Bear Radar

Style Underperformer:

• Large-Cap Value unch.

Sector Underperformers:

• 1) Oil Service -2.4% 2) Computer Services -.7% 3) Energy -.5%

Stocks Falling on Unusual Volume: 

• GEMP, TEVA, BRG, AFI, STAG, MYL, BL, GEO, BKD and WLH

Stocks With Unusual Put Option Activity:

• 1) ZYNE 2) NUE 3) JCP 4) LNG 5) CAR

Stocks With Most Negative News Mentions:

• 1) ZYNE 2) IPI 3) ANDE 4) ELY 5) TCAP

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.6%

Sector Outperformers:

• 1) Steel +2.3% 2) Social Media +1.9% 3) Semis +1.7%

Stocks Rising on Unusual Volume:

• NXTM, MYOK, EROS, EFII, COL, DQ, HZNP, NMIH, EDIT, IIVI, AAOI, BITA, WTW, PBFX, MANU, WB, KEM, STMP, TSN, REV, YRD, ZAGG, MTZ, ESNT, AVHI, DVAX, GRUB, GPRO, ON, HSIC, MTZ, YELP and UNIT

Stocks With Unusual Call Option Activity:

• 1) CBS 2) FOLD 3) LQD 4) COL 5) W

Stocks With Most Positive News Mentions:

• 1) ILMN 2) GRUB 3) ODP 4) TTMI 5) TSN

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -18.7% Below 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 45.8% of Issues Advancing, 50.6% Declining
• 93 New 52-Week Highs, 41 New Lows
• 45.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.30%
• Vix 10.0 -.6%
• Total Put/Call .91 -9.9%
• TRIN/Arms 1.04 +38.0%

Monday Watch

Today's Headlines

Bloomberg:

• China Confident Sanctions Will Bring N. Korea to Table. (video)
• Bond Bears Balk at `Trade of Decade' as Emerging Markets Tested. The case against emerging markets is gaining steam in one corner of the bond world. Investors yanked out $680 million from JPMorgan Chase & Co.’s emerging-market debt exchange-traded fund last month, the biggest-ever flows reversal. Traders are concerned that after an 18-month rally, rising yields in developed markets from the U.S. to Germany could wreak havoc across emerging markets similar to the taper tantrum of 2013, when developing-nation currencies depreciated by about 14 percent and local bonds lost an average of 7.3 percent, according to data compiled by Bloomberg.
• Asian Stocks Gain on U.S. Data; Yen Holds Drop. Asian equities advanced after strong U.S. hiring data on Friday bolstered American stocks. The yen was little changed Monday after sliding by the most in 1 1/2 weeks on Friday. Stocks in Japan, Australia and South Korea gained at the start of trading for the week. The Dow Jones Industrial Average rose on Friday for a ninth straight day to close at a record, while the greenback averted a fourth-straight weekly slide after government figures showed employers added workers at a solid clip and wage growth picked up in July. The S&P 500 Index ended one point below an all-time high to cap a weekly gain, while the Dow’s winning streak is the longest since February. The 10-year Treasury yield rose as the notes pared a weekly advance. Oil trimmed a weekly loss, while gold slumped. Japan’s Topix index rose 0.5 percent, while the S&P/ASX 200 Index in Sydney was up 0.8 percent. South Korea’s Kospi index gained 0.3 percent. Contracts on Hong Kong’s Hang Seng Index were slightly lower. The MSCI Asia-Pacific Index added 0.3 percent.
• Electric Car Boom Drives Rush to Mining's $90 Billion Heartland. A scramble by the lithium market’s biggest players to tie up supply of the high-tech metal is gathering pace in the 170-year-old heartland of Australia’s $90 billion mining industry. Rising Chinese demand for lithium-ion batteries needed for electric vehicles and energy storage is driving significant price gains and an asset boom in Australia, already the world’s largest lithium producer. The fast-developing hub is drawing investment and deals from global producers as well as chemical-to-battery manufacturers in China, the top consumer. 
• Senate Republicans Nod at Bipartisan Push for Insurer Payments. Senate Republicans are expressing a willingness to consider a bipartisan approach to strengthening the individual insurance market under Obamacare, even as President Donald Trump is deciding whether to end payments for it. “We have got a destabilized market where insurance rates are going to go up 20, 30, 40 percent next year,” Tillis of North Carolina said on ABC’s “This Week” on Sunday. “Anything that we can do to prevent that and the damage that that will have on people who need health care I think is something I have to look at.”

Wall Street Journal:

• Hot-Stock Rally Tests the Patience of a Choosy Lot: Value Investors. Value funds around the globe are on track to post their worst performance since before the financial crisis.
• Congressional Recess, Full Plate Keep the Heat on GOP Lawmakers. Pressure from constituents over health care could make it hard to focus on a tax overhaul.
• North Korea Shrugs Off Sanctions Despite China’s Push to End Missile Tests. U.S. lauds China for supporting latest U.N. sanctions, but Pyongyang has no plans to change.
• Big Tobacco’s Next Big Thing? Tobacco. Unlike e-cigarettes, new heat-not-burn products heat tobacco instead of a nicotine concoction.
• The Problem With Electric Cars? Not Enough Chargers. To hit its sales targets, Tesla has to sell 430,000 cars by the end of 2018 and 10,000 a week after that—but where are they all going to plug in?
• What Is Harvard Hiding? Evidence of bias against Asian-Americans deserves legal scrutiny.

MarketWatch.com: 

• De Blasio wants to tax wealthy New Yorkers to fund transit.

Barron's:

• Had bullish commentary on (DIS), (DAL), (SO), (VOYA), (HSBC), (CBS), (FOX) and (CMCSA). 
• Had bearish commentary on (CMG).

Fox News: 

• Asia-Pacific regional disputes impede united stand on North Korea. (video)
• Rosenstein, Christie temper reports of Mueller grand jury in Russia probe. (video)

CNBC:

• There's a house full of cryptocurrency gurus in San Francisco, and it's like a modern-day commune. (video)
• Why Apple(AAPL) is experiencing another growth spurt.

Zero Hedge:

• Silicon Valley "Outraged" After Google(GOOGL) Employee Pens Viral Doc Slamming "Anti-Conservative" Culture.
• China's Minsky Moment Is Imminent.
• Rare Earths Are China's Most Potent Weapon In A Trade War.
• The Madness Is Back: Homeowners Take Out Mortgages To Buy Bitcoin, Cars And Wine.
• Mysterious Trader With "Nearly Unlimited Bankroll" Said To Manipulate, Dominate Price Of Bitcoin.
• Illinois Makes "Barack Obama Day" State Holiday.
• More Lonely, Fewer 'Friends', Less Sex - Have Smartphones Destroyed A Generation? (graph)
• Morgan Stanley Asks At What Point Will EURUSD "Breathlessness Turn Into Outright Altitude Sickness". (graph)
• Venezuela Claims It "Crushed" A Military Rebellion.
• California Has 11 Counties With More Registered Voters Than Voting-Age Citizens.
• "How Do We Get To The Next Crisis": An Interview With Raoul Pal And Julian Brigden.

Business Insider:

• The North Korea sanctions were an 'appropriate response' according to China's foreign minister.
• Inside the world of Silicon Valley's 'coasters' — the millionaire engineers who get paid gobs of money and barely work.

Washington Post:

• Under Trump, gains against ISIS have ‘dramatically accelerated’. Nearly a third of territory reclaimed from the Islamic State in Iraq and Syria since 2014 has been won in the past six months, due to new policies adopted by the Trump administration, a senior State Department official said Friday. Brett McGurk, the State Department’s senior envoy to the anti-Islamic State coalition, said that steps President Trump has taken, including delegating decision-making authority down from the White House to commanders in the field, have “dramatically accelerated” gains against the militants.
  

Night Trading

• Asian indices are unch. to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 80.0 unch.
• Asia Pacific Sovereign CDS Index 18.75 unch.
• Bloomberg Emerging Markets Currency Index 73.79 +.03%.
• S&P 500 futures +.17%.
• NASDAQ 100 futures +.25%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (BAH)/.47
• (FDC)/.40
• (IIVI)/.35
• (TSN)/1.20
• (CAR)/.54
• (CBS)/.97
• (MAR)/1.02
• (THC)/-.18

Economic Releases 
3:00 pm EST

• Consumer Credit for June is estimated to fall to $16.0B versus $18.41B in May.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bullard speaking, Fed's Kashkari speaking, Japan Trade Balance report, Jefferies Industrials Conference, Cowen Communications/Infra Summit and the (BWA) investor day could also impact trading today.

BOTTOM LINE: Asian indices are modestly higher, boosted by technology 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 75% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Week Ahead by TheStreet. 
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as less European/Emerging Markets/US High-Yield debt angst, yen weakness and mostly positive earnings outlooks offset technical selling, profit-taking and geopolitical concerns. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Today's Headlines

Bloomberg:

• US Marines Missing After Aircraft Crashes Off Australia. Search and rescue operations were underway for three U.S. Marines who were missing after their Osprey aircraft crashed into the sea off the east coast of Australia on Saturday while trying to land. Twenty-three of 26 personnel aboard the aircraft have been rescued, the Marine base Camp Butler in Japan said in a statement.

• Surface Calm in the S&P 500 Masks a Spate of Blowups. (video) On the surface, it was another up week for the S&P 500 Index. Underneath, things were a little more complicated. Consider a version of the S&P 500 that strips out market-value biases -- the “equal-weight S&P,” in which Apple Inc. matters as much as relative pipsqueaks like Garmin Ltd. and Macy’s. Analysts normally like to see the two indexes moving together, a sign the rising market is lifting all boats. That didn’t happen in the past five days. In fact, the equal-weighted version just posted its biggest weekly drop since May, and its worst week versus the regular S&P 500 all year. The reason: while enough megacap stocks rose to keep the S&P 500 afloat, single-stock blowups were far more common than single-stock rallies.

• Toshiba to Cut Off Western Digital's(WDC) Future Supply of Chips. Toshiba Corp. took another stab at its U.S. joint venture partner, Western Digital Corp., saying it has no rights to new chip production that’s vital to the future of both companies. The latest escalation of the fight between the two centers on a new factory called Fab 6. Toshiba said it will build the plant without any participation from its U.S. partner, thereby cutting off Western Digital from chips made with the factory’s new technology. Western Digital inherited its stake in the joint venture when it bought SanDisk Corp.

• United Technologies(UTX) Weighs Deal for Rockwell Collins(COL). Jet-engine manufacturer United Technologies Corp. is weighing an acquisition of aviation-equipment supplier Rockwell Collins Inc., according to people familiar with the matter, in a deal that would potentially rank among the largest ever in the aerospace industry.

• Why ‘Pharma Bro’ Martin Shkreli Is Swaggering Into Jail.

• Citadel's Flagship Funds Gain Almost 7% This Year.

Wall Street Journal:

• The Market Really Is Different This Time. Small-time investors are moving away from stock-market euphoria, not toward it.

• Kelly’s Rules for Trump’s West Wing: Stop Bickering, Get in Early, Make an Appointment. New Chief of Staff John Kelly moves quickly to bring order and discipline to a West Wing riven by conflict.

• Warren Buffett’s Berkshire Hathaway Reports 15% Profit Drop. Results hurt by lower investment gains and a loss in its insurance underwriting segment.

• Venezuela’s New Assembly Fires Attorney General. Venezuela Constituent Assembly removes Attorney General Luisa Ortega from office in first session.

MarketWatch.com:

• Trump is right about record earnings — and these companies are getting even more profitable.

• Apple(AAPL) planning a cellular-capable Watch that cuts reliance on iPhone: report.

Fox News:

• McMaster: Threat of North Korean nuclear weapon strike "impossible to overstate". (video)

CNBC:

• North Korea's 'No. 2' official on 10-day visit to Iran that may signal wider military ties.

• Teens are more depressed and isolated than ever because of smartphones, researcher claims.

• While big bills have failed, Wall Street sees opportunity in Trump's massive deregulation movement.

• Rouhani, embarking on second term in Iran, asks Europe not to side with Trump.

• Doctors say this start-up could revolutionize how we fight infectious diseases. (video)

Zero Hedge:

• Former Facebook Exec Warns Society Will Collapse Within 30 Years As Robots Steal Half Of All Jobs.

• FOIA Dump Reveals Collusion Between Lynch, FBI And Media To Bury Bill Clinton Meeting.

• Loretta Lynch Communicated With DOJ Officials Using Grandmother's Name As Alias.

• Bitcoin Explodes Above $3000 To Record Highs.

• This Time, It's A Bubble In Rentals.

• Only Ten Years After The Last Financial Crisis the Banks Are At It Again.

• In First Formal Request, Mueller Asks White House For Flynn Documents.

• In Epic Letter, Elliott's Singer Rages Against Everything From Passive Investing To "Safe Spaces". (graph)

• Vending Machines Are The Latest Threat To US Retailers.

• Retired Green Beret Warns: "North Korea Can Deliver An EMP Weapon Dead Center Over America".

• Bookies Now See Facebook CEO Zuckerberg More Likely To Be President In 2020 Than Hillary, Harris, & Biden. (graph)

• Weekend Reading - Are Stocks Really The Great "Wealth" Equalizer?

• Dow Gains 600 Points In 9 Days; S&P, Bonds, Gold & Dollar Unchanged. (graph)

Business Insider:

• North Korea's ICBM tests may be a deception tactic to hide a much more capable threat.

• GOLDMAN SACHS(GS): There's an overlooked way to make a fortune this earnings season.

• The retail apocalypse is heading straight for Kroger, Whole Foods, and Aldi.