Bull Radar

Style Outperformer:

• Mid-Cap Value -1.15%

Sector Outperformers:

• 1) Utilities -.57% 2) REITs -.65% 3) Gold & Silver -.70%
  

Stocks Rising on Unusual Volume:

• HAWK, SKX, SQQQ and SWFT

Stocks With Unusual Call Option Activity:

• 1) PVA 2) CLDX 3) MHR 4) ACI 5) TIBX

Stocks With Most Positive News Mentions:

• 1) HAWK 2) SWFT 3) GLD 4) PAYX 5) OGE
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg: 

• Islamic State Oil in Syria Said to Be Hit by U.S. Strikes. U.S. and Arab warplanes struck small oil refineries in eastern Syria controlled by Islamic State to reduce the extremist Sunni group’s revenue and impede its mobility, the Pentagon said. Thirteen strikes by the U.S., Saudi Arabia and the United Arab Emirates used manned aircraft and drones to attack 12 “modular” refineries used by Islamic State in its oil-smuggling operations, U.S. Central Command said today in an e-mailed statement. Initial indications were that the strikes succeeded, the command said.

• Japan Steps Up Russia Sanctions, Protests Island Visit. Japan announced new sanctions on Russia, and lodged a protest after a senior official visited an island claimed by both nations, adding to tensions that have delayed a visit by Russian President Vladimir Putin to Tokyo. 

• China Steel Mills Hawk Rebar on Alibaba to Export Surplus. A glut in the world’s biggest steel-making country means that prices for basic products like rebar used in construction have collapsed, so Tangshan Donghua is targeting buyers outside China who pay more. The company now ships as much as 40 percent of its output everywhere from Southeast Asia to South America to the Middle East, and wants to expand exports even further.

• Goldman(GS) Sees Japan Stocks Dropping as Abe Runs Out of Tools. Japan Prime Minister Shinzo Abe is running out of policy options to extend a rally that sent stocks to a six-year high, according to Goldman Sachs Group Inc. Investors have largely factored in more share-buying by the nation’s $1.2 trillion Government Pension Investment Fund and further fiscal and monetary stimulus to counter the deepest economic contraction in five years, Kathy Matsui, chief Japan strategist at the brokerage, said in an interview in Tokyo on Sept. 19. Goldman Sachs cut Japanese equities to underweight for the next three months on Sept. 5, projecting the Topix index will slide 5.7 percent from yesterday’s close in the period.

• Vietnam Growth Worst Since 1980s Seen on Credit Crunch: Economy. 

• Asian Stocks Outside Japan Fall as Kiwi Plunges With Gold. Asian stocks outside Japan slipped and the dollar climbed after a four-year high as surging U.S. new-home sales signaled improvement in the world’s biggest economy. Gold retreated and New Zealand’s dollar slid after the central bank said again that its strength is unjustified. The MSCI Asia Pacific excluding Japan Index dropped 0.3 percent at 12:18 p.m. in Tokyo, as Chinese shares in Hong Kong dropped after the country’s foreign exchange watchdog said it uncovered $10 billion of trade fraud.

• BlackRock Junk-Bond ETF Sinks as Debt Yield Spikes. A slump in the U.S. junk-bond market stretched into a third day as the biggest exchange-traded fund that buys the debt fell toward the lowest level this year and yields climbed to the highest since October. 

Wall Street Journal:

• Authors Group Will Ask Justice Department to Probe Amazon(AMZN). A group of authors protesting Amazon.com ongoing contract negotiation with publisher Hachette Book Group plans to ask the Justice Department to investigate the retailer’s business practices.

• As Doctors Lose Clout, Drug Firms Redirect the Sales Call. At Big Hospital Systems, Salespeople Woo Administrators to Get on 'Formulary'.

• Deal With Saudis Paved Way for Syrian Airstrikes. Talks With Saudi Arabia Were Linchpin in U.S. Efforts to Get Arab States Into Fight Against Islamic State. 

• Junk-Bond Investors Start to See Warning Signs. Some Pare Riskiest Holdings as They Gird for Long-Running Rally to Falter. Brian Kloss isn't letting buoyant markets and U.S. economic expansion dull his sense of danger. Mr. Kloss, a portfolio manager who helps oversee junk bonds at Brandywine Global Investment Management, has been selling bonds from companies with some of the lowest ratings and highest levels of debt, or leverage. He's doing so despite a long-running rally in so-called junk bonds at a time when many analysts forecast that U.S. growth...

• The Big Money Democrats. The liberal superrich may save the Senate for Harry Reid. Harry Reid and his fellow Democrats have made a campaign fetish of denouncing the Koch brothers and other rich conservative donors for allegedly buying elections. This turns out to be one of the great misdirection plays of all time because big money might save the Democratic Senate majority in November.

