Morning Market Internals

NYSE Composite Index:

• Volume Running -6.3% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 56.6% of Issues Advancing, 39.1% Declining
• 106 New 52-Week Highs, 39 New Lows
• 44.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.7%
• Vix 9.7 -2.6%
• Total Put/Call .77 -17.2%
• TRIN/Arms .94 -6.4%

Stocks Modestly Higher into Final Hour on Earnings Optimism, Diminishing Rate-Hike Fears, Short-Covering, Tech/Retail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.81 -2.19%

• Euro/Yen Carry Return Index 136.18 +.18%

• Emerging Markets Currency Volatility(VXY) 7.42 -.54%

• S&P 500 Implied Correlation 29.74 -1.95%

• ISE Sentiment Index n/a
  

• Total Put/Call .91 -9.9%

• NYSE Arms .92 +20.36%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.95 +.53%
  

• America Energy Sector High-Yield CDS Index 432.0 -8.13%

• European Financial Sector CDS Index 51.18 +1.32%

• Western Europe Sovereign Debt CDS Index 5.49 -.27%

• Asia Pacific Sovereign Debt CDS Index 19.37 +3.2%

• Emerging Market CDS Index 182.41 -2.24%
  

• iBoxx Offshore RMB China Corporate High Yield Index 140.69 +.11%

• 2-Year Swap Spread 25.0 unch.

• TED Spread 24.25 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -26.0 -.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.82 +.07%
• 3-Month T-Bill Yield 1.05% -2.0 basis points
  

• Yield Curve 91.0 unch.

• China Import Iron Ore Spot $76.17/Metric Tonne +2.77%

• Citi US Economic Surprise Index -39.10 +1.7 points

• Citi Eurozone Economic Surprise Index 13.30 -5.0 basis points

• Citi Emerging Markets Economic Surprise Index 16.80 -.4 basis point

• 10-Year TIPS Spread 1.81 +1.0 basis point
  
• 19.5% chance of Fed rate hike at Nov. 1 meeting, 48.4% chance at Dec. 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -9 open in Japan 
• China A50 Futures: Indicating +16 open in China

• DAX Futures: Indicating -19 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Today's Headlines

Bloomberg:

• China's Debt Crackdown Gets a Big Shrug From Global Investors. (video) The Chinese leadership has this year made its strongest commitment yet to curb financial risks and rein in spendthrift local officials, yet the campaign has spurred barely a ripple of concern among global investors. In a recent survey, China hardly registered on the list of dangers eyed by fund managers and strategists that could threaten the "Goldilocks" boom in stocks and credit around the world. That’s a big change from two years ago, when a surprise devaluation of the yuan spooked markets, all the more because it came just weeks after China’s equity bubble had started to burst.
• HSBC's Steven Major Sounds a Bearish Alarm on European Credit. European investment-grade bonds will become a world of pain if volatility rises from record lows because investors aren’t being compensated for liquidity, default and downgrade risks. On top of those dangers, high debt burdens and aggressive valuations will conspire to crimp capital gains on European bonds this late in the global credit cycle.
• Europe Stocks Little Changed as Miners Rally Offsets Media Drop. (video) The Stoxx Europe 600 Index slid 0.1 percent at the close. ArcelorMittal led a gauge of mining stocks to the best gains among industry groups as steel and iron-ore prices surged. The measure is overtaking the broader benchmark in 2017 after lagging it in the first half. Media stocks slid 0.6 percent while drugmakers fell for the fourth time in five days.
• Investors Just Made a Big Bet on Global Growth and a Soft Dollar. (video) Inflows into the Industrial Select SPDR Fund (ticker XLI) approached $1.3 billion last week, the second-highest among U.S. equity exchange-traded funds. Industrials are a segment of the market considered acutely sensitive to global economic activity, and this product’s top holdings include firms with extensive worldwide operations, including General Electric Co., Boeing Co. and Caterpillar Inc. Those companies would tend to be among the chief beneficiaries of a synchronized pick-up in global growth and drop-off in the U.S. dollar, which increases the value of profits generated overseas.
• The World’s Most Feared Investor.

Wall Street Journal:

• North Korea Says ‘Under No Circumstances’ Will It Negotiate Over Nuclear Weapons. Pyongyang threatened it will use its nuclear weapons against U.S. if provoked militarily.
• Netflix(NFLX) Makes Its First Acquisition, Comic-Book Producer Millarworld. Comic-book producer was behind titles such as ‘Kick-Ass,’ ‘Old Man Logan’ and ‘Kingsman’.
• Hedge-Fund Manager Crispin Odey’s Bearish Bets Backfire Again. Veteran investor’s positions in stock markets have fared poorly.
• The Dollar Swoon Lifting U.S. Stocks Is Seen Continuing. Bets on the greenback’s weakness is increasing—a result that would benefit commodities, emerging markets.
• The End of Typing: The Next Billion Mobile Users Will Rely on Video and Voice.

Fox News:

• Lynch used email alias 'Elizabeth Carlisle' to write about Clinton tarmac meeting.

CNBC:

• Leon Cooperman is making big bets on Alphabet(GOOGL) and First Data(FDC). (video)
• Here are Goldman’s favorite bank stocks for the rest of 2017.
• Alphabet(GOOGL), Facebook(FB) and Twitter(TWTR) price targets hiked as analyst sees double-digit gains.
• The story behind the new sickle cell drug that was 25 years in the making.
• Fed won't need to raise interest rates in near term: Bullard. (video)
• Apple's(AAPL) upcoming iPhone face recognition said to be faster and more secure than fingerprint reader. (video)

Zero Hedge:

• Kelly Loses Control As "Vacationing" Trump Unleashes Angriest Tweetstorm Yet.
• Bullard: "Hard To Find Explanation For Low Inflation; Low-Vol Doesn't Signal Anything".
• Elevated 2018 Estimates Widen Gap Between GAAP & Non-GAAP Earnings. (graph)
• Matt King: "We Are More Reliant On Central Banks Holding Markets Together Than Ever Before". (graph)
• China's Reserves Continue To Decline As Capital Outflows Accelerate, "Outbound Travel Spending" Surges. (graph)
• Bitcoin Buying Binge Continues, Tops $3400 For First Time As Fork Fears Subside. (graph)
• Repsol, Statoil Pull Foreign Oil Workers From Venezuela.

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%