Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%

Sector Underperformers:

• 1) Gaming -1.8% 2) Oil Service -1.2% 3) Road & Rail -1.2%

Stocks Falling on Unusual Volume: 

• BHVN, MCRB, CYBE, MGM, JWN, XRAY, LPI, M and BLUE

Stocks With Unusual Put Option Activity:

• 1) UNG 2) JCP 3) MGM 4) XLF 5) EPI

Stocks With Most Negative News Mentions:

• 1) BLUE 2) MGM 3) WDC 4) FINL 5) CSX

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.8%

Sector Outperformers:

• 1) Steel +1.6% 2) Networking +1.2% 3) Defense +1.2%

Stocks Rising on Unusual Volume:

• SNCR, ZGNX, OFIX, TRN, IJT, MGEN, SSTI, PICO, PODD, FLXN, NVMI, CAMP, USAK, BGC, LILAK, VERI, JP, AOBC, RGR, GM, KBH, UBIO, SPPI, QURE, PVAC, FLXN, TRN, NTLA, LCI, SGEN, RGS, OLN, ALNY, RNG, SGH, COLL, KTWO, LPSN and GTN

Stocks With Unusual Call Option Activity:

• 1) CZR 2) CIEN 3) DISH 4) AXP 5) DDD

Stocks With Most Positive News Mentions:

• 1) FLIR 2) CTRX 3) STX 4) SWK 5) AKAM

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +3.7% Above 100-Day Average
• 9 Sectors Rising, 1 Sector Declining
• 58.2% of Issues Advancing, 38.0% Declining
• 165 New 52-Week Highs, 15 New Lows
• 47.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.7%
• Vix 9.6 +1.0%
• Total Put/Call 1.13 +9.7%
• TRIN/Arms 1.31 +8.4%

Monday Watch

Today's Headlines

Bloomberg:

• Japan’s Manufacturing Confidence Touches a Decade High. Confidence among Japan’s big manufacturers has improved to the highest level in a decade, underscoring Prime Minister Shinzo Abe’s run of success on the economy as he heads into an election later this month.

• Spanish Police Storm Polling Stations to Block Catalan Vote. Spanish police in riot gear smashed in the doors of polling stations and dragged protesters away by the hair, beating some with batons and firing rubber bullets at others on Sunday as they tried to shut down an illegal referendum on independence in Catalonia. Despite the police brutality against largely peaceful demonstrations, voting began in many locations across northeast Spain at 9 a.m. The Catalan government said 73 percent of polling stations were open. Spain’s representative in the region, Enric Millo, said the vote had been “dismantled.”

• The Latest on Catalonia's Independence Referendum.

• Stocks Rise as China Readies Targeted Credit Boost. Stocks are set to open higher in the Asia Pacific region as investors contemplate prospects for stimulus in the world’s two largest economies, with the Trump administration taking steps towards tax cuts and China unveiling a targeted boost to the availability of credit. Futures on the U.S. S&P 500 index headed higher after the underlying gauge closed at a record high on Friday. The dollar held gains from last week, when it put in its best performance of the year on optimism that the Trump administration is finally moving forward with tax reforms that could boost U.S. growth. Over the weekend, China reported an unexpectedly strong purchasing manager index for manufacturing and announced plans for a reduction in the amount of cash banks must hold as reserves for certain types of lending. Australia’s S&P/ASX 200 Index was up 0.5 percent in early trading. Contracts on the Nikkei 225 Stock Average were up 0.3 percent and futures on Hong Kong’s Hang Seng Index saw futures gain 0.2 percent.

• CRH Is Said to Near Acquisition of U.S. Cement Maker Suwannee. Global construction materials maker CRH Plc is nearing an agreement to acquire Florida-based cement company Suwannee American Cement LLC from Votorantim Cimentos SA and Anderson Columbia Co. to drive further growth in the U.S., according to people familiar with the matter. The companies could announce an agreement as early as this week, said the people, who asked not to be identified because talks are private. The deal may value Suwannee at about $750 million, two of the people said. While talks are advanced, they could still be delayed or fall apart and the valuation could change, they said.

Wall Street Journal:

• Catalans Defy Riot Police to Vote in Independence Referendum. Spanish police forcibly remove people from polling stations, had fired rubber bullets; Catalonian officials say hundreds are injured.

• In Puerto Rico, a Beachside Town Suffers in Solitude. Humacao is mostly on its own in Maria’s wake; ‘Nothing is left here’. 

• Why the Shadow of the 2015 Migration Crisis Still Hangs Over Europe. French President Macron’s speech and success of anti-immigration party in German elections show security is priority for EU.