Fox News:

• Climate change? China rebuts Obama. While President Obama challenged China at the United Nations to follow the U.S. lead in pushing for drastic reductions in national carbon emissions to save the planet from “climate change,” it appears that China has dramatically different ideas. As in: no.

• Kurds issue desperate plea from Syrian border town as ISIS closes in. Even as U.S. airstrikes continued to pound Islamic State positions in Syria, Kurdish fighters told FoxNews.com the terror organization was advancing on the Syrian town of Kobani, where as many as 400,000 residents and refugees are holed up. “Tell the world what is happening” said Rooz Bahjat, a senior Kurdish military officer said Wednesday by phone. “This could be a massacre if no help arrives.”

Zero Hedge: 

• The Chart No Fed-Loving Equity Bull Wants You To See. (graph)

• Meet The World's Largest Subprime Debtor. (graph)

• Forget The "Alibaba Top" - This Is The Chart Everyone Is Watching. (graph)

• What The Fed's "Crystal Ball" Says Is The Reason For The Worst Recovery Ever. (graph)

• The PunchLine: Dislocation, Dislocation, Dislocation.

Business Insider:

• Expectations For Inflation Have Tumbled To Multi-Year Lows. (graph)

• NYSE Margin Debt Is Drifting Higher Again. (graph)

Reuters:

• Your medical record is worth more to hackers than your credit card. Your medical information is worth 10 times more than your credit card number on the black market. Last month, the FBI warned healthcare providers to guard against cyber attacks after one of the largest U.S. hospital operators, Community Health Systems Inc, said Chinese hackers had broken into its computer network and stolen the personal information of 4.5 million patients.

Financial Times:

• ‘Supranationals’ borrow at record levels. The effects of the global financial crisis have pushed “supranational” organisations such as the World Bank to issue record levels of debt to international investors. Pan-national borrowers such as the European Investment Bank, World Bank and Inter-American Development Bank have raised $219bn on global debt markets so far this year – the largest sum ever raised at this point in the year, according to data from Dealogic.

Voice of Russia:

• Xi Says China Won't Support Russia Sanctions. President Xi Jinping said China will never support nor participate in sanctions against Russia no matter how much pressure China faces, citing Russian Federation Council Chairman Valentina Matviyenko, who made comments to reporters after meeting Xi Sept. 23.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 95.0 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 63.75 -1.25 basis points.

• FTSE-100 futures unch.

• S&P 500 futures -.10%.

• NASDAQ 100 futures  -.10%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SCHL)/-.84

• (NKE)/.88

• (DMND)/.15

• (MU)/.81

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated to rise to 296K versus 280K the prior week. 

• Continuing Claims are estimated to rise to 2440K versus 2429K prior.

• Durable Goods Orders for August are estimated to fall -18.0% versus a +22.6% gain in July.

• Durables Ex Transports for August are estimated to rise +.6% versus a -.8% decline in July.

• Cap Goods Orders Non-Defense Orders Non-Defense Ex Air for  August are estimated to rise +.4% versus a -.5% decline in July.

9:45 am EST

• Preliminary Markit US Services PMI is estimated to fall to 59.2 versus 59.5 in August.

11:00 am EST

• Kansas City Fed Manufacturing Activity for September is estimated to rise to 6.0 versus 3.0 in August.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Lockhart speaking, Japan CPI, $29B 7Y T-Note auction, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.

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

Stocks Surging into Final Hour on Central Bank Hopes, Less Eurozone/Emerging Markets Debt Angst, Short-Covering, Retail/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.57 -9.11%

• Euro/Yen Carry Return Index 145.47 -.39%

• Emerging Markets Currency Volatility(VXY) 7.27 -1.62%

• S&P 500 Implied Correlation 48.57 -12.02%

• ISE Sentiment Index 110.0 +50.68%

• Total Put/Call .83 -17.82%

• NYSE Arms .70 -37.59% 

Credit Investor Angst:

• North American Investment Grade CDS Index 58.92 -2.93%

• European Financial Sector CDS Index 58.35 -2.19%

• Western Europe Sovereign Debt CDS Index 27.83 -1.64%
• Asia Pacific Sovereign Debt CDS Index 64.72 -.54%

• Emerging Market CDS Index 249.51 -2.37%

• China Blended Corporate Spread Index 310.22 +.77%
• 2-Year Swap Spread 21.75 -3.0 basis points

• TED Spread 23.0 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -8.5 -.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.

• Yield Curve 198.0 -2.0 basis points

• China Import Iron Ore Spot $79.40/Metric Tonne unch.

