2.03
• (BAH)/.86
• (CAT)/.72
• (CBOE)/1.24
• (CBRE)/.41
• (CHTR)/2.66
• (CVX)/-.89
• (CHD)/.62
• (CL)/.69
• (XOM)/-.60
• (FCAU)/-.87
• (GT)/-2.03
• (IDXX)/1.17
• (ITW)/.71
• (ITT)/.37
• (JCI)/.48
• (LYB)/.69
• (MRK)/1.05
• (NWL)/.18
• (PSX)/-.84
• (SNA)/1.83
• (UAA)/-.40
• (VFC)/-.68
• (WY)/.01
  

After the Close:

• (BCC)/.46

Economic Releases

8:30 am EST

• Personal Income for June is estimated to fall -.6% versus a -4.2% decline in May.
• Personal Spending for June is estimated to rise +5.2% versus a +8.2% gain in May.
• The PCE Core Deflator MoM for June is estimated to rise +.2% versus a +.1% gain in May.
• The Employment Cost Index for 2Q is estimated to rise +.6% versus a +.8% gain in 1Q.
  

9:45 am EST

• The MNI Chicago PMI for July is estimated to rise to 44.5 versus 36.6 in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Spain GDP report  could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer 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 day.

Stocks Mostly Lower into Afternoon on Global Recession Fears, Earnings Outlooks, Oil Decline, Energy/Financial 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) 25.4 +5.5%

• Euro/Yen Carry Return Index 128.61 +.28%

• Emerging Markets Currency Volatility(VXY) 10.2 +2.4%

• S&P 500 Implied Correlation 60.0 +3.7%

• ISE Sentiment Index 146 .0 +36.0 points

• Total Put/Call .76 +4.1%

• NYSE Arms 1.31 +4.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.62 +1.04%
  

• US Energy High-Yield OAS 854.83 +.16%

• European Financial Sector CDS Index 73.12 +5.3%

• Italian/German 10Y Yld Spread 150.0 -.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  73.87 -1.03%
  

• Emerging Market CDS Index 192.73 +2.1%
  

• iBoxx Offshore RMB China Corporate High Yield Index 176.84 +.05%

• 2-Year Swap Spread 6.75 -1.0 basis point

• TED Spread 17.75 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -3.5 +1.75 basis points
• MBS  5/10 Treasury Spread  90.75 -1.25 basis points
• IHS Markit CMBX BBB- 6 67.0 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.32 -.23%
• 3-Month T-Bill Yield .09% -1.0 basis point

• Yield Curve 44.25 +.5 basis point

• China Iron Ore Spot 103.49 USD/Metric Tonne -1.19%

• Citi US Economic Surprise Index 247.1 +17.1 points

• Citi Eurozone Economic Surprise Index 128.80 -19.5 points

• Citi Emerging Markets Economic Surprise Index -18.1 +1.5 points

• 10-Year TIPS Spread 1.52 -1.0 basis point
• 100.0% chance of no change at Sept. 16 meeting, 100.0% chance of no change at Nov. 5th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -134 open in Japan 
• China A50 Futures: Indicating -122 open in China

• DAX Futures: Indicating +37 open in Germany

Portfolio:

• Higher: On gains in my tech/biotech sector longs and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.2%

Sector Underperformers:

• 1) Energy -4.1% 2) Banks -2.7% 3) Road & Rail -2.5%

Stocks Falling on Unusual Volume: 

• CERN, CFFA, NOW, SMG, SNDR, URI, CAR, BKR, NBL, RJF, MMP, INSG, YUM, BC, AGYS, WAFD, KHC, ITGR, MNRO, FEYE, DNKN, CXO, XOM, EPD, TUP, NGVT, MTZ, SIGI, LB, LLY, BAX, PPC, COP, PLCE, VLO, PRDO, RVMD, WNC, BHE, AOS, SIX, TENB, DAN, SRI, STBA, SBH, PI, TSE and KRA
  

Stocks With Unusual Put Option Activity:

• 1) JWN 2) EWW 3) KODK 4) FITB 5) OSTK
  

Stocks With Most Negative News Mentions:

• 1) QEP 2) COP 3) STBA 4) BYND  5) CHRW
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.1%

Sector Outperformers:

• 1) Gaming +1.4% 2) Semis +1.4% 3) Biotech +.5%

Stocks Rising on Unusual Volume:

• OSTK, HOME, UCTT, APA, MTSI, BLKB, UPS, SANM, QCOM, AVTR, KODK, COOP, GNRC, QRVO, FCN, INOV, HOLX, FRG, PS, ELAN, ORLY and PYPL
  

Stocks With Unusual Call Option Activity:

• 1) QCOM 2) KODK 3) SH 4) PRPL 5) QRVO

Stocks With Most Positive News Mentions:

• 1) UPS 2) QCOM 3) HOLX 4) TDOC 5) APA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -16.2% Below 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 23.1% of Issues Advancing, 74.3% Declining
• 39 New 52-Week Highs, 9 New Lows
• 39.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 54.2%
• Vix 26.7 +11.0%
• Total Put/Call .72 -1.4%
• TRIN/Arms 1.14 -8.8%

Thursday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 73.75 -1.25 basis points.

• China Sovereign CDS 43.75 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 61.33 -.07%.
• FTSE 100 futures +.08%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AGCO)/.08
• (ALXN)/2.58
• (AMT)/1.94
• (BUD)/.36
• (APTV)/-1.36
• (MT)/-.11
• (AZN)/.92
• (BAX)/.71
• (BC)/.44
• (CG)/.36
• (CI)/5.16
• (CLF)/-.51
• (CMCSA)/.55
• (COP)/-.58
• (DBD)/-.19
• (DNKN)/.49
• (DD)/.58
• (ELAN)/.07
• (LLY)/1.60
• (FLR)/.25
• (FCN)/1.04
• (GNRC)/.88
• (GPC)/.92
• (ICE)/1.04
• (IGT)/-.61
• (IP)/.39
• (K)/.94
• (KHC)/.65
• (MA)/1.18
• (TAP)/.64
• (NEM)/.31
• (NOC)/5.28
• (ODFL)/1.07
• (PBI)/-.01
• (PG)/1.01
• (RCL)/-4.55
• (SWK)/1.28
• (UPS)/1.08
• (VLO)/-1.40
• (YUM)/.54

After the Close:

• (GOOG)/8.25
• (AMZN)/1.62
• (AAPL)/2.07
• (DECK)/-1.13
• (EA)/.79
• (FB)/1.38
• (F)/-1.17
• (GILD)/1.46
• (MGM)/-1.71
• (SHAK)/-.38
• (SPG)/2.23
• (SKYW)/-.21
• (SYK)/.57
• (X)/-2.79
• (XLNX)/.64
• (ZEN)/.10

Economic Releases

8:30 am EST

• Advance 2Q GDP is estimated to fall -34.5% versus a -5.0% decline in 1Q.
• Advance 2Q Personal Consumption is estimated to fall -34.5% versus a -6.8% decline in 1Q.
• Advance 2Q GDP Price Index is estimated unch. versus a +1.4% gain in 1Q.
• Advance 2Q Core PCE QoQ is estimated to fall -.9% versus a +1.7% gain in 1Q.
• Initial Jobless Claims for last week are estimated to rise to 1430K versus 1416K the prior week.
• Continuing Claims are estimated to rise to 16250K versus 16197K prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German GDP report, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.

Market Hours

Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and technology 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.

Stocks Rising into Final Hour on Global Stimulus Hopes, Earnings Outlooks, Short-Covering, Retail/Healthcare Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 24.2 -4.7%

• Euro/Yen Carry Return Index 128.14 +.42%

• Emerging Markets Currency Volatility(VXY) 10.02 +.2%

• S&P 500 Implied Correlation 58.6 -5.0%

• ISE Sentiment Index 110 .0 -15.0 points

• Total Put/Call .70 -14.6%

• NYSE Arms 1.22 +28.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.22 -1.87%
  

• US Energy High-Yield OAS 855.93 -.71%

• European Financial Sector CDS Index 69.43 -1.2%

• Italian/German 10Y Yld Spread 150.75 +4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  74.53 -.09%
  

• Emerging Market CDS Index 189.28 -.85%
  

• iBoxx Offshore RMB China Corporate High Yield Index 176.75 +.01%

• 2-Year Swap Spread 7.75 +.25 basis point

• TED Spread 17.0 +2.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -5.25 +.5 basis point
• MBS  5/10 Treasury Spread  92.0 -4.25 basis points
• IHS Markit CMBX BBB- 6 66.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.40 +.09%
• 3-Month T-Bill Yield .10% unch.

• Yield Curve 43.75 -4.0 basis points

• China Iron Ore Spot 107.12 USD/Metric Tonne +1.52%

• Citi US Economic Surprise Index 230.0 -6.2 points

• Citi Eurozone Economic Surprise Index 148.30 +.7 point

• Citi Emerging Markets Economic Surprise Index -19.6 -.7 point

• 10-Year TIPS Spread 1.53 +2.0 basis points
• 100.0% chance of no change at Sept. 16 meeting, 100.0% chance of no change at Nov. 5th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +108 open in Japan 
• China A50 Futures: Indicating -18 open in China

• DAX Futures: Indicating +9 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long