• Why Food CEOs Are Rushing for the Exits. Packaged food companies are in trouble, squeezed by changing consumer preferences, more aggressive supermarkets and stagnant prices. More mergers may be on the way.

• J.P. Morgan’s Record High Crowns Bank-Stock Rebound. S&P financials closed the quarter at a post-financial-crisis high, but fell short of the S&P 500’s gain of 12.5%.

• Oil Prices Bounce Back in Third Quarter. Strong crude demand and signs of ebbing U.S. production led oil back into a bull market.

• Hedge Funds Ain’t Dead Yet. With an improved environment for stock picking, the average hedge fund is up an average 5.4% through August.

MarketWatch.com:

• In the near future, your hotel room will know exactly how you like to sleep.

• This is why the bull market can keep running for years even if investors dump stocks.

Fox News: 

• Trump: Talking to NK's Kim a waste, 'will do what needs to be done'. (video)

• NFL's Week 4 sees dozens of players kneel, sit, raise fists during national anthem. (pic)

CNBC:

• Kudlow: Trump has an incentive-packed tax plan like JFK and Reagan.

• Edmonton hit by 'acts of terror' after police officer gets stabbed and 4 pedestrians are hit by a truck.

• Marseille 'terrorist' attack: Two stabbed to death, attacker killed by French soldiers.

• Taking on critics, Britain's May vows to deliver policies and Brexit.

• How the Trump tax plan will make 'most people better off','Tax Foundation president says. (video)

• Trump plans a pivot to deregulation, pushing roll back of Obama-era red-tape.

Zero Hedge: 

• The Results Are In: 89% Of Catalans Vote For Independence.

• Spanish PM Rajoy Blasts Catalans' "Mockery Of Democracy", Says Spain "Responded With Firmness, Calm" Injuring 761 People.

• "This Is Fascism": Shocking Footage Of Spanish Police Firing Rubber Bullets, Brutally Beating Peaceful Voters.

• Robert Gore: "The US Has Become An Infantile Nation".

• "We're With You" - Hillary Clinton Backs San Juan Mayor As Trump Trashes "Politically Motivated Ingrates".

• Blowback? NFL Ticket Sales Crash 17.9% As Owners Lose Control Of Players.

• What Housing Bubble? Most Australians Couldn't Afford $100 Mortgage-Payment Hike.

• "The Bombs Are Still Falling" - MSNBC Urges Government Censorship Of Social Media "To Protect Democracy".

Business Insider:

• Puerto Rico's governor says the island is on a 'steady path to improvement' after Hurricane Maria.

• Thousands in Hong Kong participate in 'anti-authoritarian rule' march against China,

• Cam Newton raised a fist in the air after scoring a touchdown as political tensions engulf the NFL.

• Spain is flirting with another Civil War.

Night Trading

• Asian indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 81.75 -1.5 basis points.

• Asia Pacific Sovereign CDS Index 19.0 +1.25 basis points.

• Bloomberg Emerging Markets Currency Index 73.62 -.09%.

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.14%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (CALM)/-.22

Economic Releases 
10:00 am EST

• ISM Manufacturing for September is estimated to fall to 58.0 versus 58.8 in August.

• ISM Prices Paid for September is estimated to rise to 63.5 versus 62.0 in August.

• Construction Spending for August is estimated to rise +.4% versus a -.6% decline in July.

Upcoming Splits

• (ISRG) 3-for-1
  

Other Potential Market Movers

• The President's address on regulation, Fed's Kaplan speaking, Eurozone Unemployment Rate, Eurozone PMI report and the Deutche Bank Leveraged Finance Conference could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and industrial 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 week.

Weekly Outlook

• Week Ahead on Wall Street by CNBC.

• Wall St. Week Ahead by Reuters. 

• Stocks to Watch Next Week by Seeking Alpha.

• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on oil gains, tax reform hopes, yen weakness, economic optimism, technical buying and short-covering. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:

• Spain Tries to Stop Catalonia's Weekend Vote on Independence. Catalonia heads into a watershed moment in its modern history this weekend, and no one really knows how it’s going to play out. Spanish government spokesman Inigo Mendez de Vigo said Friday that there’s no way the regional administration will pull off its plan to hold an illegal referendum on independence on Sunday. Jordi Turull, the Catalan executive’s spokesman, said Friday in Barcelona that almost 7,000 volunteers are ready to open 2,315 polling stations across the region of 7.5 million people.

• Saudi GDP Shrinks for Second Quarter in a Row Amid OPEC Cuts. Saudi Arabia’s economy contracted for the second quarter in a row as the kingdom grapples with low oil prices and its businesses struggle to cope with economic reforms. The kingdom’s gross domestic product shrank 1 percent compared with the same period a year earlier, when it expanded 0.9 percent, according to official data released on Saturday. The economy had contracted 0.5 percent in the first three months of 2017.

• Trump Ramps Up Fed Chair Search With Decision Due Within Weeks. Donald Trump in the next few weeks will make one of the most consequential decisions of his presidency with the choice of a nominee to be the next chair of the Federal Reserve, and the selection process is accelerating as he meets with top contenders. The president and Treasury Secretary Steven Mnuchin sat down Thursday with former Fed governor Kevin Warsh and interviewed Fed Governor Jerome Powell Wednesday, three administration officials said. He’s also met with current Fed Chair Janet Yellen and White House economic adviser Gary Cohn, who are both in the running for the post, the officials said.

• Trump to Make Deregulation Pitch, Claiming $300 Million Windfall.

• The Kindest Quarter Arrives for a Stock Market That Nothing Can Rattle. (video) Theories abound as to why the fourth quarter is so often the best one for equity bulls. Fund managers need to catch up, holiday spending spreads cheer, investors celebrate the January effect in December. Or maybe it’s just dumb luck. Whatever the case, the S&P 500 Index has risen seven times in the last eight years between October and December. And while calendar effects just took a beating with a volatility-free September, betting against any form of momentum remains a losing trade until proven otherwise.

• FEMA Rethinking Policy That Bans Churches From Disaster Aid. Federal disaster-relief officials say they’re “considering making changes” to a policy banning churches, synagogues and mosques from receiving rebuilding aid that’s routinely given to other non-profits, such as zoos and museums.

Wall Street Journal:

• Beaten-Down Dollar Bounced Back in September. Greenback snaps six-month losing streak, but question remains if the comeback is sustainable.

Barron's:

• Had bullish commentary on (FSLR), (TSM), (GD), (TXT), (ERJ) and (AMAT)

Fox News:

• Trump fires back at Puerto Rico mayor, accuses her of 'poor leadership'. (video)

CNBC:

• Spanish police move in to stop banned Catalan independence referendum.

• China's factories grow at fastest pace in over 5 years as prices surge.

• China makes targeted reserve requirement cut to boost lending to small firms.

Zero Hedge:

• North Korea Seen Moving Missiles As US Admits For First Time It Is In "Direct Contact" With Pyongyang.

• Why Madrid Will Never Let Go - Catalonia Is Closer To The Eurozone Than Spain.

• Catalans Occupy Schools, Blockade Roads Amid Police/Government Threats, "History's About To Be Written".

• In Furious Tweetstorm, Trump Slams San Juan Mayor, Democrats, "Fake News" Over PR Disaster Response.

• Exposing The Slimy Business Of 'Russia-Gate' (What The Mainstream Media Doesn't Want You To Know).

• "They Won't Know What Hit Them" Shocking Undercover Footage Exposes Antifa's "Premeditated" Violence. (video)

• Journalism Is Broken - Twitter, Trump, & The NYTimes.

• China Announces RRR Cut Of At Least 50 bps; First Since February 2016.

• Kevin Warsh May Be The Next Fed Head - Let's See What He Really Thinks.

• Multiple People Injured After Van Slams Into Pedestrians Near Penn Station.

• Even The Cheapest Obamacare Plans Are "Unaffordable" In 94% Of American Cities, New Study Finds.

• NFL Favorability Crashes. (graph)

• NBA Orders Players To Stand For The National Anthem.

• Tom Price Resigns As HHS Secretary Amid Private Jet Scandal.

• Airports Systems Just Crashed Globally; Could The Power Grid Be Next?

• Weekend Reading: Tax Cut Wish List.

• Dollar & Stocks Jump; Bonds & Bullion Dump In Lowest Volatility September Ever. (graph)

Business Insider:

• A $732 billion investor says Wall Street is seriously underestimating Trump's tax plan. Even after some renewed enthusiasm in the last two weeks for lower corporate taxes, UBS Asset Management says Wall Street is placing too little odds on the prospects of tax reform. "There's no way that the markets would be trading this way if they were pricing in a greater than 50% probability of successful tax legislation," said Evan Brown, the director of asset allocation at UBS Asset Management, which oversees more than $732 billion in holdings. "It's starting to get priced in, but there's plenty of room," he told Business Insider on Thursday. 

• An investing legend who has nailed the market at every turn just got even more bullish on stocks.

• Tensions in Spain are rising over Catalonia's independence referendum.

• Idaho faces a 27% increase in Obamacare plan premiums in 2018.

• Tillerson to hold top-level talks in China as US tries to pressure North Korea.

• Spain's Catalonia is voting on independence on Sunday.

PredictIt:

• There is an 85% chance Catalonia votes for independence from Spain on Oct. 1.