• Citi US Economic Surprise Index 26.90 +5.8 points

• Citi Emerging Markets Economic Surprise Index -17.10 +1.5 points

• 10-Year TIPS Spread 2.04 +2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +135 open in Japan

• DAX Futures: Indicating +20 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• A Month of Bombs Dropped in One Night of Strikes on Syria. The U.S. continued to drop bombs and missiles on Islamic State positions in Syria today as the munitions used in a few days rivaled the total in the first month of attacks on the extremist group in Iraq. Five airstrikes using attack, bomber and fighter aircraft were conducted late yesterday and today, destroying eight vehicles in Syria northwest of Al Qa’im as well as armed vehicles and a weapons cache near Baghdad and fighting positions southeast of Erbil, according to a statement from U.S. Central Command. 
• French Hostage Beheaded by Algerian Kidnappers, Hollande Says.
• Russia Threatens Foreign Media Ownership With New Rules. Russian lawmakers gave preliminary approval to a bill that would restrict foreign ownership of media, increasing pressure on independent publications in an industry where state control has grown under Vladimir Putin. The State Duma, the lower house of parliament, yesterday backed a first reading of the law, which would cut the limit for foreign ownership to 20 percent, by 434 votes to 1. Forbes Russia and the Vedomosti newspaper are among publications that would have to change ownership or close by 2017.
• German Business Confidence Drops for Fifth Month. German business confidence fell more than analysts forecast in September as economic and political risks in the euro area increase. The Ifo institute’s business climate index, based on a survey of 7,000 executives, dropped to 104.7 from 106.3 in August. Economists predicted a decline to 105.8, according to the median of 36 estimates in a Bloomberg survey. The index is now at its lowest since April 2013.
• European Stocks Climb as Merck, Rio Tinto Shares Advance. European stocks rose, following the biggest drop in 11 weeks, as investors assessed the health of the euro-area economy and the prospects for European Central Bank stimulus after German business confidence fell for a fifth month.
  Merck KGaA and Rio Tinto Group climbed as brokerages recommended buying the shares. TNT Express NV lost the most in 20 months after dropping its 2015 profitability forecast. Adecco SA slipped 0.8 percent after saying Germany and France experienced weaker growth than normal this month. The Stoxx Europe 600 Index added 0.7 percent to 344.35 at the close of trading, extending gains in the final 30 minutes.

CNBC: 

• Fed's Mester calls for key 'considerable time' language to be reformulated.
• Tesla(TSLA) stock 'grossly overvalued': Former GM exec. (video)

ZeroHedge:

• Whatever You Do, Don't Look At Goldman's Latest Swirlogram, But If You Must... (graph)
• Global Trade Collapses: One Of World's Largest Logistics Companies Slashes Forecast; Blames Europe, US Trade. (graph)
• New Home Sales Explode Higher Thanks To... Record High Average New Home Prices? (graph)
• "Get To Work Mr. Chinese Chairman": China Set To Fire Its Central Bank Head, Unleash The Liquidity Floodgates.
• Obamacare Architect Says Society Would Be Better Off If People Died At 75.
• Bank Of Japan Buys A Record Amount Of Equities In August.

Business Insider:

• The Euro Meltdown Just Crossed An Ugly Milestone. (graph)

Telegraph:

• Germany's Ukip threatens to paralyse eurozone rescue efforts. Alternative für Deutschland has swept through Germany like a tornado, winning 12.6pc of the vote in Brandenburg and 10.6pc in Thuringia.

Bear Radar

Style Underperformer:

• Small-Cap Value +.13%

Sector Underperformers:

• 1) Gold & Silver -1.01% 2) Coal -.94% 3) Homebuilders -.80%

Stocks Falling on Unusual Volume:

• GLOP, MMLP, EVHC, AIR, EVDY, SDLP, CPRT, SKX, KBH, BGC, BSFT, SLXP, NVGS, PBA, ENPH, CTRX, CNQ, CRS, VOC, BNS, CNI, TDW, ERJ, MTN, TRS, KN, TDW and ENPH

Stocks With Unusual Put Option Activity:

• 1) ABT 2) BBBY 3) XLNX 4) SMH 5) JNPR
  

Stocks With Most Negative News Mentions:

• 1) AFL 2) PRU 3) SHLD 4) CA 5) MS
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.90%

Sector Outperformers:

• 1) Biotech +2.12% 2) Oil Tankers +1.11% 3) Restaurants +1.08%
  

Stocks Rising on Unusual Volume:

• ACOR, GDOT, ZSPH, BBBY, HSNI, SLXP, STRZA, SCTY, SCS, PKX, SUNE, BBL, NBIX, PAYX, HCLP, BOBE, GPRO, VRX, BCRX, SYY, CMCM, PHG, RDUS, KEP, YHOO, INO, TRUE, NBIX and HAS

Stocks With Unusual Call Option Activity:

• 1) BBBY 2) SUNE 3) MNK 4) BBT 5) SLXP

Stocks With Most Positive News Mentions:

• 1) GILD 2) MCD 3) BA 4) WMT 5) SBUX
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume