Bull Radar

Style Outperformer:

• Mid-Cap Growth +.6%

Sector Outperformers:

• 1) Homebuilders +1.6% 2) Gaming +1.4% 3) Semis +1.0%

Stocks Rising on Unusual Volume:

• ZGNX, PARR, CSGP, CMTL, BBRY, PTCT, CAMP, VERI, HMSY, GGAL, DXCM, KBH, OSTK, RDHL, SGH, USAK, AAAP, FARM, KRA, HTLD, AVXS, ANDX, PHI, ANGO, SSB, VYGR, RYI, CONN, KRA, TSN, FINL and TRN

Stocks With Unusual Call Option Activity:

• 1) KBH 2) GRA 3) XLK 4) CSX 5) DHI

Stocks With Most Positive News Mentions:

• 1) ROKU 2) CONN 3) CMTL 4) KBH 5) HTLD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -11.0% Below 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 55.3% of Issues Advancing, 39.9% Declining
• 134 New 52-Week Highs, 5 New Lows
• 47.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.4%
• Vix 9.6 +.6%
• Total Put/Call 1.1 +52.8%
• TRIN/Arms 1.22 +14.1%

Friday Watch

Evening Headlines

Bloomberg:

• Chinese Money Is Still Leaking Into the World's Housing Markets. Shanghai restaurateur David Hu said he’s nervous about wiring money to Australia for a home purchase because of China’s crackdown on currency outflows. Instead, he plans to carry the cash in a suitcase. The 61-year-old intended to move about A$85,000 ($66,000) to Melbourne this month, the last part of his financing for a deal struck last year. “Buying a property abroad was and is still workable,” said Hu, though he described the process as a “lot more troublesome” nowadays.
• Macau May Be Set for Its Best Golden Week Holiday in Years. The forecast for Macau’s upcoming holiday week looks pretty golden. Junkets flush with high rollers, full hotels charging five times their usual prices and brand-new entertainment options have the potential to make Golden Week the most lucrative in at least the past decade for the world’s biggest gaming hub, analysts and industry officials said. The calendar also helps: this year’s holiday period lasts eight days instead of seven, making it a “Super Golden Week.”
• Luxury Is Back in Vogue in China.
• Asian Stocks Round Out Strong Quarter With Caution. Australian and Hong Kong equity-index futures signaled higher opens ahead of long weekends, while Japanese shares were poised to edge lower. The S&P 500 Index eked out all-time highs and the Russell 2000 Index of smaller companies extended its quarterly surge. End-of-quarter volatility would not be a surprise on Friday and some major markets, including China, will shut next week for a holiday. Oil slipped after climbing into a bull market this week. Contracts on the Nikkei 225 Stock Average are down slightly, while they were higher on the Australia’s S&P/ASX 200 Index. Hong Kong’s Hang Seng Index climbed 0.4 percent.
• Five Things You Need to Know to Start Your Day.
• Murdoch's Control of Fox Targeted by Investor in Proxy Filing. Rupert Murdoch’s control over media conglomerate 21st Century Fox Inc. faces a renewed challenge from a shareholder who cites scandals at the mogul’s companies. Fox recommends shareholders oppose the proposal by the Nathan Cummings Foundation, which held 947 voting shares, to eliminate the dual-class stock structure that gives Murdoch control, according to a regulatory filing Thursday. Investors will decide on the nonbinding measure at the annual meeting scheduled for Nov. 15 in Los Angeles.
• Payday Loans Are on the Decline as U.S. Economy Improves.

Wall Street Journal:

• Republican Tax Plan Quickly Hits First Hurdle. GOP lawmakers from high-tax states oppose repealing individual deduction for state and local taxes.
• China Sets Tough Electric-Car Production Target. Auto makers will have to start manufacturing electric vehicles by 2019, after deadline was pushed back by one year.
• Food, Fuel and Medical Supplies Slowly Distributed Across Puerto Rico. Damaged roads and few truck drivers are among the logistical challenges facing the relief effort.
• Tom Price to Reimburse Government for Use of Private Jets. Statement from the Health and Human Services secretary comes after President Trump said he wasn’t happy about the practice.
• Why Tax American Companies Twice? The GOP plan would end the 35% ‘repatriation tax’ that makes it harder to compete—and create jobs.

Fox News:

• Grassley threatens to subpoena FBI officials for answers on Comey, Clinton, Russia. (video)

CNBC:

• If GOP tax reform doesn't get done, 2018 elections will be 'very ugly,' says former Bush aide. (video)
• ProShares files for bitcoin ETF, and one to bet against it.
• KB Home(KBH) shares rise after earnings beat.
• Former Wal-Mart US CEO optimistic about holiday shopping season. (video)
• These stocks will benefit the most from tax reform: Goldman Sachs(GS). (video)
• Tyson(TSN) shares jump after company boosts guidance, cuts jobs.

