Morning Market Internals

NYSE Composite Index:

• Volume Running +23.5% Above 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 35.2% of Issues Advancing, 60.5% Declining
• 12 New 52-Week Highs, 146 New Lows
• 37.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 31.1%
• Vix 14.8 -4.8%
• Total Put/Call 1.05 -1.9%
• TRIN/Arms .84 -53.1%

Friday Watch

Evening Headlines

Bloomberg:

• Asia Stocks to Drop on Spain Attack, Trump Turmoil. Asian stocks are poised to extend a global rout after terrorists struck a crowded street in Barcelona, exacerbating the unease that was already infecting markets amid rumors that President Donald Trump’s top economic adviser would quit. Japanese, South Korean and Australian equity index futures all dropped 0.9 percent or more after the the S&P 500 Index tumbled 1.5 percent, its second-biggest drop for 2017. A measure of market volatility spiked higher, whiled Treasuries rose with the yen as investors sought havens. Gold jumped. Nikkei 225 Stock Average futures slid more than 1 percent, while contracts on the Kospi index retreated 1.1 percent and those on Australia’s main gauge were 0.9 percent lower.

• Five Things You Need to Know to Start Your Day.

• Fed's Yellen to Headline Annual Jackson Hole Policy Conference. Federal Reserve Chair Janet Yellen will join European Central Bank President Mario Draghi in Jackson Hole, Wyoming next week, setting the stage for a potentially revealing debate over the common challenges facing the world’s two most powerful central banks.

Wall Street Journal:

• Dow Falls 274 Points in Biggest Decline in Three Months. Disappointing earnings, political jitters drag down U.S. stocks.

• Steve Bannon Interview Raises New Questions About His Standing at White House. Less than three weeks ago, a similar interview with Anthony Scaramucci resulted in his ouster.

• Mattis, Tillerson Say North Korea Could Still Face U.S. Military Response. Remarks come amid rising tension between national security team and White House strategist Bannon.

Barron's:

• Applied Materials(AMAT) Jumps 4% on FYQ3 Beat, Higher Q4 View.

Fox News:

• Barcelona terror attack: At least 13 dead after van plows into crowd; 2 suspects arrested. (video)

• Wasserman Schultz' ex-IT aide indicted on 4 counts. (video)

CNBC:

• After-hours buzz: ROST, GPS, AMAT & more.

• Cramer reveals the one retailer going after Amazon's(AMZN) Achilles heel. As of Thursday, one company stood out to Cramer as the competitor Amazon should worry most about: Wal-Mart(WMT). The discount retailer's second-quarter earnings report not only beat the Street's estimates on earnings per share and revenue, but also saw a 60 percent boost in online sales.

• Bitcoin bond launch brings digital currency step closer to 'world of high finance'. (video)

• Trump scraps plan for infrastructure council after 2 other panels dissolve. (video)

• Gap(GPS) soars after better-than-expected profit forecast, same-store sales.

Zero Hedge:

• Republican Senator Corker Calls For "Radical Change" In The White House.

• How Welfare States Make Us Less Civilized.

• 13 Killed After Van Plows Into Barcelona Crowd; Driver Still At Large, ISIS Claims Responsibility.

• Baltimore's Homeless Erect Modern Day 'Hooverville' Tent City On Front Lawn Of City Hall.

• Barcelona Terrorism Suspect Named As Morocco-Born Driss Oukabir.

• White House Confirms "Cohn Intends To Remain In Position". (graph)

• Carmageddon: Deep Subprime Auto Delinquencies Spike To 10-Year Highs. (graph)

• Stocks Slammed Amid 'Cohn Of Uncertainty' As Hindenburg Omen Cluster Nears Record. (graph)

Night Trading 

• Asian equity indices are -1.0% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 82.25 unch. 

• Asia Pacific Sovereign CDS Index 21.5 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.59 -.06%.

• S&P 500 futures -.09%.

• NASDAQ 100 futures -.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DE)/1.95

• (EL)/.43

• (FL)/.90

• (HIBB)/-.20

Economic Releases 
10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for August is estimated to rise to 94.0 versus 93.4 in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Chin Property Price report could also impact trading today.

BOTTOM LINE:  Asian indices are lower, weighed down by financial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.

Bear Radar

Style Underperformer:

• Large-Cap Value -.5%

Sector Underperformers:

• 1) Steel -1.2% 2) Internet -1.2% 3) I-Banks -1.0%

Stocks Falling on Unusual Volume: 

• LAKE, FNGN, LB, VIPS, ACHC, BGG, NTAP, JD, EDIT, TNET, SPTN and CATO

Stocks With Unusual Put Option Activity:

• 1) ZOES 2) NTAP 3) DLTR 4) DDS 5) AMJ

Stocks With Most Negative News Mentions:

• 1) LB 2) NUE 3) KMI 4) EOG 5) WFC

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth -.2%

Sector Outperformers:

• 1) Papers +.5% 2) Oil Tankers +.5% 3) Restaurants +.3%

Stocks Rising on Unusual Volume:

• EGN, BABA, HTHT, ZOES, ADMS, SKY, JOBS, CACI, HASI, GMED, AAP, APPF, MED, AERI, DOOR, COH, URI, HSY, SHPG, VRX, LGND, MTZ, ADMS, MOH and HASI

Stocks With Unusual Call Option Activity:

• 1) HST 2) AMLP 3) NTAP 4) HYG 5) CIEN

Stocks With Most Positive News Mentions:

• 1) HSY 2) KEY 3) VFC 4) NOV 5) CMG

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -6.1% Below 100-Day Average
• 1 Sector Rising, 9 Sectors Declining
• 32.3% of Issues Advancing, 63.4% Declining
• 40 New 52-Week Highs, 90 New Lows
• 40.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 33.8%
• Vix 13.2 +12.3%
• Total Put/Call .95 -1.04%
• TRIN/Arms 1.01 -4.8%

Thursday Watch

Evening Headlines

Bloomberg:

• Fed Supports Bonds, Dollar Weakens on Inflation. The dollar dropped and Treasuries climbed after odds of another U.S. interest-rate increase this year declined with Federal Reserve meeting minutes showing concern about inflation remaining persistently low. Stock-index futures point to a mixed start for Asian trading. A majority of Fed officials stuck with a forecast that inflation would gradually rise to a 2 percent target over the medium term, according to minutes from the July meeting. However, “many” saw some “likelihood” that it would remain below that level for longer than expected. The minutes didn’t specify when the Fed would begin shrinking its balance sheet this year. Futures on Japan’s Nikkei 225 Stock Average slipped 0.1 percent. Contracts on Australia’s S&P/ASX 200 Index added 0.2 percent, while futures on Hong Kong’s Hang Seng Index added 0.6 percent. Kospi contracts were up 0.3 percent. 

• Five Things You Need to Know to Start Your Day.

• Fed Starts to Wonder If Cornerstone Inflation Model Still Works. (video) Federal Reserve officials are looking under the hood of their most basic inflation models and starting to ask if something is wrong. Minutes from the July 25-26 Federal Open Market Committee meeting showed a revealing debate over why the economy isn’t producing more inflation in a time of easy financial conditions, tight labor markets and solid economic growth. The central bank has missed its 2 percent price goal for most of the past five years. Still, a majority of FOMC participants favor further rate increases. The July minutes showedan intensifying debate over whether that is the right policy response.

• Victoria's Secret Owner Plunges After Delivering Weak Forecast. L Brands Inc.(LB) tumbled as much as 10 percent in late trading after disappointing investors with its profit forecast, a sign that the company’s comeback is still a ways off.

Wall Street Journal:

• Fed Officials Split Over Timing of Next Rate Increase. Minutes from July’s policy meeting show officials agreed to soon start drawing down the central bank’s holdings.

• Baltimore Removes Confederate Statues Overnight. City officials didn’t announce the removal ahead of time to avoid demonstrations.

• Apple(AAPL) Readies $1 Billion War Chest for Hollywood Programming. Company immediately becomes a considerable competitor in crowded market for original shows.

Fox News:

• North Korea's nukes are not the only weapon in its arsenal. (video)

• More arrested in toppling of Confederate statue in North Carolina. (video)

CNBC:

• Here's how the Fed's decisions will begin impacting the market. (video)

• Facebook(FB) shut down an internal pro-Trump discussion group because of harassment, says report.

• Traders are getting excited about Alibaba(BABA) earnings.

• Aetna CEO says 'I am ashamed' of President Trump's 'behavior and comments'. (video)

• Key Obamacare subsidies will continue being paid to insurers despite Trump threats to end them.

• US comes out swinging at NAFTA renegotiations, lists reform demands. (video)

Zero Hedge:

• Why Was This 'Crowd Hire' Company Recruiting $25 An Hour 'Political Activists' In Charlotte Last Week? 

• FBI 'Reopens' FOIA Case On Lynch-Clinton Tarmac Meeting After Getting Caught In Lie.

• FBI Investigator Who Led Hillary Email Case Suddenly Resigns From Mueller's Team.

• Gold Gains As Stocks Sink After Trump Turmoil, Fed Fearmongering. (graph)

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 82.25 -1.5 basis points. 

• Asia Pacific Sovereign CDS Index 21.25 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index 73.81 +.01%.

• S&P 500 futures -.12%.

• NASDAQ 100 futures -.17%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BABA)/.93

• (BKE)/.23

• (WMT)/1.07

• (CRMT)/.97

• (AMAT)/.83

• (GPS)/.53

• (ROST)/.77

• (ZOES)/.02

Economic Releases 
8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 240K versus 244K the prior week.

• Continuing Claims are estimated to rise to 1955K versus 1951K prior.

•  Philly Fed Business Outlook for August is estimated to fall to 18.0 versus 19.5 in July.

9:15 am EST

• Industrial Production MoM for July is estimated to rise +.3% versus a +.4% gain in June.

• Capacity Utilization for July is estimated to rise to 76.7% versus 76.6% in June.

• Manufacturing Production for July is estimated to rise +.2% versus a +.2% gain in June. 

10:00 am EST

• The Leading Index for July is estimated to rise +.3% versus a +.6% gain in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI report, Australia Unemployment report Bloomberg Economic Expectations Index for August and weekly Bloomberg Consumer Comfort Index could also impact trading today.

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