Bull Radar

Style Outperformer:

• Small-Cap Value +1.9%

Sector Outperformers:

• 1) Biotech +7.7% 2) Steel +6.7% 3) Coal +6.5%

Stocks Rising on Unusual Volume:

• CXW, UBIO, GVA, CELG, PRI, PFE, GEO, MLM, OSK, LPLA, DERM, FGEN, OMF, VMC, URI, SCMP, CVI, IONS, ARIA, NAVI, CMC, X, ETE, HEES, ARLP, HRI, FGEN, ICPT, PBF, EXEL, XLRN, URI, SGEN, MGNX, HALO, USCR, BEN, TEX, NUE, ACM, TPC, ETP, RARE, REGN, SC, HQY, LXRX, RS, AMP, FLR, MRCY, SXC, BMRN, NBIX, OSK, HII, JEC, UNM, INCY, MCK, AKRX, VRTX, STLD, ALDR and TRN

Stocks With Unusual Call Option Activity:

• 1) STZ 2) CXW 3) GD 4) ABBV 5) TMUS

Stocks With Most Positive News Mentions:

• 1) MTW 2) LNC 3) KEY 4) VOYA 5) F

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +107.9% Above 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 42.9% of Issues Advancing, 55.0% Declining
• 126 New 52-Week Highs, 99 New Lows
• 49.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.2%
• Vix 15.9 -15.0%
• Total Put/Call 1.13 -24.2%
• TRIN/Arms .40 -58.7%

Wednesday Watch

Evening Headlines

Bloomberg:

• U.S. Stock Futures Tumble as Election Narrows Into Dead Heat. (video) U.S. stock futures plunged as investors rushed to price in a potential victory by Donald Trump in the U.S. presidential race, as rising odds of victory for the Republican in a succession of key swing stakes shocked investors into a near-panic and threw global markets into disarray. December contracts on the S&P 500 Index lost 3.1 percent to 2,068 at 9:48 p.m. in New York, wiping out gains that reached 0.8 percent. Key battlegrounds of Virginia, North Carolina and New Hampshire are among other states where polls have closed and results have been too close to call, but show Trump leading over Democrat Hillary Clinton.
• China’s Factory Prices Quicken as Drag on Global Inflation Eases. China’s factory-gate inflation picked up further last month while consumer prices accelerated, suggesting government efforts to reduce overcapacity have gained some traction and alleviating a source of global disinflationary pressure.
• Asian Stocks Drop as Results Show Tight Race for U.S. Presidency. Asian stocks fell in volatile trading as investors await the outcome of the U.S. presidential election, with early results showing Democrat Hillary Clinton and Republican Donald Trump locked in a tight race. The MSCI Asia Pacific Index lost 1.1 percent to 136.29 as of 11:25 a.m. in Tokyo, after rising as much as 0.8 percent.
• OPEC Boss Warns of Oil-Market Instability If No Deal on Output. OPEC’s chief warned of prolonged instability in the oil market if the producer group and other major crude suppliers fail to act jointly to limit output and curb a global glut. An inability of the Organization of Petroleum Exporting Countries to implement the deal it reached in Algiers in September will have “negative consequences on the already fragile state of the industry,” OPEC Secretary-General Mohammed Barkindo said Tuesday at a briefing in Abu Dhabi. Markets are “eagerly awaiting” combined action by OPEC and non-OPEC producers, he said.
• Icahn More Than Doubles Hertz(HTZ) Stake as Earnings Miss Slams Stock. Billionaire investor Carl Icahn more than doubled his stake in Hertz Global Holdings Inc., after the rental-car company reported third-quarter profit that badly missed estimates. Icahn, 80, bought an additional 15.1 million Hertz shares, boosting his stake to 33.77 percent from about 15.6 percent, according to a filing Tuesday. The investor, who first revealed a stake in Hertz in 2014, was already the company’s biggest shareholder.
• GoPro(GPRO) to Recall New Karma Drones on Reports of Power Failure.

Wall Street Journal:

• 2016 Election Day: Live Results and Analysis.

Fox News:

• 2016 Election Coverage: Live Blog:
• Tight race for White House as Trump wins Midwest states; Clinton claims East Coast victories.

CNBC:

• Billionaire Ken Langone: The grim reaper is not far away. (video)

Zero Hedge:

• GMO's Grantham Warns Of "Dismal Consequences" For Investors In A World Where Bubbles Don't Burst.
• Homebuilders Hit 8 Month Lows After 'Death Cross' Strikes. (graph)
• Walgreens Sues Theranos, Seeks $140 Million.
• WTI Crude Rises After Big Drawdown In Gasoline, Distillate Inventories. (graph)
• We're All Hedge Funds Now - Central Banks Become World's Biggest Stock Speculators.
• "It's Quiet, Too Quiet" - Stocks, Peso Bid But Hedgers Panic Buying Protection In US, Mexico. (graph)

Business Insider:

• Oil could tumble into the $30s if OPEC fails.
• Earnings reporting has turned into a dangerous shell game.

Predictit:

• Donald Trump 77% Chance of Winning US Presidency, Hillary Clinton 31%.

Feedspot.com:

• Top 25 Hedge Fund Blogs For Hedge Fund Managers and Investors.

Night Trading 

• Asian equity indices are -2.75% to -1.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 118.75 +2.5 basis points. 
• Asia Pacific Sovereign CDS Index 35.25 unch.
• Bloomberg Emerging Markets Currency Index 71.89 -.94%. 
• S&P 500 futures -4.02%. 
• NASDAQ 100 futures -4.04%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (DISH)/.68
• (VIAB)/.65
• (WEN)/.10
• (TCS)/.05
• (ETP)/.33
• (FLO)/.21
• (MYL)/1.46
• (NTES)/2.95
• (SHAK)/.14
• (SCTY)/-2.48
• (SPWR)/.44
• (TASR)/.07

Economic Releases
10:00 am EST

• Final Wholesale Inventories MoM for September are estimated to rise +.2% versus a prior estimate of a +.2% gain.
• Final Trade Sales MoM for September are estimated to rise +.5% versus a prior estimate of a +.7% gain.    

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +1,332,100 barrels versus a +1,442,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,590,000 barrels versus a -2,207,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,055,400 barrels versus a -1,828,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.43% versus a -.4% decline the prior week.
  

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Kashkari speaking, $23B 10Y T-Note auction, USDA WASDE Crop report, weekly US retail sales reports, weekly MBA mortgage applications report, Australian inflation report, RBC Tech/Internet/Media/Telecom Conference, (SYK) analyst meeting, (STZ) investor meeting and the Wells Fargo Tech/Media/Telecom Conference could also impact trading today.

BOTTOM LINE:  Asian indices are sharply lower, weighed down by industrial and technology shares in the region. I expect US stocks to open sharply lower and to maintain losses into the afternoon. The Portfolio is 50% net long heading into the day.

Stocks Reversing Higher into Afternoon on Perception of Dimished Election Uncertainty, Oil Bounce, Short-Covering, Metals & Mining/Healthcare Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Slightly Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 17.88 -4.44%

• Euro/Yen Carry Return Index 120.95 +.35%

• Emerging Markets Currency Volatility(VXY) 9.98 -1.67%

• S&P 500 Implied Correlation 58.41 -3.79%

• ISE Sentiment Index 101.0 +27.9%
  

• Total Put/Call 1.71 +42.5%

• NYSE Arms .94 +117.15% 

Credit Investor Angst:

• North American Investment Grade CDS Index 75.88 -1.68%
  

• America Energy Sector High-Yield CDS Index 657.0 -1.29%

• European Financial Sector CDS Index 95.95 -1.14%

• Western Europe Sovereign Debt CDS Index 19.19 -.83%

• Asia Pacific Sovereign Debt CDS Index 35.52 +.69%

• Emerging Market CDS Index 233.0 -.63%
  

• iBoxx Offshore RMB China Corporate High Yield Index 132.73 +.06%

• 2-Year Swap Spread 23.75 +1.5 basis points

• TED Spread 47.75 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -46.5 -1.25 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.53 +.44%
• 3-Month T-Bill Yield .42% +2.0 basis points

• Yield Curve 100.0 unch.
  

• China Import Iron Ore Spot $68.30/Metric Tonne +1.29%

• Citi US Economic Surprise Index -9.80 +2.1 points

• Citi Eurozone Economic Surprise Index 33.3 -3.7 points

• Citi Emerging Markets Economic Surprise Index -6.60 -5.1 points

• 10-Year TIPS Spread 1.74% +1.0 basis point
• 86.6% chance of Fed rate hike at Feb. 1 meeting, 88.2% chance at March 15 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +179 open in Japan 
• China A50 Futures: Indicating +38 open in China

• DAX Futures: Indicating +47 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +4%

Sector Underperformers:

• 1) Homebuilding -1.4% 2) Defense -.3% 3) Computer Services -.2%

Stocks Falling on Unusual Volume: 

• HTZ, OMF, CVS, MATX, DEPO, W, TAST, ATRO, PRAA, NVRO, FICO, USAC, SCSC, VRX, IFF, CAR, NEWR, SITE, ECPG, MOMO, ULTI, ZBH, SYNA, DHI, PKI, CBPX, ENV, EXPD, KMX, SC, ECPG and NWSA

Stocks With Unusual Put Option Activity:

• 1) CVS 2) MGM 3) PCLN 4) ALXN 5) ITW

Stocks With Most Negative News Mentions:

• 1) RMTI 2) VRX 3) HTZ 4) CEMP 5) OMF

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.6%

Sector Outperformers:

• 1) Steel +2.3% 2) HMOs +1.9% 3) Foods +1.7%

Stocks Rising on Unusual Volume:

• SNCR, WBAI, ACAD, PINC, PCLN, HSNI, INVA, SSP, TREX, MXL, FCX, PRIM, CSU and SEAS

Stocks With Unusual Call Option Activity:

• 1) HTZ 2) DEPO 3) INFN 4) K 5) GIS

Stocks With Most Positive News Mentions:

• 1) MDCO 2) BAC 3) CNP 4) HTZ 5) W

Charts:

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