Bear Radar

Style Underperformer:

• Mid-Cap Growth +.1%

Sector Underperformers:

• 1) Hospitals -1.9% 2) Gold & Silver -1.5% 3) HMOs -1.0%

Stocks Falling on Unusual Volume: 

• TRVG, PLAY, HOME, NWL, NOMD, TRTN, KEM and MACK

Stocks With Unusual Put Option Activity:

• 1) DWDP 2) HCA 3) EWW 4) SIG 5) UAL

Stocks With Most Negative News Mentions:

• 1) NWL 2) MKTX 3) UAL 4) EVHC 5) NKE

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%

Sector Outperformers:

• 1) Oil Service +1.8% 2) Road & Rail +1.7% 3) Computer Hardware +1.7%

Stocks Rising on Unusual Volume:

• VYGR, ZGNX, PCOM, HCI, INSM, COUP, UVE, CVGW, SRPT, EFII, HRTG, GIII, HQY, RDNT, HESM, GNRC, RNR, SNHY, FUL, NAV, USG, SGH, GFF, DM, ERJ, GPS, RDNT, CISN, BECN, PII and FUL

Stocks With Unusual Call Option Activity:

• 1) EWW 2) ARRY 3) STZ 4) DWDP 5) SRPT

Stocks With Most Positive News Mentions:

• 1) SRPT 2) VSTM 3) COUP 4) VYGR 5) HQY

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -2.2% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 63.2% of Issues Advancing, 32.8% Declining
• 77 New 52-Week Highs, 14 New Lows
• 39.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.8%
• Vix 12.2 +..1%
• Total Put/Call .95 -18.8%
• TRIN/Arms .79 +14.8

Wednesday Watch

Evening Headlines

Bloomberg:

• Florida Hunkers Down Ahead of Hurricane Irma. (video) Businesses are bracing for the worst as Hurricane Irma barrels toward South Florida, packing potentially catastrophic winds. Insurers led the S&P 500 Index lower Tuesday, as forecasters struggled to predict whether the strongest storm to form in the open Atlantic Ocean will slam into the third most-populous U.S. state. A direct hit on Miami could theoretically inflict damages in the $200 billion range, according to Enki Research risk modeler Chuck Watson.

• Plastic Film Covering 12% of China's Farmland Contaminates Soil. China will expand its agricultural use of environment-damaging plastic film to boost crop production even as authorities try to curb soil pollution, a government scientist said. Some 1.45 million metric tons of polyethylene are spread in razor-thin sheets across 20 million hectares (49 million acres) — an area about half the size of California — of farmland in China. Use of the translucent material may exceed 2 million tons by 2024 and cover 22 million hectares, according to Yan Changrong, a researcher with the Chinese Academy of Agricultural Sciences in Beijing.

• Asian Stocks Set to Fall as Korea Tensions Persist. Equity-index futures signaled declines from Tokyo to Sydney, and S&P 500 Index contracts retreated in early Asian trading. The cash measures snapped a six-day rally and the Dow Jones Industrial Average fell 234 points Tuesday, while 10-year Treasuries climbed amid reports North Korea is planning a ballistic missile launch. Also in the mix: Hurricane Irma is barreling toward another U.S. economic hub. The greenback dropped amid dovish comments from Federal Reserve Governor Lael Brainard. Futures on the Nikkei 225 Stock Average fell 0.1 percent as of 7:12 a.m. Tokyo time, while they dropped 0.3 percent on the Kospi index in South Korea and 0.5 percent on Australia’s main gauge. 

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

Wall Street Journal:

• Workers: Fear Not the Robot Apocalypse. Automation commonly creates more, and better-paying, jobs than it destroys. A case in point: U.S. retailing.

• U.S. Opens Way to Boost Arms Sales to Asia Allies. Trump offers billions of dollars in new American military equipment to Japan and South Korea in response to North Korea threat.

Fox News:

• Trump has 'great love' for Dreamers, but says he'll put 'hardworking citizens' first. (video)

CNBC:

• Sticker shock: Obamacare's specialty drug customers faced big price hikes in 2017.

• Biotech stock doubles in single day after treatment for a rare lung disease has successful trial. (video)

• Trump's top advisors discuss tax initiatives at White House summit. (video)

• Market sell-off a good buying opportunity, strategist Jim Paulsen says. (video)

• Wall Street: Booming McDonald's sales to continue next year with launch of 'fresh beef' burger.

