Bull Radar

Style Outperformer:

• Large-Cap Growth -.31%

Sector Outperformers:

• 1) Hospitals +3.39% 2) HMOs +.78% 3) Gaming +.61%
  

Stocks Rising on Unusual Volume:

• BNNY, CMRX, WB, BDBD, HDS, UTHR and THC

Stocks With Unusual Call Option Activity:

• 1) TTWO 2) IGT 3) WWAV 4) ATLS 5) LNG

Stocks With Most Positive News Mentions:

• 1) NFLX 2) LMT 3) ANAC 4) AAPL 5) SCTY
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg: 

• EU Slows New Russia Sanctions as It Gauges Ukraine Truce. European Union governments abruptly put on hold for at least a “few days” new sanctions against Russia, allowing more time to assess the viability of a cease-fire in Ukraine without risking further trade retaliation by the Kremlin. The EU’s second package of economic penalties against Russia was delayed late yesterday in Brussels by the bloc’s 28 governments, which approved the measures in principle while stopping short of giving the green light for their publication in the Official Journal and entry into force. 

• BofA’s(BAC) China Bear Sticks to His Stock Call Amid Rally. China’s stock rally will evaporate within weeks, said Bank of America Corp.’s strategist David Cui, sticking with his bearish call amid the biggest advance in 19 months.

• Australia Gives Up on Australia as Investment Dwindles. Australia’s biggest companies are giving up on growth. Investment by businesses in the benchmark stock index will probably slip below rising dividend payouts within two years, according to data compiled by Bloomberg. Wesfarmers Ltd., the country’s biggest private-sector employer with operations spanning retail, mining and manufacturing, returned a record A$2.75 billion ($2.58 billion) to shareholders last year.

• Most Asian Stocks Advance as Weaker Yen Boosts Topix. Most Asia-Pacific stocks rose, after the benchmark index declined for the past three days, as a weaker yen buoyed Japanese shares. SoftBank Corp. provided the biggest boost to the regional gauge. Honda Motor Co. (7267), a carmaker that gets about 84 percent of sales abroad, added 1.5 percent as Japan’s currency touched an almost six-year low. SoftBank extended its two-day gain to 4.5 percent after Alibaba Group Holding Ltd., in which the Tokyo-based phone carrier owns a stake, unveiled details of its initial share sale. Newcrest Mining Ltd., Australia’s biggest gold producer, slid 2.2 percent after the price of bullion closed yesterday at a three-month low. About two shares rose for each that fell on the MSCI Asia Pacific Index (MXAP), which slipped 0.1 percent to 148.10 as of 9:32 a.m. in Tokyo.

• Iron Ore Bound for Further Drop Set to Last Years, Calderon Says. Iron ore prices may tumble a further 15 percent and stay low for as long as three years as expansions add to a global surplus, according to former BHP Billiton Ltd. (BHP) executive Alberto Calderon. Prices may trade between $70 and $80 a metric ton for two to three years as the market adjusts to increases in supply and a decline in demand in China, Calderon, a board member of Orica Ltd. (ORI), the biggest supplier of chemicals and explosives to the mining industry, said in an interview.

• CFTC Said to Alert Justice Department of Criminal Rate Rigging. Derivatives regulators told the U.S. Justice Department they’ve found evidence of criminal behavior following an investigation into banks’ alleged manipulation of ISDAfix, a benchmark used to set rates for trillions of dollars of financial products. The U.S. Commodity Futures Trading Commission, which first sent subpoenas to the world’s largest banks in November 2012 to determine whether ISDAfix was rigged, has flagged its findings to prosecutors, according to a person familiar with the matter. The CFTC’s enforcement powers are confined to bringing civil, not criminal, cases. It isn’t clear who the CFTC suspects broke the law.

• Most Influential 50 Are the Bankers, Investors Who Move Markets. To arrive at our 50, we start with a larger group of candidates assembled with the help of Bloomberg News journalists in bureaus across the globe. Rankings and profiles published in Bloomberg Markets throughout the year help guide the selection process, with the magazine's editors narrowing the final list to 10 people in each of five categories: Money Managers, Thinkers, Corporate Power Brokers, Bankers and Policy Makers. We select individuals based on what they're doing now, rather than past achievements, and almost three-fifths of this year's list is made up of people who are appearing for the first time.