Zero Hedge:

• Twitter(TWTR) Provides "Russian Interference" Update; Senator Warner Blasts As "Deeply Disappointing".
• Deutsche Bank(DB) Downgraded, Fitch "No Longer Expects Franchise To Recover This Year".
• Seven Things Saudi Women Still Can't Do.
• "What Are We Going To Do?" Puerto Rico In Chaos As Cash Runs Out.
• The Global Housing Bubble Is Biggest In These Cities.
• CNBC Viewership Drops To 22 Year Low.
• Clinton Lawyer Helped Facebook Avoid Political Ad Disclosures.
• Networks Told NFL Cameramen To Avoid Shots Of Booing Crowds.
• First Sponsor Pulls Ad Dollars From The NFL.
• Stocks Up, Bonds Up, Gold Up, & Dollar Down But 'Middle-Class-Miracle' Fades. (graph)

Telegraph: 

• Spain threatens to break up the euro unless Catalonia comes to heel.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 83.25 +.25 basis point. 

• Asia Pacific Sovereign CDS Index 17.75 +.5 basis point.

• Bloomberg Emerging Markets Currency Index 73.61 unch.

• S&P 500 futures -.07%.

• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases 
8:30 am EST

• Personal Income for August is estimated to rise +.2% versus a +.4% gain in July.
• Personal Spending for August is estimated to rise +.1% versus a +.3% gain in July.
• The PCE Core MoM for August is estimated to rise +.2% versus a +.1% gain in July.
  

9:45 am EST

• Chicago Purchasing Manager for September is estimated to fall to 58.7 versus 58.9 in August.

Upcoming Splits

• (ISRG) 3-for-1

Other Potential Market Movers

• The US debt ceiling deadline, UK GDP report and the (RGEN) analyst day 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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Reversing Slightly Higher into Final Hour on Tax Reform Hopes, Economic Optimism, Short-Covering, Homebuilding/Restaurant Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.75 -1.11%

• Euro/Yen Carry Return Index 138.18 +.02%

• Emerging Markets Currency Volatility(VXY) 8.16 -1.69%

• S&P 500 Implied Correlation 22.26 -4.38%

• ISE Sentiment Index 112.0 +9.8%
  

• Total Put/Call .75 -9.64%

• NYSE Arms 1.12 +30.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.86 -1.61%
  

• America Energy Sector High-Yield CDS Index 409.0 -.86%

• European Financial Sector CDS Index 60.2 +.88%

• Western Europe Sovereign Debt CDS Index 5.16 +3.93%

• Asia Pacific Sovereign Debt CDS Index 17.69 +3.36%

• Emerging Market CDS Index 186.59 -1.38%
  

• iBoxx Offshore RMB China Corporate High Yield Index 141.99 unch.

• 2-Year Swap Spread 25.5 +.25 basis point

• TED Spread 28.75 +2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -39.75 -7.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.60 +.17%
• 3-Month T-Bill Yield 1.05% unch.
  

• Yield Curve 86.0 +3.0 basis points

• China Import Iron Ore Spot $62.89/Metric Tonne -1.96%

• Citi US Economic Surprise Index -8.50 +.8 point

• Citi Eurozone Economic Surprise Index 54.10 +8.4 points

• Citi Emerging Markets Economic Surprise Index 13.30 -.5 basis point

• 10-Year TIPS Spread 1.88 +1.0 basis point
  
• 69.9% chance of Fed rate hike at Dec. 13 meeting, 71.1% chance at Jan. 31 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +7 open in Japan 
• China A50 Futures: Indicating +10 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Restaurants +1.0% 2) Drugs +.8% 3) Papers +.8%

Stocks Rising on Unusual Volume:

• AAAP, BBRY, CLDR, SPPI, OMN, SYRS, SELB, THO, JBL, ORA, KEM, LOXO, REV, ABBV, GGSL, IHG, ABT, EBIX, MKC, BLUE, PBPB, CUTR, EDIT, AWR, ABEO, KURA, BLUE, ABBV, KIM, CLDR, UCTT, GBT and ZAGG

Stocks With Unusual Call Option Activity:

• 1) MNST 2) ALK 3) ABT 4) TXN 5) MON

Stocks With Most Positive News Mentions:

• 1) EMN 2) PBPB 3) AMAT 4) MCD 5) MKC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -.7% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 39.5% of Issues Advancing, 56.5% Declining
• 82 New 52-Week Highs, 10 New Lows
• 47.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.9%
• Vix 10.0 +1.32%
• Total Put/Call .90 +8.43%
• TRIN/Arms .77 -9.15%