• HPE(HPE) stock jumps as the company beats earnings expectations.

• Hurricane Irma's damage could be most ever, topping Katrina, Barclays predicts. (video)

Zero Hedge:

• Angry Hillary Blames Everything From Bernie Sanders To "There's Something About Mary" For 2016 Loss.

• House To Vote On Harvey Aid Bill Wednesday, Senate To Combine With Debt Limit Extension. 

• Miami Mayor: "Expect Evacuation Order On Wednesday Or Thursday".

• Bond Bulls Best Day Since Brexit Amid Bomb Tests, Brainard Bombshells, & Barometric Behemoths. (graph)

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 77.50 +1.5 basis points. 

• Asia Pacific Sovereign CDS Index 19.0 +.5 basis point.

• Bloomberg Emerging Markets Currency Index 74.70 +.02%.

• S&P 500 futures -.07%.

• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (FRED)/-.17

• (GIII)/-.26

• (HDS)/.64

• (JKS)/.67

• (NAV)/.27

• (ABM)/.54

• (KFY)/.53

• (NX)/.32

• (RH)/.47

Economic Releases 
8:30 am EST

• The Trade Balance for July is estimated to widen -$44.7B versus -$43.6B .

10:00 am EST

• ISM Non-Manufacturing for August is estimated to rise to 55.5 versus 53.9 in July.
  

2:00 pm EST

• Fed Beige Book release.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Factory Orders report, weekly MBA mortgage applications report, Cowen Transport Conference, Baird Healthcare Conference, Keefe Bruyette Insurance conference, Citi Tech Conference, Goldman Retail Conference, Citi Biotech Conference, UBS Chemical/Paper/Packaging Conference and the Wells Fargo Healthcare Conference could also impact trading today.

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

Stocks Falling into Final Hour on Geopolitical Concerns, Hurricane Irma Worries, Yen Strength, Financial/Insurance Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.12 +29.8%

• Euro/Yen Carry Return Index 135.11 -.76%

• Emerging Markets Currency Volatility(VXY) 7.75 +.91%

• S&P 500 Implied Correlation 36.43 +45.7%

• ISE Sentiment Index 72.0 -11.11%
  

• Total Put/Call 1.15 +36.9%

• NYSE Arms .69 +1.65%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.50 +2.34%
  

• America Energy Sector High-Yield CDS Index 455.0 -2.32%

• European Financial Sector CDS Index 51.53 -2.11%

• Western Europe Sovereign Debt CDS Index 5.24 -5.84%

• Asia Pacific Sovereign Debt CDS Index 19.08 +3.64%

• Emerging Market CDS Index 178.39 +.60%
  

• iBoxx Offshore RMB China Corporate High Yield Index 141.47 +.05%

• 2-Year Swap Spread 22.25 +1.25 basis points

• TED Spread 32.5 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -24.5 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.70 +.16%
• 3-Month T-Bill Yield 1.0% unch.
  

• Yield Curve 78.0 -3.0 basis points

• China Import Iron Ore Spot $78.39/Metric Tonne +.68%

• Citi US Economic Surprise Index -19.30 -1.1 points

• Citi Eurozone Economic Surprise Index 23.60 -2.2 points

• Citi Emerging Markets Economic Surprise Index 23.10 +4.3 basis points

• 10-Year TIPS Spread 1.78 -1.0 basis point
  
• 13.8% chance of Fed rate hike at Nov. 1 meeting, 36.2% chance at Dec. 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -85 open in Japan 
• China A50 Futures: Indicating -14 open in China

• DAX Futures: Indicating -49 open in Germany

Portfolio: 

• Lower: On losses in my tech/biotech sector longs 

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.0%

Sector Underperformers:

• 1) Banks -2.2% 2) Semis -1.9% 3) Homebuliders -1.7%

Stocks Falling on Unusual Volume: 

• CLLS, UVE, TECD, TECK, UTX, MNK, NTNX, MZOR, VR, XL, CCL, SGMO, RCL and BLUE

Stocks With Unusual Put Option Activity:

• 1) NTNX 2) DWDP 3) PGR 4) PAH 5) UTX

Stocks With Most Negative News Mentions:

• 1) TOPS 2) CLMT 3) QCOM 4) SCHW 5) GS

Charts:

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