Wall Street Journal:

• Fed to Hit Biggest U.S. Banks With Tougher Capital Surcharge. Extra Padding in Case of a Financial Crisis Would Surpass That Required by International Regulators. The Federal Reserve is preparing to hit the biggest U.S. banks with a tougher version of a capital surcharge than agreed to by international regulators, a top official said in testimony prepared for a hearing Tuesday. "By further increasing the amount of the most loss-absorbing form of capital that is required to be held by firms that potentially pose the greatest risk to financial stability, we intend to improve the resiliency of these firms," Fed Gov. Daniel Tarullo, the central bank's point man on...

• The Myth of ObamaCare's Affordability. The law's perverse incentives will have the nation working fewer hours, and working those hours less productively. Whether the Affordable Care Act lives up to its name depends on how, or whether, you consider its consequences for the wider economy. Millions of people pay a significant portion of their income for health insurance so they and their families can get good health care when they need it. The magnitude of their sacrifices demonstrates the importance that people ascribe to health care. The Affordable Care Act attempts to help low-...

• Islamic State Is Getting Stronger, and It's Targeting America. U.S. air strikes in Syria are essential to defeating IS, but we should not cooperate with Iran or its militias.

MarketWatch.com: 

• 5 things to watch at Tuesday’s Apple event.

CNBC: 

• General Mills(GIS) buying Annie's(BNNY) for $46 a share. General Mills announced on Monday that it will acquire organic food producer Annie's for about $820 million—in an attempt to boost its presence in the natural food space. Annie's shares spiked more than 37 percent in extended-hours trading after the announcement. General Mills shares were unchanged.  

• Choking on oversupply, oil could fall another 10 percent. 

Zero Hedge:

• Obama's Former Chief Economist Calls For An End To US Dollar Reserve Status.

• No! The US Is Not 'Decoupling'. (graph)

• Calling A Top In The Narrative Of Central Bank Omnipotence.

• You Are Welcome, Fed. (graph)

• These Kinds Of Market-Rigging "Practices" Will No Longer Be Allowed On The CME.

• John Hussman's "Exit Rule For Bubbles". (graph)

• Merkel Ally Slams Draghi's Plan To "Buy Junk Paper".

• Dot Com Bubble 2.0 By The Numbers.

• China Hits 'Inflow' Panic Button- Strengthens Yuan Fixing By Most In 4 Years. (graph)

• The Difference Between Theory And Practice. (graph)

Business Insider:

• The S&P 500 Is One Day Away From Completing A Streak We Haven't Seen Since The Nixon Administration.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 89.0 -.5 basis point.

• Asia Pacific Sovereign CDS Index 62.25 +.25 basis point.

• FTSE-100 futures -.20%.

• S&P 500 futures -.20%.

• NASDAQ 100 futures  -.18%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BKS)/.04

• (PANW)/.11

• (KKD)/.16

• (TITN)/.10

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for August is estimated to rise to 96.0 versus 95.7 in July.

10:00 am EST

• JOLTS Job Openings for July are estimated to rise to 4700 versus 4671 in June.

Upcoming Splits

• (UGI) 3-for-2

• (CPK) 3-for-2

• (CLR) 2-for-1

Other Potential Market Movers

• The Fed's Tarullo speaking, UK Trade balance, $27B 3Y T-Note auction, US weekly retail Sales reports, RBC Industrials Conference, Deutsche Bank Tech Conference, (SPW) analyst event, (CHS) analyst event and the (WDC) analyst briefing could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Slightly Lower into Final Hour on Euro Weakness, Rising Eurozone/Emerging Markets Debt Angst, Technical Selling, Commodity/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 12.87 +6.45%

• Euro/Yen Carry Return Index 142.74 +.42%

• Emerging Markets Currency Volatility(VXY) 6.53 +2.03%

• S&P 500 Implied Correlation 48.40 +2.76%

• ISE Sentiment Index 105.0 unch.

