Stocks Reversing Higher into Final Hour on Diminshed Global Growth Fears, Fed Rate-Cut Hopes, Oil Gain, Medical/Gaming Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.1 -7.1%

• Euro/Yen Carry Return Index 122.46 -.07%

• Emerging Markets Currency Volatility(VXY) 8.26 -3.05%

• S&P 500 Implied Correlation 37.36 -5.2%

• ISE Sentiment Index 72.0 -15.3%
  

• Total Put/Call .89 +8.5%

• NYSE Arms 1.38 +112.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.99 -2.98%
  

• America Energy Sector High-Yield CDS Index 417.0 -1.56%

• European Financial Sector CDS Index 56.80 -2.83%

• Italian/German 10Y Yld Spread 151.5 -2.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 58.64 -1.61%
  

• Emerging Market CDS Index 197.82 -1.25%
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.21 +.04%

• 2-Year Swap Spread 3.75 +5.75 basis points

• TED Spread 15.25 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -13.5 +3.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.78 +.35%
• 3-Month T-Bill Yield 1.95% -1.0 basis point

• Yield Curve .04 +1.0 basis point

• China Iron Ore Spot 85.35 USD/Metric Tonne -1.41%

• Citi US Economic Surprise Index 5.4 -2.3 points

• Citi Eurozone Economic Surprise Index -36.90 -2.6 points

• Citi Emerging Markets Economic Surprise Index -14.8 -.2 point

• 10-Year TIPS Spread 1.55 unch.
• 100.0% chance of Fed rate cut at Oct. 30th meeting, 100.0% chance of cut at Dec. 11th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +41 open in Japan 
• China A50 Futures: Indicating +64 open in China

• DAX Futures: Indicating -6 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.1%

Sector Underperformers:

• 1) Gold & Silver -1.2% 2) Road & Rail -.8% 3) Education -.7%

Stocks Falling on Unusual Volume: 

• DOMO, TPTX, PD, BGNE, CRWD, MRC, SAIC, SY and KFY

Stocks With Unusual Put Option Activity:

• 1) AMLP 2) MOS 3) TLRD 4) DOCU 5) SPXL

Stocks With Most Negative News Mentions:

• 1) DOMO 2) MRC 3) MD 4) HURC 5) BYND

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.5%

Sector Outperformers:

• 1) Shipping +1.2% 2) Insurance +.9% 3) Airlines +.9%

Stocks Rising on Unusual Volume:

• WMS, CCC, DOCU, ZUMZ, LULU, GWRE, AUTL, ACHC, MDP, HOV, IRTC, LCI, GCO, HMC, TM, NX, ORTX, HDB, USLV, CRON, BRC, PANW, ATRC, MMSI, ELAN, ATRC, NAV, WMS, LE, REGI, ADVM and CCC

Stocks With Unusual Call Option Activity:

• 1) DOCU 2) AOBC 3) GEO 4) ADI 5) XME

Stocks With Most Positive News Mentions:

• 1) DOCU 2) LULU 3) GCO 4) BRC 5) K

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -9.4% Above 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 60.9% of Issues Advancing, 35.3% Declining
• 135 New 52-Week Highs, 20 New Lows
• 53.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.8%
• Vix 15.6 -4.2%
• Total Put/Call .89 +8.5%
• TRIN/Arms 1.27 +95.9%

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 58.75 -1.75 basis points.

• China Sovereign CDS 40.75 -3.0 basis points.

• Bloomberg Emerging Markets Currency Index  65.56 +.01%.
• FTSE 100 futures +.01%.

• S&P 500 futures +.30%.

• NASDAQ 100 futures +.30%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (GCO)/-.01

After the Close:

• None of note

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for Aug. is estimated at 160K versus 164K in July.
• The Unemployment Rate for Aug. is estimated at 3.7% versus 3.7% in July. 
• Average Hourly Earnings MoM for August is estimated to rise +.3% versus a +.3% gain in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell speaking, Eurozone GDP report and the Eurozone Industrial Production report could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Surging into Afternoon on China Trade Deal Hopes, Diminished Global Growth Fears, Less European/Emerging Markets/US High-Yield Debt Angst, Transport/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 15.99 -7.7%

• Euro/Yen Carry Return Index 122.58 +.53%

• Emerging Markets Currency Volatility(VXY) 8.5 -1.05%

• S&P 500 Implied Correlation 39.5 -6.5%

• ISE Sentiment Index 80.0 -10.1%
  

• Total Put/Call .81 -16.5%

• NYSE Arms .77 +35.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.28 -3.56%
  

• America Energy Sector High-Yield CDS Index 423.0 -2.56%

• European Financial Sector CDS Index 58.70 -3.64%

• Italian/German 10Y Yld Spread 153.75 +5.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 59.46 -4.78%
  

• Emerging Market CDS Index 200.04 -1.50%
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.14 -.05%

• 2-Year Swap Spread -2.0 -1.25 basis points

• TED Spread 16.50 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -16.5 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.61 +.11%
• 3-Month T-Bill Yield 1.96% +2.0 basis points

• Yield Curve .03 +2.0 basis points

• China Iron Ore Spot 87.33 USD/Metric Tonne +.41%

• Citi US Economic Surprise Index 7.7 +15.4 points

• Citi Eurozone Economic Surprise Index -34.30 -2.5 points

• Citi Emerging Markets Economic Surprise Index -14.6 -1.1 points

• 10-Year TIPS Spread 1.55+4.0 basis points
• 100.0% chance of Fed rate cut at Oct. 30th meeting, 100.0% chance of cut at Dec. 11th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +95 open in Japan 
• China A50 Futures: Indicating +100 open in China

• DAX Futures: Indicating -6 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +1.1%

Sector Underperformers:

• 1) Gold & Silver -4.5% 2) Utilities -1.2% 3) REITs -.8%

Stocks Falling on Unusual Volume: 

• MDP, GMS, NNN, VRNT, BGNE, USLV, CDAY, CIEN, ATRC, MTCH, CHD, MDB, SMAR, QURE, MMSI, APPN, INOV, SA, AG, ROKU, ZS, UPWK, IAC and BTU

Stocks With Unusual Put Option Activity:

• 1) CIEN 2) FXE 3) DOCU 4) RTN 5) SLV

Stocks With Most Negative News Mentions:

• 1) MNK 2) MDP 3) BTU 4) REVG 5) ABX

Charts:

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