Stocks Slightly Higher into Afternoon on Economic Optimism, Oil Gain, Yen Weakness, Financial/Retail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 9.82 -5.94%

• Euro/Yen Carry Return Index 135.85 -.29%

• Emerging Markets Currency Volatility(VXY) 7.48 -1.06%

• S&P 500 Implied Correlation 29.51 -2.51%

• ISE Sentiment Index n/a
  

• Total Put/Call .93 -7.0%

• NYSE Arms .73 -36.36%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.56 +.68%
  

• America Energy Sector High-Yield CDS Index 470.0 +8.51%

• European Financial Sector CDS Index 50.34 +.25%

• Western Europe Sovereign Debt CDS Index 5.50 +.73%

• Asia Pacific Sovereign Debt CDS Index 18.77 +.29%

• Emerging Market CDS Index 186.42 +.24%
  

• iBoxx Offshore RMB China Corporate High Yield Index 140.53 -.07%

• 2-Year Swap Spread 25.0 +.5 basis point

• TED Spread 24.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -25.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.77 -.25%

• 3-Month T-Bill Yield 1.07% unch.
  

• Yield Curve 91.0 +1.0 basis point

• China Import Iron Ore Spot $74.12/Metric Tonne +1.63%

• Citi US Economic Surprise Index -40.80 +3.3 points

• Citi Eurozone Economic Surprise Index 18.30 +1.2 basis points

• Citi Emerging Markets Economic Surprise Index 17.20 -1.7 basis points

• 10-Year TIPS Spread 1.80 +2.0 basis points
  

• 19.5% chance of Fed rate hike at Nov. 1 meeting, 48.4% chance at Dec. 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +97 open in Japan 

• China A50 Futures: Indicating +41 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio: 

• Slightly Lower: On losses in my tech sector longs 

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%

Sector Underperformers:

• 1) Gold & Silver -2.1% 2) Utilities -.5% 3) HMOs -.5%

Stocks Falling on Unusual Volume: 

• EFII, APLP, TEVA, BRG, TRVG, PI, MELI, VECO, FLR, BGS, VIAB, AXDX, ACXM, BL, SYNA, SPXC, REV, CBM, LOCO, SRCL, CSOD, SYNA and AAOI

Stocks With Unusual Put Option Activity:

• 1) GPRO 2) VIAB 3) KEY 4) STZ 5) SEAS

Stocks With Most Negative News Mentions:

• 1) EFII 2) FLR 3) CTV 4) ABTL 5) VIAB

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.8%

Sector Outperformers:

• 1) Hospitals +1.9% 2) Steel +1.6% 3) Banks +1.6%

Stocks Rising on Unusual Volume:

• GPRO, WTW, KBWB, WIFI, ANET, YELP, HDP, AJRD, MDRX, CBB, UTHR, ESIO, ELY, WING, GRUB, JOBS, COL, SWIR, AMC, DQ, SODA, ETSY, GWPH, IBP, HCC, SAGE, ECPG, NBIX, PODD, SVU, GBT, AL, LTRPA, SRG, SNAP, RTTX, LGIH, KMT, MCHP and CXO

Stocks With Unusual Call Option Activity:

• 1) GPRO 2) WTW 3) COG 4) XBI 5) IYR

Stocks With Most Positive News Mentions:

• 1) ANET 2) YELP 3) GPRO 4) WTW 5) JOBS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +3.7% Above 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 52.8% of Issues Advancing, 43.5% Declining
• 111 New 52-Week Highs, 44 New Lows
• 44.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.5%
• Vix 9.9 -5.1%
• Total Put/Call .92 -8.0%
• TRIN/Arms .91 -19.4%

Friday Watch

Night Trading 

• Asian equity indices are -.25% to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 80.0 -.25 basis point. 
• Asia Pacific Sovereign CDS Index 18.75 unch.
• Bloomberg Emerging Markets Currency Index 74.0 +.06%.
• S&P 500 futures -.05%.
• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CBOE)/.86
• (CI)/2.48
• (CTB)/.74
• (ITT)/.63
• (NWL)/.87
• (SUP)/.46
• (TM)/153.14
• (BRK/B)/2800.98

Economic Releases 

8:30 am EST

• The Change in Non-Farm Payrolls for July is estimated to fall to 180K versus 222K in June.
• The Unemployment Rate for July is estimated to fall to 4.3% versus 4.4% in June.
• The Average Hourly Earnings MoM for July is estimated to rise +.3% versus a +.2% gain in June.
• The Trade Deficit for June is estimated at -$44.5B versus -$46.5B in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Retail Sales report and German Factory Orders report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

Stocks Slightly Lower into Afternoon on Less Economic Optimism, Oil Decline, Yen Strength, Telecom/Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.08 -1.95%

• Euro/Yen Carry Return Index 136.42 -.39%

• Emerging Markets Currency Volatility(VXY) 7.63 -.26%

• S&P 500 Implied Correlation 29.01 +5.54%

• ISE Sentiment Index n/a
  

• Total Put/Call .98 +1.03%

• NYSE Arms 1.07 +9.71%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.12 +1.5%
  

• America Energy Sector High-Yield CDS Index 430.0 -1.37%

• European Financial Sector CDS Index 50.20 +.32%

• Western Europe Sovereign Debt CDS Index 5.46 -.55%

• Asia Pacific Sovereign Debt CDS Index 18.72 +.03%

• Emerging Market CDS Index 185.58 -.99%
  

• iBoxx Offshore RMB China Corporate High Yield Index 140.64 +.04%

• 2-Year Swap Spread 24.5 +.25 basis point

• TED Spread 24.25 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -25.25 +1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.94 -.05%
• 3-Month T-Bill Yield 1.07% unch.
  

• Yield Curve 90.0 unch.

• China Import Iron Ore Spot $72.93/Metric Tonne +.87%

• Citi US Economic Surprise Index -44.10 +1.5 points

• Citi Eurozone Economic Surprise Index 17.10 +1.2 basis points

• Citi Emerging Markets Economic Surprise Index 18.90 +.1 basis point

• 10-Year TIPS Spread 1.78 -1.0 basis point
  
• 17.6% chance of Fed rate hike at Nov. 1 meeting, 43.8% chance at Dec. 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -39 open in Japan 
• China A50 Futures: Indicating +39 open in China

• DAX Futures: Indicating +2 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 100% Net Long