Tuesday, August 11, 2015

Bear Radar

Posted by Gary .....at 1:17 PM
Style Underperformer:
  • Small-Cap Growth -1.35%
Sector Underperformers:
  • 1) Coal -5.6% 2) Steel -4.9% 3) Gaming -4.3%
Stocks Falling on Unusual Volume:
  • ENV, ZBRA, WRLD, APEI, RRGB, CLDX, RENT, BSTC, QTS, NHI, FMS, NCLH, ASCMA, LOPE, HIBB, RAX, PRAA, ICPT, BID, KPTI, XON, KWEB, SHG, DTSI, FOE, ACM, IFF, VSAR, CVT, SYMC, FRPT, ICON, YUM, SEM, KMT, SLH, SUNE, RLYP, FIX, HIBB, MXL, OCUL, NEWR, ENVA, PTCT, FCX and FRSH
Stocks With Unusual Put Option Activity:
  • 1) GPS 2) HYG 3) FOSL 4) HEDJ 5) RL
Stocks With Most Negative News Mentions:
  • 1) FCX 2) BXLT 3) XON 4) ORCL 5) XOM
Charts:
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Bull Radar

Posted by Gary .....at 12:42 PM
Style Outperformer:
  • Small-Cap Value -.82%
Sector Outperformers:
  • 1) REITs +.63% 2) Utilities +.36% 3) Homebuilders +.19%
Stocks Rising on Unusual Volume:
  • SYA, AMID, YDLE, RNF, TEX, NVAX, AQXP, TUBE, HALO, MACK, IGT, AMBC and HRTG
Stocks With Unusual Call Option Activity:
  • 1) BK 2) EMES 3) TTWO 4) SGMS 5) RAX
Stocks With Most Positive News Mentions:
  • 1) PDCE 2) RESI 3) AAL 4) ALGT 5) TEX
Charts:
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Morning Market Internals

Posted by Gary .....at 11:03 AM
NYSE Composite Index:
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Monday, August 10, 2015

Tuesday Watch

Posted by Gary .....at 11:37 PM
Evening Headlines 
Bloomberg:
  • China Weakens Yuan Reference Rate by Record 1.9% Amid Slowdown. China devalued the yuan by the most in two decades, ending a de facto peg to the dollar that’s been in place since March and battered exports. The People’s Bank of China cut its daily reference rate for the currency by a record 1.9 percent, triggering the yuan’s biggest one-day loss since China unified official and market exchange rates in January 1994. The change was a one-time adjustment, the central bank said in a statement, adding that it plans to keep the yuan stable at a “reasonable” level and will strengthen the market’s role in determining the fixing. “It looks like this is the end of the fixing as we know it,” said Khoon Goh, a Singapore-based strategist at Australia & New Zealand Banking Group Ltd. “The one-off devaluation of the fix and allowing more market-based determination takes us into a new currency regime.”
  • China’s Credit Slumps as Funds Used to Prop Up Stock Market. (graph) China’s efforts to halt a stock market rout spurred a surge in new lending to financial institutions last month, while credit to the real economy weakened. Aggregate financing slumped to 718.8 billion yuan ($116 billion) in July, from 1.86 trillion originally reported for June, according to the People’s Bank of China, missing the estimate for 1 trillion yuan in a survey of economists. New yuan loans jumped to 1.48 trillion yuan, almost double economists’ estimate, with 891 billion yuan going to financial institutions as the central bank backed stock rescue efforts.
  • With Sales Slowing, Luxury Brands Are Finding Hong Kong Rent Too High. Landlords on Hong Kong’s Russell Street a year ago could boast the highest retail rents in the world. Now they are adjusting to a new reality. Burberry Group Plc, Kering SA and jewelry retailer Chow Tai Fook Jewellery Group Ltd. are pushing landlords to lower rents on existing properties as luxury brands are scaling back amid plummeting sales. TAG Heuer closed its Russell Street store last week, citing high rents and declining traffic.
  • Aussie Firms on Alert as Confidence Slides Over China Slowdown. Australian business confidence fell in July, led by mining and construction firms as concerns mount about resource demand in response to China’s faltering growth outlook. National Australia Bank Ltd.’s sentiment index slumped to 4 from a revised 8 in June, a survey taken July 27-July 31 showed. The business conditions gauge, a measure of hiring, sales and profits, slid to 6 from a revised 10.
  • Aussie Drops 1% as China’s Record Yuan Cut Fractures Confidence. The Australian and New Zealand dollars tumbled after China, the South Pacific nations’ key trading partner, cut the yuan reference rate by the most on record. The Aussie and the kiwi are each down more than 10 percent this year against the greenback as weakening Chinese demand drives down prices for the commodity exports on which the Antipodean nations’ economies depend.
  • Ringgit Tracks Asia Currency Losses as China Slashes Yuan Fixing. Malaysia’s ringgit fell along with other Asian currencies as China’s record weakening in its daily reference rate spurred the biggest decline in the yuan since a dollar peg ended a decade ago. China took the unprecedented step just days after data showed exports contracted in July for a fifth month this year, underscoring concern that the region’s largest economy is slowing. Malaysia’s currency is Asia’s worst performer in 2015 as a slump in Brent crude weighs on the oil exporter’s earnings. A political scandal involving the prime minister and a looming U.S. interest-rate increase have sent the ringgit to a 17-year low, triggering capital outflows.
  • Chinese Airlines Tumble Most in Six Years on Slump in Currency. China Southern Airlines Co. led a plunge by the nation’s carriers on concern a weaker yuan will increase the size of their dollar-denominated debt and hurt earnings. China Southern sank 14 percent in Hong Kong trading at 10:23 a.m. local time, set for its biggest loss since April 2009. Air China Ltd. dropped 13 percent and China Eastern Airlines Corp. declined 10 percent.  
  • Goldman Sachs Cuts Aluminum Outlook Predicting Glut Through ’19. Goldman Sachs Group Inc. reduced its aluminum price forecasts by at least 21 percent from 2016 through 2018 because of a global surplus. The bank cuts its predictions to $1,525 a metric ton in 2016, to $1,625 in 2017 and to $1,700 in 2018 from $1,925, $2,100 and $2,200 as it projected a glut of about 2.5 million tons to 3 million tons from 2016 to 2019. Prices fell to a six-year low on the London Metal Exchange this month as exports from China surged. While shipments from the country, the world’s biggest producer, fell in July from the highest level this year, they have still increased 28 percent in the first seven months from a year earlier, customs figures showed on Saturday.  
Wall Street Journal: 
  • The World-Wide Undermining of Free Markets. China’s interference in its stock markets reflects a global trend of states trying to govern economic activity. Chinese authorities have gotten creative in their efforts to control the fall in the Shanghai and Shenzhen stock markets, which recently experienced their steepest one-day plunge in more than eight years. Prohibiting large shareholders and executives from selling their stocks, as announced last month, was a bold step, as was providing central-bank money to brokerage firms for equity purchases. Shutting down a large part of the markets was...
MarketWatch.com: 
CNBC: 
  • Australia’s CSL warns of biotech bubble. CSL, the Australian company that recently bought Novartis' influenza business, has warned of a "biotech bubble" amid a frenzy of mergers and acquisition activity across the healthcare sector.
Business Insider:
  • CITI: We've identified 'the most important consequence' of China's stock market crash. "The diminished credibility of policymakers may be the most important consequence of the crisis," a team of Citi Research economists said in a note to clients. The way they see it, officials were in charge of pumping up the stock market in an attempt to move the economy from one based on investment to based on consumption. The stock market's crash highlighted their inability to do so.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -.75% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 114.25 +.5 basis point.
  • Asia Pacific Sovereign CDS Index 64.5 -.75 basis point.
  • S&P 500 futures -.39%.
  • NASDAQ 100 futures -.11%.

Earnings of Note
Company/Estimate
  • (JASO)/.15
  • (ZBRA)/1.18
  • (CSC)/1.02
  • (CREE)/-.03
  • (FOGO)/.22
  • (FOSL)/.82
  • (MTGN)/.41
  • (SLW)/.13
  • (SYMC)/.43
Economic Releases
6:00 am EST
  • The NFIB Small Business Optimism Index for July is estimated to rise to 95.4 versus 94.1 in June.
8:30 am EST
  • Preliminary 2Q Non-Farm Productivity is estimated to rise +1.6% versus a -3.1% decline in 1Q.
  • Preliminary 2Q Unit Labor Costs are estimated unch. versus a +6.7% gain in 1Q.
10:00 am EST
  • Wholesale Inventories for June are estimated to rise +.4% versus a +.8% gain in May.
  • Wholesale Trade Sales for June are estimated to rise +.5% versus a +.3% gain in May.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The German ZEW Index, $23B 3Y T-Note auction, weekly US retail sales reports, JPMorgan Auto conference, Wedbush PacGrow Healthcare conference, Goldman Power/Utilities/MLP/Pipeline conference, Oppenheimer Tech/Internet/Communications conference and the (ORLY) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
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Stocks Surging into Final Hour on Central Bank Hopes, Less Eurozone/Emerging Markets Debt Angst, Short-Covering, Commodity/Tech Sector Strength

Posted by Gary .....at 3:31 PM
Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 12.37 -7.62%
  • Euro/Yen Carry Return Index 143.43 +.79%
  • Emerging Markets Currency Volatility(VXY) 9.32 -.85%
  • S&P 500 Implied Correlation 53.52 -2.27%
  • ISE Sentiment Index 83.0 +48.21%
  • Total Put/Call .53 -56.91%
  • NYSE Arms .39 -73.25% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 73.55 -2.1%
  • America Energy Sector High-Yield CDS Index 1,882.0 +2.30%
  • European Financial Sector CDS Index 74.06 -3.28%
  • Western Europe Sovereign Debt CDS Index 22.49 +.02%
  • Asia Pacific Sovereign Debt CDS Index 64.75 -.77%
  • Emerging Market CDS Index 329.71 -2.0%
  • iBoxx Offshore RMB China Corporates High Yield Index 121.23 +.20%
  • 2-Year Swap Spread 25.25 +.5 basis point
  • TED Spread 25.0 -3.0 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -19.25 +1.25 basis points
Economic Gauges:
  • 3-Month T-Bill Yield .07% +1.0 basis point
  • Yield Curve 151.0 +6.0 basis points
  • China Import Iron Ore Spot $56.40/Metric Tonne n/a
  • Citi US Economic Surprise Index -5.9 +2.3 points
  • Citi Eurozone Economic Surprise Index 15.9 +.9 point
  • Citi Emerging Markets Economic Surprise Index -5.8 -2.3 points
  • 10-Year TIPS Spread 1.70 unch.
  • # of Months to 1st Fed Rate Hike(Morgan Stanley) 4.39 -.23
Overseas Futures:
  • Nikkei 225 Futures: Indicating +107 open in Japan 
  • China A50 Futures: Indicating -76 open in China
  • DAX Futures: Indicating -3 open in Germany
Portfolio: 
  • Slightly Lower: On losses in my index hedges and emerging markets shorts 
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 75% Net Long
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Today's Headlines

Posted by Gary .....at 3:02 PM
Bloomberg: 
  • Ukraine Tells Allies East Situation Worsens as Attacks Rise. Ukraine said pro-Russian rebels increased the intensity of shelling to the highest in weeks, prompting the administration in Kiev to inform its allies about the deteriorating situation in the war-torn east. Pro-Russian separatists violated a truce 127 times in the past 24 hours, the military said on Monday. The heaviest fighting occurred near the village of Starognativka in the Donetsk region this morning, leaving “many casualties” among rebels, it said. One Ukrainian serviceman was killed and 16 wounded overnight, Oleksandr Turchynov, head of the National Defense and Security Council, said in an e-mailed statement. Tensions are building after more than a year of fighting, which has killed at least 6,700 people, according to the United Nations. Ukraine needs the war to end as it seeks to rebuild an economy crippled by recession, renegotiate its foreign debt and restore confidence in the hryvnia, this year’s third-worst-performing currency against the dollar. 
  • Here are the S&P 500 Stocks With the Highest Exposure to China. Wynn Resorts(WYNN), YUM! Brands(YUM), Intel(INTC), and more. In new research, Kostin and his group take a look at the China exposure of S&P 500 companies. Overall, the analysts say, some $168 billion of S&P 500 revenue comes explicitly from China, according to company disclosures. That's a relatively low amount, equivalent to just 2 percent of total sales in the overall index, but the topline figure masks some large variations between sectors and firms.
  • Russian GDP Plunges 4.6%. Russia’s economy shrank the most since 2009 after a currency crisis jolted consumer demand, while a selloff in oil threatens to drag the country into a deeper recession. Gross domestic product contracted 4.6 percent in the second quarter from a year earlier after a 2.2 percent decline in the previous three months, the Federal Statistics Service in Moscow said on Monday, citing preliminary data. That was worse than the median forecast for a 4.5 percent slump in a Bloomberg survey of 18 analysts. The Economy Ministry had projected that output shrank 4.4 percent in the period, calling it “the lowest point” for Russia.  
  • Negative Yields on $1.5 Trillion of Euro Bonds Show Flat Economy. Negative bond yields, unthinkable before Europe’s debt crisis, have become a fact of life as the euro region shows few signs of growth. More than four months after the European Central Bank started its bond-buying program to funnel money into the economy, $1.5 trillion of securities issued by governments in the region pay less than zero, according to data compiled by Bloomberg. That’s equivalent to 23 percent of that market. 
  • European Stocks Advance as Technology, Resource Companies Rally. European stocks advanced as technology and resource companies rebounded, while investors speculated on the possibility of Chinese stimulus. BHP Billiton Ltd. and Rio Tinto Group rose at least 1.5 percent, leading commodity producers to the best performance of the 19 industry groups on the Stoxx 600. ASML Holding NV added 2.7 percent, pushing technology stocks to the second-largest gain. Statoil ASA and Royal Dutch Shell Plc weighed on oil-and-gas shares even as oil rose from the lowest level in almost five months. The Stoxx Europe 600 Index climbed 0.7 percent to 399.82 at the close of trading, reversing earlier losses of as much as 0.7 percent.
  • Watch Out for a Deeper Credit Selloff as Commodity Pain Spreads. It’s getting harder to find U.S. credit investments that are insulated from the pain of slumping commodity prices. U.S. companies have generally been reporting lower quarterly earnings, even those outside an oil industry that’s been rocked by the almost 60 percent plunge in crude since last year’s peak. And revenues at most U.S. companies are positively correlated to metal prices, which have sagged in response to cooling growth from Asia to South America, according to Deutsche Bank AG analysts. Those aren’t great signs for investors who’ve bought $9 trillion of dollar-denominated corporate bonds since the end of 2008. But perhaps a worse omen is that investment-grade companies are piling on debt at the fastest pace in at least a decade, boosting such obligations by 17.1 percent versus last year, the analysts wrote in an Aug. 7 report. This suggests that companies are depending more on the global economy to accelerate at a time when it doesn’t seem like that’s happening. And it doesn’t bode well for investors now sitting on the biggest pile of U.S. corporate bonds ever.
  • S&P Flouts History in Break With Bonds That Often Ends Badly. As far as credit markets are concerned, U.S. stock investors have lost touch with reality. That’s seen in the extra yield bond investors demand over Treasuries. The spread has expanded by 0.48 percentage point from a year ago, the most since 2012, even as the Standard & Poor’s 500 Index rallied. While not without precedent, instances when anxiety in bonds didn’t seep into equities are rare. More than 70 percent of the time since 1996, as spreads widened as much as they have since April, the S&P 500 has fallen, with the average decline exceeding 10 percent, data compiled by Bloomberg show.
CNBC: 
  • Retail investors bet on Apple, market rebound: TD. Small investors were net buyers of U.S. stocks for a third straight month in July, according to data gleaned from 6 million TD Ameritrade accounts, keeping up their summer buying spree despite a market trading frustratingly sideways.
Zero Hedge:
NBC:
  • China Read Emails of Top U.S. Officials. China's cyber spies have accessed the private emails of "many" top Obama administration officials, according to a senior U.S. intelligence official and a top secret document obtained by NBC News, and have been doing so since at least April 2010. The email grab -- first codenamed "Dancing Panda" by U.S. officials, and then "Legion Amethyst" -- was detected in April 2010, according to a top secret NSA briefing from 2014. The intrusion into personal emails was still active at the time of the briefing and, according to the senior official, is still going on.
Reuters:
  • OPEC has no plan for emergency meeting on oil price drop -delegates. The Organization of the Petroleum Exporting Countries has no plan to hold an emergency meeting to discuss the drop in oil prices before its next scheduled gathering in December, two OPEC delegates said on Monday. Earlier on Monday, Algerian Energy Minister Salah Khebri was reported by state news agency APS as saying discussions about holding such a meeting were ongoing.
Telegraph:
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