Bull Radar

Style Outperformer:

• Mid-Cap Value +.33%

Sector Outperformers:

• 1) Homebuilders +1.67% 2) Retail +1.48% 3) Oil Service +.89%
  

Stocks Rising on Unusual Volume:

• DEPO, CMCM, SWIR, URBN, HD, TJX, RAX and TRN

Stocks With Unusual Call Option Activity:

• 1) AEO 2) GNRC 3) TJX 4) HOV 5) DKS
  

Stocks With Most Positive News Mentions:

• 1) HD 2) ESV 3) TJX 4) AAPL 5) MCD
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg: 

• Red Cross Says Russian Convoy Details Expected Soon. The international Red Cross is close to working out the details of a safe-passage plan for a Russian aid convoy intended for war-torn southeastern Ukraine, while four-way talks on a halt to the fighting reached an impasse in Berlin. The crisis, in which Ukrainian government troops have been battling pro-Russian separatists for months, can only be stemmed once the government in Kiev calls off its army as part of an unconditional cease-fire, Russian Foreign Minister Sergei Lavrov said yesterday in the German capital. Ukraine says it will declare a cease-fire if the pro-Russian rebels lay down their arms and Russia stops supplying them with weapons. 

• Why Would Chinese Hackers Steal Millions of Medical Records? A group of sophisticated Chinese hackers known for its high-stakes corporate espionage has a history of stealing medical-device blueprints, prescription-drug formulas and other valuable intellectual property from large health-care companies.

• China to Cut ‘Overly High’ Income of State-Owned Firm Executives. Chinese President Xi Jinping plans to regulate income distribution in state-owned companies, cutting the top salaries, as part of the nation’s anti-extravagance and anti-corruption campaigns. “Unreasonably high income will be adjusted,” and top managers can’t have excessive spending beyond what’s stipulated by government regulations or companies’ financial policies, according to a statement posted on the central government’s website, citing Xi. Leaders of central-government-controlled enterprises should actively support the changes, Xi was cited as saying in a meeting of the Communist Party’s reform group yesterday. 

• RBA Sees Uncertain Growth Outlook as Rate Pause Reaffirmed. Australia’s central bank said the nation’s economic outlook remains uncertain because of the conflicting forces at play and reiterated that interest rates are set to remain on hold. Members “noted the significant uncertainties around the growth forecast and the importance of considering the risks to the forecast as well as the central projection,” the Reserve Bank of Australia said in minutes released today of its Aug. 5 meeting, where it kept the cash rate unchanged at a record-low 2.5 percent. “GDP growth was likely to have slowed to a more moderate pace in the June quarter.”

• Asian Stocks Rise as U.S. Homebuilder Sentiment Improves. Asian stocks rose after confidence in the U.S. housing industry climbed to the highest level in seven months and tensions eased over global political conflicts. Amcor Ltd. (AMC) climbed 4.4 percent in Sydney as the packaging firm posted earnings that topped analyst estimates. Terumo Corp. advanced 3.2 percent after Credit Suisse Group AG advised buying shares of the Japanese medical-equipment maker. Don Quijote Holdings Co. (7532) sank 4.4 percent in Tokyo after the discount-store owner forecast little change in profits. The MSCI Asia Pacific Index (MXAP) gained 0.5 percent to 148.76 as of 9:41 a.m. in Hong Kong, with all of its 10 industry groups rising. 

Wall Street Journal: 

• Ukrainian Refugees Caught in Crossfire. Report of Deadly Rebel Attack on Fleeing Non-Combatants Highlights Civilian Toll. Ukraine accused pro-Russian separatists of killing dozens of civilians by firing on a refugee convoy, the latest example of residents caught in the line of fire of a four-month-old war that has caused more than 2,000 deaths. Rebels denied any role in the attack, or that an attack had taken place. The U.S. State Department condemned the "shelling and rocketing" of the convoy but said it couldn't confirm who was responsible....

• Curfew Lifted in Ferguson as National Guard Arrives. Missouri Governor Calls in National Guard After Another Night of Clashes in St. Louis Suburb.

• Investors Raise Their Shields Against Russia. Fund Managers Cut Exposure to Nations Affected by Fallout.
  

MarketWatch.com:

• Where is Hong Kong’s perfect storm?

CNBC:

• NY Fed: Firms 'widely' see Obamacare boosting health costs. Many businesses said Obamacare is jacking up their employee health coverage costs, and they expect it to do so even more next year, two new surveys of businesses by the Federal Reserve Bank of New York have found. As a result, consumers in the areas covered by the bank could be paying more next year—and some workers at the firms might need to look for a new job, the surveys found.

Zero Hedge: 

• ISIS Gets Angrier At America: "We Will Drown All Of You In Blood".

• Protesters Storm Governor's Office In Downtown St. Louis, Demand Removal Of National Guard. (pic)

• Joblessness, Hopelessness, And Government Dependency.

• WHO Urges "Exit Screening" Of All Travelers In Ebola-Infected Countries As Reported Cases Go Parabolic.

Business Insider:

• Investors Are Addicted To The 'Bad News Is Good' Trade.

Reuters:

• Russian oil prices fall below $100/barrel, straining budget. Russian Urals crude weakened for an eight straight trading day on Monday due to weak European refining demand, falling well below $100 a barrel for the first time in a year in a move to increase the pain for Russian state finances amid Western sanctions.

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

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are +.25 to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 102.0 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 70.5 -.75 basis point.

• FTSE-100 futures +.16%.

• S&P 500 futures +.10%.

• NASDAQ 100 futures  +.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DKS)/.65

• (HD)/1.44

• (MDT)/.92

• (TJX)/.73 

Economic Releases 
8:30 am EST

• The CPI for July is estimated to rise +.1% versus a +.3% gain in June.

• The CPI Ex Food & Energy for July is estimated to rise +.2% versus a +.1% gain in June.

• Housing Starts for July are estimated to rise to 966K versus 893K in June.

• Building Permits for July are estimated to rise to 1000K versus 963K in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK inflation data and the weekly US retail sales reports could also impact trading today.

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

Stocks Surging into Final Hour on Diminished Russia/Ukraine Tensions, Buyout Speculation, Central Bank Hopes, Homebuilding/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Light

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 13.55 +9.10%

• Euro/Yen Carry Return Index 143.09 -.08%

• Emerging Markets Currency Volatility(VXY) 6.77 -.73%

• S&P 500 Implied Correlation 49.24 -2.78%

• ISE Sentiment Index 96.0 +28.0%

• Total Put/Call .92 -7.07%

• NYSE Arms .82 -35.81% 

Credit Investor Angst:

• North American Investment Grade CDS Index 57.19 -3.98%

• European Financial Sector CDS Index 65.50 -5.75%

• Western Europe Sovereign Debt CDS Index 34.0 +.34%
• Asia Pacific Sovereign Debt CDS Index 70.46 -1.25%

• Emerging Market CDS Index 269.47 -1.30%

• China Blended Corporate Spread Index 316.05 +1.08%
• 2-Year Swap Spread 23.25 +1.0 basis point

• TED Spread 20.75 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -14.75 -1.25 basis points

Economic Gauges:

• 3-Month T-Bill Yield .03% unch.

• Yield Curve 197.0 +4.0 basis points

• China Import Iron Ore Spot $93.30/Metric Tonne -.11%

• Citi US Economic Surprise Index -2.0 +3.7 points

• Citi Emerging Markets Economic Surprise Index -12.30 -4.5 points

• 10-Year TIPS Spread 2.19 unch.

Overseas Futures:

• Nikkei Futures: Indicating +108 open in Japan

• DAX Futures: Indicating +16 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg: 

• Ukraine Talks Stall as Russia Sees Only Progress on Aid. Russia’s foreign minister said talks on the conflict in Ukraine haven’t produced a resolution, with progress made only on humanitarian aid deliveries. The crisis, in which government troops have been battling pro-Russian separatists for months in the nation’s easternmost regions, can only be stemmed once Ukraine calls off its army as part of an unconditional cease-fire, Sergei Lavrov told reporters today in Berlin after meeting with his Ukrainian, German and French counterparts. He said he expects truckloads of Russian aid for the Luhansk region to be delivered soon. “As long as they’re betting on a military solution, and as long as the authorities in Kiev are using military victories over their own people to shore up their position in Kiev, I don’t think there’s any point to what we’re trying to do now,” Lavrov said.

• Kurdish Forces Oust Militants From Dam With U.S. Airstrikes. Kurdish and Iraqi forces seized control of Iraq’s largest dam from Islamic State militants as the U.S. deployed air power that helped reverse some gains made by the Sunni-Muslim insurgents in the north. Kurdish forces, known as the peshmerga, and government anti-terrorism units “with joint air support, have taken over the Mosul Dam entirely,” Iraqi military spokesman Qassim Ata said on state-sponsored Iraqiya television. Their progress has been slowed by militants wearing suicide vasts, booby-trapped buildings and roadside bombs, Abo Maan Al-Taie, a spokesman for Sunni tribes supporting the insurgents, said by phone. 

• Bundesbank Casts Doubt on German Economic Rebound in Second Half. The Bundesbank said geopolitical tensions may impede a rebound of the German economy, Europe’s largest, after it contracted in the second quarter. “The economic outlook for the German economy has clouded over in the middle of the year in response to unfavorable international news,” the Frankfurt-based central bank said in its monthly report for August published today. “Expectations for a strengthening of economic momentum in the second half of 2014 underlying the spring projections are called into question by current data.”

• European Stocks Rise as Ukraine Concern Eases; Renault Up. European stocks advanced, after equities had their biggest weekly gain in more than a month, as Ukrainian and Russian officials met for talks. United Internet AG added 3.8 percent after saying it bought a 10.7 percent stake in Rocket Internet AG. Renault SA advanced 2.5 percent, helping a gauge of automakers post the biggest gain among 19 industry groups in the Stoxx Europe 600 Index. Aker Solutions ASA dropped 1.6 percent. The Stoxx 600 rallied 1.2 percent, the most in a week, to 333.6 at the close of trading in London, after advancing 1.5 percent last week.

• Dollar General(DG) Makes $9.7 Billion Family Dollar(FDO) Counterbid.

Wall Street Journal: 

• Why the Islamic State Represents a Dangerous Turn in the Terror Threat. The Danger Extends to America's Friends and Foes Alike Across the Middle East and Even Europe.
  
  You can mark it down: The summer of 2014 is the time when the terrorism threat morphed into something new, more ambitious and more dangerous. This threat represents a long-term danger to the U.S., but a more immediate threat to America's friends and foes alike across the Middle East and even Europe. It imperils Iraq, of course, but also Saudi Arabia, Israel, Turkey, Egypt, Russia and Iran.

• Wary Ferguson Awaits National Guard. Missouri Governor Calls in National Guard After Another Night of Clashes in St. Louis Suburb. Missouri Gov. Jay Nixon lifted the nighttime curfew here, hours after the worst violence from protests over the shooting death by police of an unarmed 18-year-old. The curfew was in effect between midnight and 5 a.m. on Sunday and Monday following looting and other vandalism on Friday night. But the past two nights saw violent clashes between protesters and police in the hours just before the curfew took effect.

• Fed Economists Criticize SEC Money-Fund Restrictions. Federal policy makers are warning a central plank in the Securities and Exchange Commission’s plan to rein in risks posed by the $2.6 trillion money-market mutual-fund industry will inadvertently encourage investor stampedes rather than quell them.

CNBC: 

• Chinese hackers stole info on 4.5 million U.S. hospital patients. If you've been to a hospital in a small town or anywhere in the southeastern portion of the United States in the last few years, it's worth keeping an eye on your personal information.

ZeroHedge:

• Is The Correction Over? (graph)

• What's So Special About A 17x PE Multiple? (graph)

• Dozens Of Flash-Crashes - Including AAPL - As BATS Breaks.

• Chinese Troops 'Invade' 25Km Into India, "This Is Chinese Territory, Go Back".

• Homebuilder Sentiment Jumps to Highest Since January As Midwest Hits Record High. (graph)

• Don't Think It Won't Happen Just Because It Hasn't Happened Yet: Loss Of Faith In The Fed.

Business Insider:

• FLECKENSTEIN: There’s 'No Chance' That This Ends Well.

PzFeed Top News:

• URGENT: This is reportedly a photo of women that ISIL is selling into sex slavery. (pic)

Reuters:

• Yazidis haunted by cries for help as militants bury victims alive. Refugee Samo Ilyas Ali has nine children to feed but he can't focus on the future because the sounds of women and children crying out for help while being buried alive by Islamic State militants in northern Iraq often consume his mind. Tens of thousand of Yazidis fled their ancient homeland of Sinjar and other villages to escape a dramatic push by the Sunni militants who regard the ethnic minority as devil worshippers who must embrace their radical version of Islam or die.The refugees sit idle in camps in the semi-autonomous Kurdish region in northern Iraq. Suddenly the men began digging ditches - soon to become mass graves. "We did not understand. Then they started to put people in those holes, those people were alive," said former grocery shop owner Ali, 46, pausing to weep. "After a while we heard gunfire. I can't forget that scene. Women, children, crying for help. We had to run for our lives, there was nothing to be done for them."

Xinhua:

• Xi Says China to Set Up Media Groups With Big Influence. China to set up a few media groups with high credibility and influence, President Xi Jinping said at meeting of leading group for deepening reform. Meeting approved guidelines to promote integrated development of traditional media and new media.

Bear Radar

Style Underperformer:

• Large-Cap Value +.64%

Sector Underperformers:

• 1) Coal -.35% 2) Utilities -.14% 3) Gold & Silver -.13%

Stocks Falling on Unusual Volume:

• NOAH, FN, FSYS, MNST, KMP, JKS, DLTR, NXPI, EPB, CMCM, NUS, KMR, FONR, RRGB, HGR, GLF, WBAI, MCY, ASPS, OCN, FEYE, CSTM, XONE, YOKU and MCHP

Stocks With Unusual Put Option Activity:

• 1) XME 2) URBN 3) MOS 4) ACHN 5) XLB
  

Stocks With Most Negative News Mentions:

• 1) MGM 2) STZ 3) RGR 4) NXPI 5) MNST
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.17%

Sector Outperformers:

• 1) Semis +1.93% 2) Homebuilders +1.72% 3) Road & Rail +1.33%
  

Stocks Rising on Unusual Volume:

• FDO, DG, TASR, ST, ATHM, TKMR, HMSY, WUBA, KNDI, DWA, LCI, ARWR, ENPH and GTAT

Stocks With Unusual Call Option Activity:

• 1) NUE 2) ACHN 3) JWN 4) JBLU 5) URBN
  

Stocks With Most Positive News Mentions:

• 1) DG 2) AAPL 3) RTN 4) GTAT 5) NKE
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume