Bull Radar

Style Outperformer:

• Large-Cap Growth -1.5%

Sector Outperformers:

• 1) Gaming unch. 2) HMOs -.1% 3) Banks -.2%

Stocks Rising on Unusual Volume:

• LXRX, CLCD, FNSR, LOCO, TGP, RH, ZUMZ and CVI

Stocks With Unusual Call Option Activity:

• 1) FNSR 2) NVAX 3) PG 4) MSTX 5) REC

Stocks With Most Positive News Mentions:

• 1) RH 2) FNSR 3) ZUMZ 4) HOV 5) MON

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +8.5% Above 100-Day Average
• 0 Sectors Rising, 10 Sectors Declining
• 8.5% of Issues Advancing, 90.4% Declining
• 17 New 52-Week Highs, 14 New Lows
• 65.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 23.8%
• Vix 14.6 +16.6%
• Total Put/Call 1.04 +7.2%
• TRIN/Arms .51 -35.25%

Friday Watch

Evening Headlines

Wall Street Journal: 

• U.S. Gets Ready to Assist Offensive to Retake Key Iraq City From Islamic State. Additional troops arrive to bolster preparation for campaign to reclaim Mosul; defense officials anticipate battle will begin in October.
• Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert. U.S. aluminum executives claim Liu Zhongtian, founder of Chinese metals conglomerate China Zhongwang, used a factory in Mexico to game the global trade system.

Fox News:

• Clinton email had 'multiple' classified markings, challenging her claim to FBI. (video) New details about the emails on Hillary Clinton's personal server that contained classified markings call into question her claim to the FBI that she didn't know what the markings meant -- and even believed they represented an alphabetical listing of paragraphs.

CNBC:

• Asia markets open mostly lower; ASX down 0.9 pct, Nikkei up 0.3 pct, Kospi down 0.8 pct. Asian markets opened mostly lower after a lower finish from U.S. equities and disappointment with the European Central Bank (ECB) decision to stand pat on policy. Traders will be watching for China's inflation data and South Korea's central bank rate decision later. Australia's S&P/ASX 200 opened down 0.9 percent, dragged by losses in its heavily-weighted financials subindex, which slid 1.15 percent, but losses were offset by its energy sector rising 0.64 percent.

Zero Hedge:

• Wells Fargo Fires 5,300 For Engaging In Massive Fraud, Creating Over 2 Million Fake Accounts.
• DB Warns That 35-Year Economic Super Cycle Is Officially Ending.
• Brace For "VaR Shock" - How The Bank Of Japan May Be About To Unleash A Global Selloff.
• Matt Lauer Slammed By Mainstream Press After Vet Tells Hillary "I Would Have Been Imprisoned" If I Did What You Did.
• Labor Department Revises Away 150,000 Jobs.
• Fed Wants To Bar Banks From Owning Physical Commodities, Equities.
• "It's Bordering Chaos": $14 Billion In Cargo Stranded At Sea, Crews "Go Crazy" On Hanjin Ghost Ships.
• Oilgasm Unable To Save Stocks As Draghi 'Dud' Sparks Bond Bloodbath. (graph)

Business Insider:

• Obama’s grand finale trip to Asia has turned into a disaster.
• US commercial bankruptcies are soaring.
• A massive oil discovery could supply every refiner on the Gulf Coast.

Telegraph:

• ECB's Mario Draghi has run out of magic as deflation closes in.
• US recession jitters stoke fears of impotent Fed and fiscal paralysis.

Night Trading 

• Asian equity indices are -.75% to -.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 106.5 -.75 basis point.
• Asia Pacific Sovereign CDS Index 36.0 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 73.26 -.02%. 
• S&P 500 futures +.01%. 
• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (HOV)/.08
• (KR)/.45
• (MFRM)/.65 

Economic Releases
10:00 am EST

• Final Wholesale Inventories MoM for July are estimated to rise +.1% versus unch. in June.
• Wholesale Trade Sales MoM for July are estimated to rise +.2% versus a +1.9% gain in June.
  

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Rosengren speaking, Fed's Kaplan speaking and the Canadian Unemployment report could also impact trading today.

BOTTOM LINE:  Asian indices are lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Falling into Afternoon on Fed Rate Hike Fears, European/Emerging Markets/US High-Yield Debt Angst, Earnings Outlook Worries, Tech/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.34 +3.35%

• Euro/Yen Carry Return Index 120.37 +.77%

• Emerging Markets Currency Volatility(VXY) 9.58 +.21%

• S&P 500 Implied Correlation 43.52 +4.99%

• ISE Sentiment Index 97.0 -10.19%
  

• Total Put/Call .98 +12.64%

• NYSE Arms .75 -36.33% 

Credit Investor Angst:

• North American Investment Grade CDS Index 72.02 +.54%
  

• America Energy Sector High-Yield CDS Index 680.0 +1.34%

• European Financial Sector CDS Index 85.05 +2.19%

• Western Europe Sovereign Debt CDS Index 24.41 -.43%

• Asia Pacific Sovereign Debt CDS Index 35.75 +.82%

• Emerging Market CDS Index 233.11 +.82%
  

• iBoxx Offshore RMB China Corporate High Yield Index 131.62 -.02%

• 2-Year Swap Spread 26.0 -.25 basis point

• TED Spread 51.0 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -28.0 +4.25 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.34 -.10%
• 3-Month T-Bill Yield .34% unch.

• Yield Curve 84.0 +4.0 basis points
  

• China Import Iron Ore Spot $58.14/Metric Tonne -.55%

• Citi US Economic Surprise Index -4.8 +.9 point

• Citi Eurozone Economic Surprise Index -14.1 -.2 point

• Citi Emerging Markets Economic Surprise Index -10.0 -2.5 points

• 10-Year TIPS Spread 1.54% +3.0 basis points
• 32.6% chance of Fed rate hike at Nov. 2 meeting, 57.9% chance at Dec. 14 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -38 open in Japan 
• China A50 Futures: Indicating +21 open in China

• DAX Futures: Indicating -23 open in Germany

Portfolio: 

• Slightly Higher: On gains in my biotech longs, index hedges and emerging markets shorts

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

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.2%

Sector Underperformers:

• 1) Computer Hardware -1.7% 2) Steel -1.6% 3) Computer Services -1.3%

Stocks Falling on Unusual Volume: 

• WNRL, TSCO, ECHO, AMH, WATT, QVCA, CVGW, EVH, LSI, HPE, FNSR, GWRE, PSO, AIRM, LOXO, BNED, TWTR, LPL, CHTR, HUN, LULU, FCFS, OMCL, AAPL, KWR, HUN, DVAX, ECHO and BNED

Stocks With Unusual Put Option Activity:

• 1) MJN 2) XLI 3) LQD 4) ETE 5) RH

Stocks With Most Negative News Mentions:

• 1) TSCO 2) PIR 3) AIRM 4) MDRX 5) LULU

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value unch.

Sector Outperformers:

• 1) Oil Service +1.7% 2) Energy +1.2% 3) Gaming +1.0%

Stocks Rising on Unusual Volume:

• APIC, VRNT, TLRD, CLVS, TOUR, TREE, APA, BLUE, TLRD, TSRO, FRAN, CRC and MRC

Stocks With Unusual Call Option Activity:

• 1) MSTX 2) RAD 3) PRU 4) PSX 5) BRCD

Stocks With Most Positive News Mentions:

• 1) VMW 2) LLY 3) ICLD 4) GPX 5) SYNL

Charts:

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