Bear Radar

Style Underperformer:

• Large-Cap Value +.5%

Sector Underperformers:

• 1) Computer Services -1.7% 2) Road & Rail +.2% 3) Energy +.3%

Stocks Falling on Unusual Volume: 

• AYA, LDL, IBM, GWW, WWW, CUDA, THRM, BMI, OMC, LEA, MGA, EXPDE, FLOW, KNOP, STC, JNJ, KSU, MSM, NKTR, FIVE, VC, TEN, HAFC, BIS, LII, CAMP, OAS and BANC

Stocks With Unusual Put Option Activity:

• 1) DPZ 2) PSX 3) IBM 4) LQD 5) INTC

Stocks With Most Negative News Mentions:

• 1) CRZO 2) USDP 3) KSU 4) WFT 5) NX

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.9%

Sector Outperformers:

• 1) HMOs +4.5% 2) Gold & Silver +2.9% 3) Hospitals +2.8%

Stocks Rising on Unusual Volume:

• MMYT, TACO, RECN, DPZ, NFLX, UNH, CE, TTS, HOG, ILMN, MDCO and NRG

Stocks With Unusual Call Option Activity:

• 1) AA 2) EMN 3) SHPG 4) UNH 5) HPE

Stocks With Most Positive News Mentions:

• 1) UNH 2) MDCO 3) NFLX 4) CNC 5) SHEN

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -8.2% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 76.1% of Issues Advancing, 21.1% Declining
• 48 New 52-Week Highs, 16 New Lows
• 54.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.1%
• Vix 15.5 -4.4%
• Total Put/Call .9 -6.3%
• TRIN/Arms 1.34 +21.7%

Tuesday Watch

Evening Headlines

Bloomberg:

• Beyond the Headlines: Five Things to Watch in China’s GDP Report. With the world’s second-largest economy stable for now, you’ll need to look under the hood to see where the real action is when China releases its third-quarter economic report card on Wednesday. Gross domestic product probably expanded 6.7 percent from a year earlier in the three months through September, the same pace as the previous two quarters and smack in the middle of the government’s full-year target pace, according to a Bloomberg survey of economists ahead of a report due Wednesday at 10 a.m. in Beijing. Industrial output, fixed-asset investment and retail sales all likely picked up last month, surveys show. 
• China Casino Detentions Cast Pall Over Macau’s Nascent Recovery. China’s detention of 18 Crown Resorts Ltd. employees may have been intended as a warning to foreign casinos, but it’s also unsettling gambling businesses in Macau, the nation’s own betting enclave. In theory, the detentions of workers at the Australian company late last week shouldn’t affect Chinese casinos and could even help them by putting higher scrutiny on competitors outside of Macau. But a more watchful government eye is unwelcome in an industry that has been roiled by corruption crackdowns in the past few years. 
• Asian Stocks Rise as Mixed U.S. Data Damp Rate Hike Outlook. Asian stocks rose as mixed U.S. economic data supported the case for monetary policy to remain accommodative. Japanese shares fell as the yen strengthened. The MSCI Asia Pacific Index gained 0.1 percent to 138.28 as of 9:01 a.m. in Tokyo. Japan’s Topix index lost 0.1 percent as the yen traded at 103.88 against the dollar.
• OPEC Spat Over Production Data Grows as Iran Rejects Estimates. (video) OPEC’s struggle with the first step of its new production deal -- agreeing on how much its members are pumping -- deepened as Iran became the third nation to openly question the organization’s data. Output estimates compiled by OPEC’s Vienna-based secretariat are “not acceptable,” Ali Kardor, managing director of National Iranian Oil Co., said Monday in Tehran. Iran is pumping 3.89 million barrels a day, Kardor said, or about 300,000 a day more than OPEC estimated the country produced last month. Iraq and Venezuela have already criticized the data, which OPEC compiles from “secondary sources” such as news agencies.
• Ford(F) to Idle Four Factories as Slowing Sales Bloat Inventory. Ford Motor Co. is temporarily halting one of two plants that builds the top-selling F-150 pickup as it idles four factories this month amid slowing U.S. auto sales. This week, Ford is shutting its Louisville, Kentucky, factory building the Escape and Lincoln MKC sport utility vehicles, as well as two plants in Mexico that make the Fusion sedan and Fiesta subcompact, according to an e-mailed statement. Next week, the second-largest U.S. automaker said, it will close the F-150 factory near Kansas City for seven days. And starting Oct. 31, the Louisville plant will be idled for another week, Ford said.

Wall Street Journal:

• Iraqi Forces Advance to Edges of ISIS-Held Mosul. Government troops and Kurdish fighters move the Islamist militant group’s last major Iraqi stronghold.
• Caterpillar(CAT) CEO to Step Down at Year’s End. Doug Oberhelman to remain chairman until March; Jim Umpleby to be new CEO.

Fox News:

• FBI docs: Clinton 'contemptuous' of security agents, put team at risk for photo op. (video) Then-Secretary of State Hillary Clinton was "contemptuous" toward security agents and even put officials traveling with her in “unnecessary danger” by pursuing a photo op for her "election campaign" in a risky area of Jakarta during a 2009 visit, according to a security agent interviewed by the FBI.

CNBC:

• Goldman: It's looking like a 'wave' for Democrats, and that could be bad for stocks. (video)
• Icahn: I'm 'more and more' concerned about the stock market. (video)

Zero Hedge:

• Financial Repression Is Now "In Play".
• Former German Central Banker Reveals "The Real Danger In Finance".
• The Case For Real Assets: Buy Humilation, Sell Hubris.
• Podesta's Iran Deal Admission Exposes Tragic Results Of AP's 2013 Treachery.
• Deutsche Bank(DB) Pays $38 Million To Settle Silver Manipulation Lawsuit.
• Diamonds Are Forever, But Bonds Are A Girl's Best Friend. (graph)
• IBM(IBM) Sinks After 18th Consecutive Revenue Drop; Margins Miss; EPS "Beats" On Tax Rate Fudge. (graph)
• Market Myth Shattered: Ned Davis Warns "There's No More Cash On The Sidelines". (graph)
• Netflix(NFLX) Soars 20% As Subscribers Smash Expectations But Cash Burn Explodes.
• Bonds & Bullion Bid, Stocks Skid As China Currency Collapse Continues. (graph)

Business Insider:

• Donald Trump says the latest FBI documents on Hillary Clinton prove 'corruption at the highest level'.
• Walmart's(WMT) price cuts should terrify Target, Dollar General, and Family Dollar.
• North Korea warns 'a preemptive nuclear strike is not something the US has a monopoly on'.

Telegraph:

• Euro 'house of cards' to collapse, warns ECB prophet.

Financial News:

• China Should Closely Monitor Bank Asset Quality. China should closely monitor banks' asset quality, as well as risks from insurance funds and cross-sector financial services, a front page commentary in PBOC-backed Financial News says. China should prevent the spread of financial risks across markets and sectors and the spread of risks from the real economy, regions and companies to the financial system.

Night Trading 

• Asian equity indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 118.5 +1.75 basis points. 
• Asia Pacific Sovereign CDS Index 34.75 +.75 basis point.
• Bloomberg Emerging Markets Currency Index 72.14 +.12%. 
• S&P 500 futures +.29%. 
• NASDAQ 100 futures +.32%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (BLK)/4.99
• (CMA)/.78
• (DPZ)/.89
• (GS)/3.83
• (GWW)/2.99
• (HOG)/.64
• (JNJ)/1.65
• (KSU)/1.18
• (PM)/1.23
• (RF)/.21
• (UNH)/2.08
• (WWW).48
• (ADTN)/.24
• (BMI)/.33
• (CREE)/.10
• (INTC)/.72
• (IBKR)/.32
• (ISRG)/5.16
• (LLTC)/.54
• (MANH)/.46
• (YHOO)/.14

Economic Releases
8:30 am EST

• The CPI MoM for September is estimated to rise +.3% versus a +.2% gain in August.
• The CPI Ex Food and Energy MoM for September is estimated to rise +.2% versus a +.3% gain in August.
• Real Avg. Weekly Earnings YoY for September.    

10:00 am EST

• The NAHB Housing Market Index for October is estimated to fall to 63.0 versus 65.0 in September.

4:00 pm EST

• Net Long-Term TIC Flows for August.
  

Upcoming Splits 

• None of note

Other Potential Market Movers

• The China GDP report, UK CPI report, weekly US retail sales reports, Bio Investor Forum, (KBH) investor conference, (OXM) investor day and the (CAG) investor day could also impact trading today.

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

Stocks Lower into Final Hour on Earnings Outlook Concerns, Oil Decline, Yen Strength, Restaurant/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 16.35 +1.43%

• Euro/Yen Carry Return Index 119.28 -.09%

• Emerging Markets Currency Volatility(VXY) 10.15 -.1%

• S&P 500 Implied Correlation 49.78 +1.76%

• ISE Sentiment Index 84.0 +10.53%
  

• Total Put/Call .97 +4.3%

• NYSE Arms 1.09 -8.55% 

Credit Investor Angst:

• North American Investment Grade CDS Index 76.06 +.72%
  

• America Energy Sector High-Yield CDS Index 598.0 -.98%

• European Financial Sector CDS Index 99.44 +.85%

• Western Europe Sovereign Debt CDS Index 19.57 -5.32%

• Asia Pacific Sovereign Debt CDS Index 34.63 +1.42%

• Emerging Market CDS Index 247.78 +2.08%
  

• iBoxx Offshore RMB China Corporate High Yield Index 132.46 +.12%

• 2-Year Swap Spread 22.50 +.5 basis point

• TED Spread 59.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -45.50 -1.5 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.05 +.02%
• 3-Month T-Bill Yield .30% +2.0 basis points

• Yield Curve 95.0 +1.0 basis point
  

• China Import Iron Ore Spot $58.38/Metric Tonne +1.92%

• Citi US Economic Surprise Index -9.70 -2.1 points

• Citi Eurozone Economic Surprise Index 21.8 -.7 point

• Citi Emerging Markets Economic Surprise Index -18.10 +.8 point

• 10-Year TIPS Spread 1.69% +5.0 basis points
• 65.9% chance of Fed rate hike at Dec. 14 meeting, 67.3% chance at Feb. 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -40 open in Japan 
• China A50 Futures: Indicating +1 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.3%

Sector Underperformers:

• 1) HMOs -1.7% 2) I-Banks -1.3% 3) Oil Service -1.3%

Stocks Falling on Unusual Volume: 

• OPB, SWNC, CORR, LII, JBHT, CHRW, LCI, MSG, NFLX, COH,  BPMC, LION, ANTM, STML, HP, MMYT, WDC, ROLL, SWN, TSLA, SCHW, CHU, AMZN, PLCE and OPHT

Stocks With Unusual Put Option Activity:

• 1) CLF 2) MRK 3) JWN 4) SCHW 5) HOG

Stocks With Most Negative News Mentions:

• 1) DHX 2) WDR 3) STRL 4) ANTM 5) MRO

Charts:

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