Bear Radar

Style Underperformer:

• Large-Cap Value +.7%

Sector Underperformers:

• 1) Homebuilders -.8% 2) Banks -.2% 3) Agriculture +.2%

Stocks Falling on Unusual Volume: 

• MSM, COMM, ALDR, ROCK and BPT

Stocks With Unusual Put Option Activity:

• 1) KEY 2) FAST 3) Z 4) TMUS 5) GME

Stocks With Most Negative News Mentions:

• 1) DF 2) TUSK 3) VIRT 4) CTL 5) HOG

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.2%

Sector Outperformers:

• 1) Airlines +2.2% 2) Social Media +2.1% 3) Disk Drives +2.0%

Stocks Rising on Unusual Volume:

• NRG, MLP, HCSG, CARA, IPHI, TSEM, CCXI, ROLL, CTRL, LAD, PDFS, ABM, ENVA, KLIC, JAG, CAI, RACE, TWTR, KEM, AAWW, PYPL, GRUB, COHU, ULTA, NYLD, AYX, WDAY and SWX

Stocks With Unusual Call Option Activity:

• 1) TXT 2) MBI 3) DBA 4) TRUP 5) CHRW

Stocks With Most Positive News Mentions:

• 1) NVDA 2) UAL 3) TRUP 4) CARA 5) PDFS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +3.6% Above 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 87.3% of Issues Advancing, 10.5% Declining
• 144 New 52-Week Highs, 5 New Lows
• 45.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.1%
• Vix 10.4 -4.4%
• Total Put/Call .91 -14.2%
• TRIN/Arms 1.58 +79.8%

Wednesday Watch

Evening Headlines

Bloomberg:

• Asia Stocks to Slip With Attention Back on Yellen. Attention in financial markets reverts to central bank policy after a brief flurry of activity spurred by reports about Donald Trump’s election campaign’s possible involvement with Russia last year. Stocks in Japan look set to open with small declines as the yen nudged higher, with futures on equity gauges in Australia and Hong Kong also retreating after the S&P 500 Index rebounded to end the day flat. Oil surged amid reports of a decline in stockpiles. Treasury 10-year yields lost one basis point to 2.36 percent. Japan’s Topix Index lost 0.3 percent. Australia’s S&P/ASX 200 Index declined 0.5 percent and South Korea’s Kospi Index was little changed. WTI crude climbed 1.4 percent to $45.68 a barrel. Gold was up 0.1 percent at $1,218.38 an ounce.
• Oil Majors Face Ratings Cuts Amid Weak Recovery, S&P Global Says. Exxon Mobil Corp., Chevron Corp. and other oil majors could see their credit ratings slashed again if they fail to cut costs and reduce their growing debt loads in the next year, according to an S&P Global Ratings report. The world’s largest drillers failed to take advantage of high prices during the boom years before 2014 to repay debt, according to the report published on Tuesday. Instead they embarked on costly investments in new projects and dividends, leaving them unprepared for the painful downturn that ensued.
• Five Things You Need to Know to Start Your Day.
• Fidelity Dismisses Hundreds of Workers, Axios Reports. Mutual-fund giant Fidelity Investments let hundreds of employees go Tuesday, according to a report by website Axios, which didn’t say where it got the information. Adam Banker, a spokesman for the Boston-based firm, responded in an e-mailed statement that the company doesn’t comment about hiring or reductions.

Wall Street Journal:

• Email to Trump Jr. Says Clinton Info Was Part of Moscow’s Trump Support. President’s son was told information would incriminate Hillary Clinton.
• Republicans Largely Defer to Investigators After Trump Jr.’s Email Release. GOP lawmakers focus on other topics like health care; Democrats say emails show collusion.
• U.S. Military Plane That Crashed Carried Specialized Personnel, Equipment. Material on board could have contributed to post-crash explosions, officials say.

Fox News:

• Donald Trump Jr. tells Sean Hannity: 'In retrospect I probably would have done things a little differently'. (video)
• FBI document dump reveals secrets of Clinton probe as new director nominee faces Senate. (video)

MarketWatch:

• Here’s one reason why expensive stocks can continue to climb.

CNBC:

• Why stock market bulls should actually cheer the drop in oil, according to one fund manager. (video)
• McConnell says revised version of health-care bill expected on Thursday. President Donald Trump is increasingly unlikely to nominate Federal Reserve Chair Janet Yellen next year for a second term, and National Economic Council Director Gary Cohn is the leading candidate to succeed her, Politico reported on Tuesday, citing four people close to the process.
• Trump could reportedly nominate Gary Cohn as Janet Yellen's successor.

Zero Hedge:

• Death Of The Middle Class: The Suburbs Have Absorbed Half Of America's Poverty Growth.
• "We Are Forced To Strike Back": Russia Set To Expel 30 US Diplomats, Seize US Assets.
• Connecticut Capital Hartford Downgraded To Junk By S&P.
• WTI Pops After Huge Crude Inventory Drawdown. (graph) 
• 'Junior' Jangles Stock Market's Nerves; Gold Gains As Dollar Slumps.

Business Insider:

• Google(GOOGL) launched an in-house AI fund to help startups turn sci-fi into 'nonfiction'.

Night Trading 

• Asian equity indices are -.5% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 87.25 -.75 basis points. 
• Asia Pacific Sovereign CDS Index 22.0 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 72.55 +.09%.
• S&P 500 futures -.05%.
• NASDAQ 100 futures -.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (OZRK)/.73
• (FAST)/.49
• (MSM)/1.09

Economic Releases 
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,305,220 barrels versus a -6,299,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -813,110 barrels versus a -3,669,000 barrel decline the prior week. Distillate inventories are estimated to rise by +720,440 barrels versus a -1,850,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.32% versus a +1.1% gain the prior week. 
  

2:00 pm EST

• The Fed's Beige Book report.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Yellen testifying to House, Fed's George speaking, WASDE crop report, $20B 10Y T-Note auction, Eurozone industrial production report, UK employment change, weekly MBA mortgage applications report, (GIS) investor day and the (FAST) June sales report 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 mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Reversing Slightly Higher into Final Hour on Oil Gain, Technical Buying, Short-Covering, Tech/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 11.21 +.99%

• Euro/Yen Carry Return Index 136.26 +.45%

• Emerging Markets Currency Volatility(VXY) 7.74 -.64%

• S&P 500 Implied Correlation 34.77 -3.53%

• ISE Sentiment Index 125.0 +95.3%
  

• Total Put/Call 1.05 +16.7%

• NYSE Arms .81 -3.66%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.95 +.35%
  

• America Energy Sector High-Yield CDS Index 480.0 -1.31%

• European Financial Sector CDS Index 53.62 -.1%

• Western Europe Sovereign Debt CDS Index 6.22 -4.82%

• Asia Pacific Sovereign Debt CDS Index 21.92 -1.77%

• Emerging Market CDS Index 202.87 +.59%
  

• iBoxx Offshore RMB China Corporate High Yield Index 140.08 +.05%

• 2-Year Swap Spread 25.0 -1.0 basis point

• TED Spread 26.25-1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -27.5 -.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.47 unch.
• 3-Month T-Bill Yield 1.04% +1.0 basis point
  

• Yield Curve 99.0 unch.

• China Import Iron Ore Spot $65.40/Metric Tonne +2.11%

• Citi US Economic Surprise Index -58.40 -2.9 points

• Citi Eurozone Economic Surprise Index 37.80 +.1 point

• Citi Emerging Markets Economic Surprise Index 13.70 -1.9 points

• 10-Year TIPS Spread 1.75 +2.0 basis points
  
• 24.3% chance of Fed rate hike at Sept. 20 meeting, 25.9% chance at Nov. 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -45 open in Japan 
• China A50 Futures: Indicating -23 open in China

• DAX Futures: Indicating +30 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• Theresa May’s ‘Reset’ for U.K. Government Comes Off the Rails. (video) U.K. Prime Minister Theresa May attempted a “reset” for her government after last month’s election losses, but the bid was undermined by confusion over Brexit policy and a health scandal dating back decades. In a speech Tuesday at the launch of a review of working practices, the premier reached out to other parties, urging them to work with her to ensure British workers are given fair pay and conditions, saying “big decisions” need to be made so Britain emerges from Brexit “stronger and better.”

• Copper Buildup Chatter Conceals Looming Deficit, Top Miner Says. A surge in copper stockpiles isn’t sounding any alarm bells with the world’s biggest producer as supply struggles to match demand. After tumbling to a four-month low in June, global warehouse inventories have jumped about 15 percent this month, spurring concern that demand for the metal used in wiring and plumbing is waning. Prices have retreated in July.

• Your Evening Briefing. 

• Asset Management Revenue Falls in 2016 for First Time Since 2008. For the first year since the 2008 financial crisis, revenue earned by asset management firms globally fell in 2016 along with profits, according to a report Tuesday by Boston Consulting Group. While assets under management increased 7 percent to $69 trillion, most of that growth came from rising markets while net new money from investors was little changed from recent years. 

• Investors Are Jumping Back Into Hedge Funds. (video)

• Three Key Economic Questions Facing Yellen in Congress This Week. (video)

Wall Street Journal: 

• Tesla(TSLA) Readies for Model 3 Launch by Adding Hundreds of Repair Vans.

Fox News:

• Donald Trump Jr. releases 'entire email chain' regarding Russian meeting. (video)

• Businesses warn of price hikes, staff cuts as minimum wage increases kick in. (video)

CNBC:

• Fed's Brainard: Balance sheet runoff 'soon,' but rate hikes in doubt. (video)

• Georgia snags America's No. 2 spot for business. (video)

• Grocery chain Albertsons' IPO plans reportedly stalled following Amazon(AMZN)-Whole Foods deal.

• This chart shows why this is the best 'stock pickers market' in 17 years. (graph)

• World's largest money manager: Investors need to take more risk. (video)

Zero Hedge:

• Donald Trump Jr Releases Emails Exchanged Ahead Of Meeting With Russian Lawyer.

• Senate Republicans Cancel First Two Weeks Of Recess To Work On Legislation.

• "The Tide Is Going Out" - JPMorgan's Dimon Warns QE Unwind Could Be Far Worse Than Fed Hopes.

• Another Day, Another V-Shaped Panic-Buying Spree in Crude Oil. (graph)

• Oregon Legislature Passes Bill To Decriminalize Cocaine, Meth, And Heroin.

• "Reverse Schizophrenic" JOLTS Report: Job Openings Plunge As Hiring Soars. (graph)

• Wholesale Sales Tumble For 3rd Straight Month, Inventories Build. (graph)

• ISIS Confirms Leader al-Baghdadi Has Been Killed.

PredictIt:

• The odds that Donald Trump will remain president at year-end 2018 are rising from 63% to 67%.