• Total Put/Call .87 -14.71%

• NYSE Arms 1.26 +33.69% 

Credit Investor Angst:

• North American Investment Grade CDS Index 56.94 +1.29%

• European Financial Sector CDS Index 57.06 +2.20%

• Western Europe Sovereign Debt CDS Index 26.75 +1.60%
• Asia Pacific Sovereign Debt CDS Index 62.15 +.06%

• Emerging Market CDS Index 241.88 +7.09%

• China Blended Corporate Spread Index 305.02 -.38%
• 2-Year Swap Spread 22.0 +.25 basis point

• TED Spread 20.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -18.75 +.75 basis points

Economic Gauges:

• 3-Month T-Bill Yield .02% unch.

• Yield Curve 195.0 unch.

• China Import Iron Ore Spot $83.60/Metric Tonne unch.

• Citi US Economic Surprise Index 38.0 +.1 point

• Citi Emerging Markets Economic Surprise Index -12.20 +1.2 basis points

• 10-Year TIPS Spread 2.14 -2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating -22 open in Japan

• DAX Futures: Indicating -25 open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg: 

• Ukraine Truce Wobbles as Poroshenko Visits Frontline City. Ukraine said pro-Russian rebels targeted Mariupol, a frontline city in the east of the country, after President Petro Poroshenko announced his visit, further straining a four-day cease-fire. Road blocks near the port city on the Sea of Azov came under fire from militants today, presidential spokesman Svyatoslav Tsegolko said on Twitter. Shelling and small-arms fire continued during the past 24 hours across the war-torn regions of Luhansk and Donetsk, said Andriy Lysenko, a spokesman for Ukraine’s National Security and Defense Council.

• Toxic Stew of New Technology, Old Hatreds in World Crises. The crises that dominate today’s news -- Ukraine, Islamic State, Libya, Ebola, Gaza, cyber-attacks -- are symptoms of the most profound revolution in world affairs in almost four centuries. A toxic stew of new technologies, old hatreds, eroding boundaries, tattered alliances, environmental dangers and independent groups are making the world more interconnected and less stable at an accelerating rate, forcing the U.S. and other nations to re-invent their approaches to defending their borders, populations and economies.

• European Stocks Decline Amid Valuations, Scotland Poll. European stocks slid for a second day as investors weighed equity valuations and U.K. shares fell on concerns that Scotland may vote for independence. Oil companies slumped after Brent crude slipped below $100 a barrel. Lenders dragged the FTSE 100 Index down 0.3 percent. Royal Bank of Scotland Group Plc and Lloyds (LLOY) Banking Group Plc, the two banks that lend the most in Scotland, lost more than 1 percent each. Oil and gas producers posted the second-biggest loss of the 19 industry groups on the Stoxx Europe 600 Index. The Stoxx 600 retreated 0.4 percent to 346.09 at the close of trading, after earlier losing as much as 1 percent. 

• Brent Declines Below $100 for First Time Since June 2013. Brent for October settlement decreased 88 cents, or 0.9 percent, to $99.94 a barrel on the London-based ICE Futures Europe exchange at 1:12 p.m. in New York. Prices reached $99.36, the lowest intraday level since May 1, 2013. The volume of all futures traded was 12 percent above the 100-day average for this time of day.

• Fed Research Shows Investors Underestimate Path of Rate Rise. Low volatility across financial markets may signal investors are underestimating how quickly the Federal Reserve will raise interest rates, according to researchers at the San Francisco Fed. “Surveys, market expectations, and model estimates show that the public seems to expect a more accommodative policy than Federal Open Market Committee participants,” Jens Christensen, a senior economist, and Simon Kwan, a vice president of financial research, said in a report today. Data also suggest that the public is “less uncertain about their projections.” 

• Oaktree Speaks for Mom and Pop in Rejecting Expensive Junk Bonds. Oaktree Capital Group LLC (OAK)’s Howard Marks isn’t alone in being more concerned about losing money in junk securities than missing out on returns by avoiding them. Mutual fund investors last week resumed their race to top-rated company bonds, funneling $1.7 billion into the notes while pulling money from riskier, higher-yielding debt.

