Bull Radar

Style Outperformer:

• Large-Cap Value -.04%

Sector Outperformers:

• 1) Banks +.84% 2) Utilities +.16% 3) HMOs +.15%
  

Stocks Rising on Unusual Volume:

• ROC, LJPC and JPM

Stocks With Unusual Call Option Activity:

• 1) UUP 2) STJ 3) KERX 4) JNJ 5) MA

Stocks With Most Positive News Mentions:

• 1) CMA 2) ROC 3) JPM 4) GPRO 5) MJN
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg:

• Russia Continues Trying to Destabilize Ukraine, U.S. Says. Russia’s “policy of destabilization” in eastern Ukraine includes providing more heavy weapons to pro-Russia rebels and deploying additional Russian forces near the border with Ukraine, according to the U.S. State Department. The statement issued today, which amounts to an indictment of the actions of Russian President Vladimir Putin, comes as the U.S. and European Union nations are weighing whether to impose substantial new economic sanctions on Russia. The U.S. said Russia is acting in ways that undermine the peace efforts by new Ukrainian President Petro Poroshenko, whose plan includes a promise of amnesty for separatists who lay down their arms voluntarily and are not guilty of capital crimes, decentralization of powers within Ukraine, and protection of the Russian language.

• Ukraine Sees Russia Hand in Downed Plane as Talks Begin. Ukraine’s government said Russian forces may have shot down one of its airplanes to bolster the Kremlin-backed insurgency amid a European push for peace talks that Germany expects to inch forward today. An An-26 transport plane was shot down in eastern Ukraine yesterday by a “powerful weapon” not previously used by the separatists, probably from inside Russia, Defense Minister Valeriy Geletey told President Petro Poroshenko, according to the president’s website. The plane was hit at 6,500 meters, an altitude shoulder-fired missiles can’t reach, he said.

• Israel to Weigh Egypt Plan for Cease-Fire in Gaza. Israeli leaders are set to discuss an Egyptian proposal for a cease-fire to end the week-long conflict in Gaza, as U.S. Secretary of State John Kerry heads for Cairo amid growing international peace efforts. Israel’s security cabinet will consider the plan at a meeting early today, a senior official said, speaking on condition of anonymity to discuss the matter. Prime Minister Benjamin Netanyahu is in favor of accepting, Israeli newspaper Haaretz reported, citing unidentified officials. Hamas hasn’t received any proposals, spokesman Sami Abu Zuhri said, according to Al-Mayadeen television. 

• Sydney Set for Biggest Hotel Boom Since Olympics in 2000. Fourteen years after the last major hotel opened in Sydney’s center, 42 developers are competing to turn two 100-year-old government office buildings into accommodations as demand soars. Elsewhere in the city, developers including China’s Greenland Holding Group Co. and Singapore-based M&L Hospitality Trusts plan to add more than 5,300 rooms over the next five years. If they are completed, the city’s supply of rooms will rise by about 20 percent by the end of the decade, the most since Australia’s largest city hosted the Olympics in 2000, according to broker CBRE Group Inc.’s hotels division.

• Asian Stocks Climb Before BOJ as Brent Declines With Corn. Asian stocks rose, with the regional index headed for a one-week high before the Bank of Japan reports on monetary policy and the head of the Federal Reserve addresses U.S. lawmakers. Corn futures and Brent crude oil resumed declines as South Korea’s won weakened. The MSCI Asia Pacific Index gained 0.6 percent by 10:42 a.m. in Tokyo, as Japan’s Topix Index rose a second day, climbing 0.9 percent.

• Microsoft(MSFT) Said to Announce Job Cuts as Soon as This Week. Microsoft Corp. (MSFT) is planning its biggest round of job cuts in five years, as the software maker looks to slim down and integrate Nokia Oyj’s handset unit, people with knowledge of the company’s plans said.

Wall Street Journal:

• Syria's Allies Are Stretched by Widening War. Lebanon's Hezbollah and Other Shiite Fighters Are Drawn Away by Sunni Rebellion in Iraq, Palestinians' Clash With Israel.

Fox News:

• Forty illegal immigrants returned to Honduras amid massive influx. Some 40 illegal immigrants, including both adults and children, were returned to Honduras from a U.S. detention facility in New Mexico on Monday, Homeland Security officials confirmed to FoxNews.com.

Zero Hedge:

• Global PMIs: France Worst, UK First. (graph)

• Feeling Poorer Through The Power Of Inflation. (graph)

• Phoenix Housing Market Hit By Unprecedented Plunge In Demand.

• David Stockman Sees "Signs Of The Bubble's Last Days". (graph)

• Bubbles Everywhere: Krugman Wrong Again; Austrians And The BIS Are Correct.

• Full-Time Pain: Mort Zuckerman Says Most Americans "Wouldn't Call This A Recovery".

• Michael Pettis Warns China Bulls: "Bad Debt Cannot Simply Be 'Socialized'".

• Japanese GDP "Guesses" Are Collapsing; Here's The 3rd Arrow That Will 'Save' It. (graph)

• "Boring", "Absolutely Dead" Market Leaves World's Largest Trading Floor "Virtually Empty".

Business Insider:

• The Most Extreme Faction Of Al Qaeda Is Winning, And It’s Leading To The Destruction Of Iraq.

Reuters:

• Valero(VLO) sees second-quarter profit below expectations. U.S. refining company Valero Energy Corp on Monday said second-quarter income will be higher than a year ago but profit will fall short of Wall Street estimates on seasonal weakness in its biggest Gulf Coast market. 

• Putin seeks BRICS moves to protect against US "sanction attacks". Russia will press other BRICS emerging market nations to agree measures to prevent "sanction attacks" by the United States to "harass" countries opposing its policies, President Vladimir Putin said. Putin said he would urge Brazil, China, India and South Africa to draw "substantive conclusions" from sanctions imposed on Russia over its role in the Ukraine crisis during a two-day BRICS summit in Brazil starting on Tuesday.

Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99

Telegraph:

• With mansion taxes, another housing bust becomes inevitable. The only solution to the boom is to let everyone do what they want with their property.

China Securities Journal:

• China PBOC May Hold Monetary Policy Steady in 2H. People's Bank of China may hold monetary policy steady in 2H as there are signs that economic outlook isn't "too pessimistic," according to a front-page commentary, written by reporter Ren Xiao.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 102.0 -.5 basis point.

• Asia Pacific Sovereign CDS Index 71.0 -1.0 basis point.

• FTSE-100 futures -.10%.

• S&P 500 futures +.08%.

• NASDAQ 100 futures  +.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JNJ)/1.55

• (CMA)/.76

• (WWW)/.27

• (JPM)/1.31

• (GS)/3.09

• (IBKR)/.29

• (CSX)/.52

• (CTAS)/.75

• (YHOO)/.38

• (INTC)/.52

• (ADTN)/.29

• (JBHT)/.79

Economic Releases
8:30 am EST

• Empire Manufacturing for July is estimated to fall to 17.0 versus 19.28 in June.

• Retail Sales Advance for June are estimated to rise +.6% versus a +.3% gain in May.

• Retail Sales Ex Autos and Gas for June are estimated to rise +.5% versus unch. in May.

• The Import Price Index for June is estimated to rise +.4% versus a +.1% gain in May.

• Business Inventories for May are estimated to rise +.6% versus a +.6% gain in May.
  

Upcoming Splits

• (AAON) 3-for-2

• (SFBS) 3-for-1

Other Potential Market Movers

• The German ZEW index and US weekly retail sales reports could impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 75% net long heading into the day.

Stocks Rising into Final Hour on Buyout Speculation, Earnings Optimism, Yen Weakness, Tech/Energy 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) 11.62 -3.81%

• Euro/Yen Carry Return Index 144.42 +.31%

• Emerging Markets Currency Volatility(VXY) 5.80 -.34%

• S&P 500 Implied Correlation 48.43 -3.87%

• ISE Sentiment Index 134.0 +22.94%

• Total Put/Call .92 +4.56%

• NYSE Arms .97 -8.0% 

Credit Investor Angst:

• North American Investment Grade CDS Index 56.92 -2.53%

• European Financial Sector CDS Index 70.1 -2.23%

• Western Europe Sovereign Debt CDS Index 36.98 +.26%

• Asia Pacific Sovereign Debt CDS Index 71.24 -1.0%

• Emerging Market CDS Index 227.26 +.76%

• China Blended Corporate Spread Index 304.46 +.35%

• 2-Year Swap Spread 17.0 +.25 basis point

• TED Spread 21.75 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -11.25 +.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .02% unch.

• Yield Curve 208.0 +1.0 basis point

• China Import Iron Ore Spot $97.90/Metric Tonne +1.03%

• Citi US Economic Surprise Index -15.90 -2.8 points

• Citi Emerging Markets Economic Surprise Index -4.40 unch.

• 10-Year TIPS Spread 2.25 -2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +56 open in Japan

• DAX Futures: Indicating +2 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech sector longs

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

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg: 

• Ukraine Says Russia May Have Shot Down Transport Plane. Ukraine’s Defense Ministry said Russian forces may have shot down one of its airplanes to bolster the Kremlin-backed insurgency and sabotage efforts to end a conflict that’s already claimed hundreds of lives. An An-26 transport plane was shot down in eastern Ukraine today by a “powerful weapon” not previously used by the separatists, probably from inside Russia, Defense Minister Valeriy Geletey told President Petro Poroshenko, according to the president’s website. The plane was hit at 6,500 meters, an altitude shoulder-fired missiles can’t reach, he said. The aircraft was probably struck either by an air-to-air missile from a jet based at Russia’s Millerovo base or a surface-to-air rocket from a mobile ground system, Andriy Lysenko, a ministry spokesman, told reporters in Kiev. 

• Israel Extends Gaza Air Strikes, Downs Palestinian Drone. Israel struck back against fire from the Gaza Strip, Syria and Lebanon and downed a Palestinian drone that breached its airspace as its offensive against Gaza militants entered a seventh day. Israel targeted about 100 “terror sites” in Hamas-controlled Gaza today while more than 70 rockets were fired at Israel from the Palestinian enclave, the military said. “The heavier the blow we give from the air the easier it will be to carry out a ground operation, if that proves necessary,” Israeli Deputy Foreign Minister Zeev Elkin said today on Israel Radio.

• China Auto Association Cuts Sales Forecast. China’s state-backed auto association forecast that vehicle sales will slow more than it previously projected, as the economy showed little signs of improvement and more cities consider purchase restrictions. Total industry vehicle deliveries will probably rise 8.3 percent to 23.83 million units, compared with its January prediction for 10 percent growth, the China Association of Automobile Manufacturers said in a statement today. Last year, sales increased 14 percent, making China the first country in which more than 20 million vehicles were sold in any given year. 

• China’s Local Governments Pile on Stimulus. Any borrowing to fund the investment risks exacerbating financial dangers from local-government debt that swelled to about $3 trillion as of June 2013. While Premier Li Keqiang is trying to expedite spending from existing budgets and avoid broad stimulus, provinces such as Hebei are facing bigger shortfalls on their own growth goals than Li is with the nationwide target of about 7.5 percent. “The motivation is there -- currently GDP is still the key performance indicator for local officials,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, who previously worked at the European Central Bank. The challenge for local governments is to find financing at a time when bank loans and shadow banking are constrained, Shen said.

• European Stocks Rise After Weekly Drop; Shire Shares Gain. European stocks climbed, after the Stoxx Europe 600 Index posted its biggest weekly drop since March, as Shire Plc and Kuehne & Nagel International AG gained. Shire advanced after saying it is willing to recommend an offer from AbbVie Inc. Kuehne & Nagel rose the most in three months after reporting earnings that beat analyst forecasts. Sports Direct International Plc increased 3.6 percent after saying it will expand into Australia and New Zealand. Banco Espirito Santo SA dropped 7.5 percent after appointing a chief executive officer. The Stoxx 600 added 0.9 percent to 339.79 at the close of trading.

• VIX Contracts Signal Bigger U.S. Stock Swings Ahead. Investors haven’t seen this much volatility in U.S. stocks since April, and options traders are betting there’s more to come. The Chicago Board Options Exchange Volatility Index (VIX) jumped 17 percent to 12.08 last week and a similar measure for European equities surged the most in almost six months. The ratio of contracts wagering that the volatility measure known as the VIX will rise versus those betting on declines is almost 4-to-1, the highest level since before the financial crisis in 2007, according to data compiled by Bloomberg.

Wall Street Journal: 

• Russian's 'Imperial Dream' Faces Last Stand in Donetsk. Muscovite Heading Separatist Movement in Ukraine Seeks Return of Empire. The military noose was tightening around the rebel city, and Alexander Borodai, now the leader of pro-Russia separatists in Donetsk, was urging decisive action. That was more than a decade ago, in a different war and a different city—Grozny, the capital of Chechnya, which was fighting for independence from Russia. Mr. Borodai, accompanying Russian troops as a war correspondent, wanted to see Grozny hit hard, all...

• AbbVie Nears $54 Billion Shire Deal. Deal Would Be Latest 'Inversion' Play.

• Asian Nations' Fears of War Elevated as China Flexes Muscle, Study Finds. Majority of Filipinos, Japanese and Vietnamese Say They Fear Armed Conflict With China.

ZeroHedge:

• Draghi Jawbones "Appreciating Euro Would Be Risk To Recovery"; Market Shrugs.

• Still Think First Quarter Earnings Were Strong? Then Look At This Chart. (graph)

• Nomura Threatens Espirito Santo Cross Defaults, Said To Demand Immediate Repayment Of €100MM Loan.

• "The US Has Only Succeeded In Accelerating Middle East Disintegration".

• Russia Furious With UK Air Show Visa Refusal, Vows Reponse Before Ukraine Plane Allegedly Shot Down By Russia.

• Citi(C) Masks Crashing Mortgage, Trading Revenues With $3.8 Billion Settlement Charge.

The New Yorker:

• The Hand on the Lever. How Janet Yellen is redefining the Federal Reserve.

El Mundo:

• Independent Fiscal Authority Says Spain May Miss Deficit. AIReF, Spain's independent authority for fiscal responsibility, sees very high risk that Spain will not meet target of reducing debt to 60% of GDP in 2020. AIReF says in report that it sees as not feasible the official road map established by financial stability and sustainability law to gradually reduce Spain's debt from 96.8% of GDP now to a maximum of 60% in 2020. Report says debt will be higher than pledged in 2016 and will be at 97% of GDP in 2017.

TheDailyStar:

• NATO denounces new Russian troop build-up on Ukraine border. NATO on Monday said Russia had increased its troops near the Ukraine border to as many as 12,000 after reducing them to less than 1,000 in June, hurting efforts to ease the crisis. "This is not a step in the right direction. It is a step away from de-escalating the situation," a NATO official said. "Our current assessment is that between 10,000 and 12,000 Russian troops are in the area."

Bear Radar

Style Underperformer:

• Mid-Cap Value +.14%

Sector Underperformers:

• 1) Gold & Silver -2.59% 2) Utilities -.95% 3) Hospitals -.40%

Stocks Falling on Unusual Volume:

• RVBD, VISN, CHUY, TS, X, GTAT, RICE, AG, BPT, PBPB, SODA, UGLD, DYN, WTW, CLR, DFRG, FUN, HSY, PSMT, BURL, KORS, BMA, CSH, FGP and GNCA

Stocks With Unusual Put Option Activity:

• 1) NFX 2) GPRO 3) EXC 4) TXN 5) M
  

Stocks With Most Negative News Mentions:

• 1) RVBD 2) EBAY 3) PBPB 4) ZEP 5) WHR
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.82%

Sector Outperformers:

• 1) Social Media +1.99% 2) Construction +1.54% 3) Alt Energy +1.43%
  

Stocks Rising on Unusual Volume:

• URS, ACM, KOG, WLL, PRGO, KNDI, C, PEIX and EGOV

Stocks With Unusual Call Option Activity:

• 1) PVH 2) URI 3) ARUN 4) WLL 5) MYL

Stocks With Most Positive News Mentions:

• 1) SNCR 2) MYL 3) AAPL 4) PRGO 5) AMZN
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume