Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Gaming +1.4% 2) Retail +1.4% 3) Semis +1.3%

Stocks Rising on Unusual Volume:

• ARMH, BURL, IOC, XENT, GME, GIMO, BID and FIVE

Stocks With Unusual Call Option Activity:

• 1) GME 2) ANF 3) TWX 4) K 5) SKX

Stocks With Most Positive News Mentions:

• 1) GRPN 2) KMI 3) BURL 4) COH 5) VRX

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running -20.8% Below 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 60.4% of Issues Advancing, 36.6% Declining
• 110 New 52-Week Highs, 4 New Lows
• 61.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.1%
• Vix 12.7 +.2%
• Total Put/Call .79 -6.0%
• TRIN/Arms 1.23 -.5%

Monday Watch

Today's Headlines

Bloomberg: 

• Payback Time in Turkey as Coup Survivor Erdogan Cracks Down. Turkish President Recep Tayyip Erdogan ordered massive reprisals for the failed attempt to oust him in a coup, with thousands of army officers and judges swept up in a nationwide wave of arrests. The resurgent leader, whose grip on power seemed to have been shaken just a day earlier, also pressed the U.S. to extradite the cleric he accuses of being the ringleader. Well past midnight, supporters of Erdogan’s government were celebrating in city centers that had been engulfed in bloody gun battles and airstrikes the previous night.
• Chaos Plays Into Erdogan’s Hands After a Career Shaped by Coups. The political career of Turkish President Recep Tayyip Erdogan has been shaped by military coups, real or imagined, for more than four decades. Friday’s attempt is likely to prove the most consequential, and potentially empowering, of them all. Whatever goals the rebels had, they may have ended up securing Erdogan’s position at a time of multiplying challenges to his popularity: Islamic State terror attacks, a war with militant Kurds, a failing foreign policy and weakened economic growth. 
• China June Home Prices Rise in Fewer Cities Amid Slower Sales. China’s home-price gains tapered off last month, as second-tier cities joined some of the nation’s largest hubs in imposing housing curbs to cool surging prices. New-home prices excluding government-subsidized housing climbed in 55 cities in June, down from 60 in May, among the 70 tracked, the National Bureau of Statistics said Monday. Prices dropped in 10 cities, compared with four a month earlier. They were unchanged in five cities in June.
• $7,000-a-Month ‘Shameless China’ Blogger Loses All With One Post. At the peak of her WeChat blogging career, Laura Lian was earning about $7,000 a month. Writing satirical articles for more than 220,000 fans, she won backing from an investor and quit her public-relations job. Then it all came tumbling down. Internet authorities shut down her blog, calledShameless China, with no warning. It happened just after she posted an article mocking Chinese men’s hairstyles, including former President Jiang Zemin’s slick-backed coiffure. “It didn’t dawn on me how serious the situation was,” Lian said. “I didn’t realize I was never getting back this account and all my followers.”
• Abe’s Enforcer Rules Out Deficit Bonds to Fund Stimulus Package. Japan’s top government spokesman ruled out the issuance of deficit bonds to fund an economic stimulus package planned for the autumn, hinting at the use of construction bonds for longer-term investments. “We want to make full use of every possible resource, including for financing, to make it robust,” Chief Cabinet Secretary Yoshihide Suga said in an interview Saturday at his offices in Tokyo. “I want to make it clear that we are not planning to issue” deficit bonds, the 67-year-old said. In his first speech after winning an upper house election on July 10, Prime Minister Shinzo Abe outlined plans for a “bold” stimulus package. He said it would include funds for regional infrastructure, such as bringing forward the construction of maglev and other high-speed train lines and improving facilities at ports for tourist cruise ships. 
• Oil Producers Prepare for Second-Half Slump as Rally Sputters. Oil producers aren’t betting on the rally. After surviving two years of low prices, they’re gearing up for a third by buying protection against a renewed downturn. Laredo Petroleum Inc. said July 14 that it hedged more than two million barrels of 2017 output earlier this month. Drillers have increased bets on falling prices by 29 percent this year. Crude has declined more than 10 percent since hitting a 2016 peak in early June, stoking fears of another second-half slump. It was July that broke the back of last year’s bull-run, with oil plummeting 21 percent. The prospect of a repeat has drillers doing everything they can to raise cash, from selling stocks and bonds to adding fresh hedges.
• Gold’s in ‘Major Bull Market’ and May Surpass $1,500, DBS Says. Gold is in a major bull market and may surge to more than $1,500 an ounce as low interest rates buoy demand and the U.S. presidential election looms, according to DBS Group Holdings Ltd., which foresaw this year’s rally and is now advising investors to buy any declines.

Wall Street Journal: 

• Coup Attempt in Turkey Highlights Risks for Emerging Markets. Analysts See Dangers in Reach for Yield. The failed coup in Turkey highlights the pitfalls facing global investors fleeing low returns in the West for hard-to-assess, idiosyncratic risks in emerging markets.
• Corporate Profits Set to Shrink for Fourth Consecutive Quarter. S&P 500 companies expected to report earnings decline of 4.7%.
• As Rates Sink, Housing Bubbles Rise. Canada, Australia and Sweden are among central banks caught between supporting their economies and addressing financial threats.
• Turkey Faces Its Iran 1979 Moment. Empowered by surviving a coup, Erdogan may be tempted to encourage an Islamist counterrevolution. Turkey is at a pivotal point in its history following the failed coup attempt of July 15. President Recep Tayyip Erdogan, having survived the coup plot, won fresh legitimacy and gained a new ally: religious fervor in the streets. Mr. Erdogan can use this impetus either to become an executive-style president, or he can encourage the forces of religion to take over the country, crowning himself as an Islamic leader.

Barron's:

• Had bullish commentary on (CI), (BAC), (KW) and (MSG). 

Fox News:

• 3 law enforcement officers killed, 3 others injured in Baton Rouge shooting. (video) The Louisiana governor called the shooting of Baton Rouge deputies and officers "an absolutely unspeakable heinous attack" Sunday, as the city mourned the deaths of three officers and prayed for the recovery of one "fighting for his life." Louisiana Gov. John Bel Edwards described Sunday morning's deadly ambush on six Baton Rouge officers as "unjustifiable" and said, "the violence, the hatred just has to stop." 

CNBC:

• Stock market's moonshot to record highs is all hype, Cornerstone's Worth says. (video)
• Nice attacker radicalized fast, French PM says as more victims fight for life. The man who killed 84 Bastille Day revellers in the French city of Nice by driving a truck at a crowd had been radicalized recently and quickly, France's Prime Minister told a newspaper as a further 18 victims fought for their lives on Sunday.

Zero Hedge: 

• 29-Year-Old Black Male Dead After Killing 3 Cops, Wounding 3 More In Baton Rouge "Cowardly" Ambush.
• ISIS Mouthpiece Urges 'Black Community' To Join Islam, Fight US Government.
• Deutsche Bank(DB) Loves Helicopter Money: Why "Big Inflation Is Coming... But Will First Require A Crisis".
• Italy Tasks JPMorgan With Creating A €50 Billion Bank Bailout. (graph)
• "A Gift From God" - Erdogan Arrests 6,000 In Historic "Systemic Purge", Incirlik Airbase Commander Detained.
• Erdogan's Arch-Enemy Accuses Turkish President Of Staging Coup, Compares Him To Hitler.
• Trump Narrows Clinton's Lead But Latest Polls Show Voters "Hate Them Both". (graph)
• Illinois Obamacare Co-Op Goes Bust Leaving Tens of Thousands At Risk.
• "The Credit Ponzi Is Dead" - Brexit Or Not, The Pound Will Crash. (graph)
• The Counter-Coup Begins: Erdogan Purges 2,745 Judges, Prosecutors; Arrests Hundreds.
• Grant Williams: The Rising Danger Of A Bidless Market.
• Turkey Suspends All US Operations Against ISIS At Incirlik Airbase, Which Vaults B61 Nuclear Bombs.
• Jihad Awakens Europe.
• Turkey Accuses US Of Being Behind Military Coup, Demands Extradition Of Cleric Gulen.
• With "Stock Valuations At Extremes" Goldman's Clients Are Asking Just One Question.
• "Janet Yellen Sounds Like A Fumbling Idiot No Matter What She Does". (graph)
• Great Numbers! Curious Timing? (graph)
• ISIS Takes Responsibility For Nice Attack, Warns "Crusader States" Not Safe. 
• The One Key Indicator Pointing To A Bear Market. (graph)
• "This Is Going To Get Very Ugly" - Former Top CIA Officer Says "Obama Has Lost Control Of The Middle East".
• Global Central Banks Are On A Collective Suicide Mission.

Business Insider:

• It's a 'mystery' why two rebel jets that could have attacked the president of Turkey's plane didn't.
• Italy isn't the only European country with 'a systemic banking crisis'.
• 9 million barrels of oil are being hoarded on tankers in the North Sea.
• Not everyone in the hedge fund industry is miserable.
• 2 years later: Video shows the moment Russian-backed rebels realized they shot down a civilian airliner in eastern Ukraine.
• This huge investor is preparing for a 'bonfire of distress'.
• One chart shows all the risks that could lead Italy to tear Europe apart.
• A stock market crash will take the California Pension system along with it.
• These are STRATFOR's disconcerting predictions for the third-quarter of 2016.
• Police in France arrest 3 in truck attack investigation.
• This stock market rally isn't like the others. 
• 'WORRISOME': Donald Trump's convention speaking list is void of many of the GOP's emerging stars.
• Caterpillar(CAT) keeps digging itself into a bigger hole.

ABC News:

• Facebook Post Defines How It Was to Be Black and an Officer. Baton Rouge police officer Montrell Jackson, who was killed Sunday, had written a Facebook post expressing how difficult it was for him to be both a black man and a police officer. The message was posted July 8, just three days after a black man was shot and killed by police in Baton Rouge. Here is the post:

The Daily Caller:

• Baton Rouge Shooter Gavin Eugene Long Was Nation Of Islam Member, Railed Against ‘Crackers’ On YouTube Channel [VIDEO].

Telegraph:

• Why Italy's banking crisis will shake the eurozone to its core.
• Italy’s wrangle with Europe will dwarf Brexit shock.

Independent:

• Poll: Voters do not want second EU referendum and think Theresa May should continue without general election.

Night Trading

• Asian indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 119.75 -.75 basis point.
• Asia Pacific Sovereign CDS Index 47.0 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 72.62 +.09%.
• S&P 500 futures +.15%.
• NASDAQ 100 futures +.17%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (BAC)/.44
• (CALM)/-.19
• (SCHW)/.30
• (HAS)/.39
• (JBHT)/.97
• (PETS)/.31
• (BRO)/.44
• (EMC)/.41
• (IBM)/2.88
• (IEX)/.93
• (NFLX)/.92
• (RMBS)/.13
• (STLD)/.56
• (VMW)/.95
• (YHOO)/.10   

Economic Releases

10:00 am EST

• The NAHB Housing Market Index for July is estimated at 60.0 versus 60.0 in June.

4:00 pm EST

• Net Long-Term TIC Flows for May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The (KMX) analyst day could also impact trading today.

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

Weekly Outlook

• Week Ahead by Bloomberg.
• Wall St. Week Ahead by Reuters.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on rising European/Emerging Markets/US High-Yield debt angst, commodity weakness, yen strength, technical selling, terrorism fears, earnings outlook concerns and profit-taking. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Stocks Slightly Lower into Final Hour on Terrorism Fears, European/Emerging Markets/US High-Yield Debt Angst, Technical Selling, Energy/Road & Rail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.65 -1.33%

• Euro/Yen Carry Return Index 122.03 -.33%

• Emerging Markets Currency Volatility(VXY) 9.69 -.51%

• S&P 500 Implied Correlation 49.30 +3.90%

• ISE Sentiment Index 99.0 -3.88%
  

• Total Put/Call .86 +38.71%

• NYSE Arms 1.68 +168.0% 

Credit Investor Angst:

• North American Investment Grade CDS Index 71.43 +.13%
  

• America Energy Sector High-Yield CDS Index 715.0 -1.55%

• European Financial Sector CDS Index 97.68 +2.02%

• Western Europe Sovereign Debt CDS Index 25.59 -.04%

• Asia Pacific Sovereign Debt CDS Index 46.81 -1.12%

• Emerging Market CDS Index 251.52 +1.55%
  

• iBoxx Offshore RMB China Corporate High Yield Index 130.75 +.09%

• 2-Year Swap Spread 19.75 +2.0 basis points
  

• TED Spread 37.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -48.0 -4.25 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.84 -.29%
• 3-Month T-Bill Yield .31% unch.

• Yield Curve 89.0 +3.0 basis points
  

• China Import Iron Ore Spot $58.42/Metric Tonne -.09%

• Citi US Economic Surprise Index 21.90 +6.5 points

• Citi Eurozone Economic Surprise Index 4.5 unch.

• Citi Emerging Markets Economic Surprise Index -12.20 +4.6 points

• 10-Year TIPS Spread 1.51% +2.0 basis points
• 22.7% chance of Fed rate hike at Sept. 21 meeting, 22.7% chance at Nov. 2 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +108 open in Japan 
• China A50 Futures: Indicating -15 open in China

• DAX Futures: Indicating -15 open in Germany

Portfolio: 

• Slightly Higher: On gains in my biotech sector longs
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running -13.9% Below 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 52.9% of Issues Advancing, 44.0% Declining
• 118 New 52-Week Highs, 4 New Lows
• 61.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.0%
• Vix 12.5 -2.5%
• Total Put/Call .78 +25.81%
• TRIN/Arms 1.58 +156.43%