ZeroHedge: 

• Here Is Why Europe Just Launched The "Nuclear Option" Against Russia. (graph)

• Miami Hospital Reports Potential Ebola Case.

• Living In An Age Of Anything Goes And Nothing Matters.

• ISIS Now Has A Navy, Launches Gunboat Attack Near Baghdad.

• Scottish Independence Referendum: The Complete Summary.

• The China Boom Story: Alibaba And The 40 Thieves.

• "Jobs Friday": Why Bubblevision Misses The Epic Failure Of The US Labor Market.

• There Goes The "Housing Recovery": Record Few Americans Think "Now Is A Good Time To Buy A Home".

Business Insider:

• Iran Supreme Leader: Prepare For The ‘New World Order’. Iran’s Supreme Leader Ayatollah Ali Khamenei warns that the “new world order is emerging” and that “Iran will have a strong role in creating” it, according to a Farsi-language transcript of Khamenei’s remarks late last week to the country’s Assembly of Experts. Iran will lead this “new world order” that will replace American influence as capitalism and Western influence collapse, according to Khamenei, who underwent surprise prostate surgery on Monday.

• Ukraine President Vows To Defend The Crucial Port City Threatened By Russian-Backed Rebels.

• The Simple Reason Why The Ceasefire In Ukraine Is Likely Doomed.

• Wall Street's Biggest Bear Just Flipped To Bullish.

• BUSTED: Obama Gets Caught Spinning His Most Embarrassing Statement About ISIS.

Reuters:

• Ebola spread is exponential in Liberia, thousands of cases expected soon: WHO. The Ebola virus is spreading fast in Liberia, where many thousands of new cases are expected over the coming three weeks, the World Health Organization said on Monday. "Transmission of the Ebola virus in Liberia is already intense and the number of new cases is increasing exponentially," WHO said in a statement.

Telegraph:

• Eurozone faces another recession as ECB fails to avert confidence plunge. Despite unveiling a package of interest rate cuts and a new stimulus scheme, the ECB has failed to prevent a "collapse" in euro area investor confidence.

Handelsblatt:

• Stark Says ECB Risks 'Grave Crisis' With New Plan. "Markets will be flooded more even though there is already abundant excess liquidity globally," former ECB chief economist Juergen Stark writes. ECB monetary policy leads to "fundamentally distorted market conditions, for example for bonds of highly indebted euro-area countries, and exaggerations in other financial-market segments". "The necessary correction, whenever it will come, can lead to a new, grave crisis," he said. Interest rates close to zero "won't produce a single euro in additional credit and this inefficiency, among other things, will in the long run erode the ECB's reputation even more." ABS purchases risk transforming ECB into European 'bad bank". "The ECB council isn't democratically legitimized to take decisions with such far-reaching consequences."

Bear Radar

Style Underperformer:

• Large-Cap Value -.60%

Sector Underperformers:

• 1) Gold & Silver -2.82% 2) Oil Service -2.03% 3) Energy -1.91%

Stocks Falling on Unusual Volume:

• WRLD, KERX, XCRA, HPTX, JOBS, TRUE, GSK, VNET, BTI, CPB, PBR, COUP, HMIN, CENX, SLCA, PBR, BP, CWEI, DISCK, UGLD, TASR, HIBB, SDRL, CRZO and DRQ

Stocks With Unusual Put Option Activity:

• 1) XLV 2) JNK 3) XHB 4) DHI 5) BHI
  

Stocks With Most Negative News Mentions:

• 1) AMZN 2) KMR 3) GPS 4) FCS 5) YELP
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth -.12%

Sector Outperformers:

• 1) Alt Energy +1.59% 2) Hospitals +.98% 3) I-Banks +.56%
  

Stocks Rising on Unusual Volume:

• MGAM, CMGE, AMBA, RAX, INFN, CSIQ, CMCM, ACHN, BDSI, SGMS, INFI, VRA, ACAD and FEYE

Stocks With Unusual Call Option Activity:

• 1) DLTR 2) MYL 3) INFN 4) RSX 5) GNC

Stocks With Most Positive News Mentions:

• 1) TWTR 2) BAC 3) ADBE 4) GOOG 5) BA
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume