Bear Radar

Style Underperformer:

• Smal-Cap Value -.3%

Sector Underperformers:

• 1) Oil Service -.8% 2) Road & Rail -.6% 3) Utilities -.4%

Stocks Falling on Unusual Volume: 

• NVMI, PTCT, LL, DXCM, SCMP, MDXG, HEI, FIZZ and AEGN

Stocks With Unusual Put Option Activity:

• 1) VRX 2) TWX 3) BBT 4) MNKD 5) BRK/B

Stocks With Most Negative News Mentions:

• 1) TTS 2) SCMP 3) AEGN 4) URBN 5) FFIV

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%

Sector Outperformers:

• 1) Airlines +3.5% 2) Social Media +1.4% 3) Homebuilders +1.3%

Stocks Rising on Unusual Volume:

• SSTI, LEN, PAYX, MANH, CALM, JP, SHW, NTLA, GM, MYOV, ICPT, PINC, EFX, FWONK, JBLU, BMA, CCU, SGH, DAL, TSLA, HLNE, MHK, EXAS, UNIT, RGR, SHW, ESIO, MTCH, EXTR, KR and MCRB

Stocks With Unusual Call Option Activity:

• 1) JBLU 2) MGM 3) COF 4) LEN 5) LUV

Stocks With Most Positive News Mentions:

• 1) ECYT 2) MANH 3) GM 4) PAYX 5) LEN

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -6.7% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 47.2% of Issues Advancing, 48.9% Declining
• 223 New 52-Week Highs, 9 New Lows
• 48.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.8%
• Vix 9.6 +2.0%
• Total Put/Call .76 -18.0%
• TRIN/Arms .73 -18.8%

Tuesday Watch

Evening Headlines

Bloomberg:

• Here Are Five Tailwinds Set to Boost the Global Market Rally. (video) Financial markets are dancing again to the risk-on beat, with the latest upswing in global manufacturing the latest reason to boogie. With the threat of higher interest rates, geopolitical shocks, and rich valuations, for now, seemingly powerless to unhinge stocks and bonds from their bullish foundations, there could be even more pain in store for naysayers. Here are five forces that may fan the flames of the risk rally. This is the season for investors to be jolly. Discretionary macro hedge-fund managers and active mutual-fund managers are likely to chase markets since they are flat or have lagged benchmarks for the first three quarters, according to JPMorgan Chase & Co. Add outflows spurred by the boom in passive investing -- estimated to hit $254 billion this year, matching 2008 levels -- and active equity mutual funds are under strong pressure to chase performance, the bank reckons.

• Why an Enigmatic Chinese Company Just Spent $9 Billion on a Stake in Rosneft. While there’s a risk of crude sliding below $30 as demand is displaced by alternative energy, it’ll still be needed for making petrochemicals, said the head of the enigmatic Chinese company that last month bought a $9 billion stake in Rosneft Oil Co.

• India's Central Bank Seen Holding Rates Lower as Slowdown Bites. India’s central bank is expected to keep its benchmark rate at a seven-year low this week amid slowing growth in Asia’s third-largest economy. With inflation climbing fast toward the Reserve Bank of India’s medium term target, the Federal Reserve starting to shrink its balance sheet and growing speculation the government may loosen purse strings to bolster the economy, the room for lowering rates in the coming months is narrowing.

• Stocks Add Gains, Dollar Climbs on Economic Cheer. Strong factory data and the prospect for American tax cuts boosted confidence in the global economy, lifting the dollar and emboldening bulls who drove U.S. equities to fresh record highs and pushed up shares in Asia. The Bloomberg dollar index was near strongest since mid-August, and the S&P 500 Index closed at an all-time high after data showed U.S. manufacturing expanded at the fastest pace in 13 years. That comes on the back of an unexpectedly strong factory gauge out of China over the weekend and the Bank of Japan’s quarterly Tankan survey showing the country’s big manufacturers are the most confident in a decade. Japanese shares rose, Aussie stocks gave back some yesterday’s gains and oil fell closer to $50 a barrel. Japan’s Topix index added 0.3 percent. Australia’s S&P/ASX 200 Index slid 0.3 percent. Hang Seng futures were up 0.2 percent with traders returning after a long weekend. Indian markets also reopen after a holiday, while those in China and South Korea remain shut.

• Five Things You Need to Know to Start Your Day. (video)

Wall Street Journal:

• Shooting Suspect Was a Gambler, Property Investor; Brother Is ‘Horrified’. Stephen Paddock, accused of killing at least 59 people, lived in several retirement communities where he kept to himself.

Fox News:

• Las Vegas police, feds race to uncover what drove 'aggressively unfriendly' gunman with weapons arsenal to kill. (video)

CNBC:

• Mass shooting may have little impact on Las Vegas tourism. (video)

• Art Cashin on markets: 'It looks like the last quarter is going to be good'.

• After hours buzz: TSLA, GS, GE & more.

Zero Hedge:

• "Innovative Mortgages": Lennar Lures Millennials With Offer To Repay Student Loans.

• Trump To Seek Additional $10-$15 Billion In Disaster Funds Amid Puerto Rico Fallout.

• The Globalists Are Systematically Destroying America's Middle Class.

• Bernie Sanders' "Medicare for All" Is 'Good For None'.

• CBS Fires Exec Who Slammed Vegas Dead As "Country Music Fans Who're Often Gun-Toting Republicans".

• Tesla(TSLA) Slumps As Model 3 Disappoints Despite "All-Time Best Quarter" For Model S, X Deliveries.

• Small Cap Stocks Surge To 'Most Overbought' In 20 Years, Bonds Shrug. (graph)

Business Insider: 

• Chiefs Charcandrick West tried to shield a sitting teammate from cameras during anthem prior to 'Monday Night Football'.

Night Trading 

• Asian equity indices are -.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 80.5 -1.25 basis points. 

• Asia Pacific Sovereign CDS Index 18.75 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.39 -.14%.

• S&P 500 futures +.01%.

• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AZZ)/.44

• (LEN)/1.01

• (PAYX)/.60

Economic Releases 
Afternoon:

• Total Vehicle Sales for September are estimated to rise to 17.1M versus 16.0M in August.

Upcoming Splits

• (ISRG) 3-for-1

Other Potential Market Movers

• The Eurozone PPI report, Australian Central Bank decision, weekly US retail sales reports, (F) Strategic Update, BofA Building/Infrastructure Conference and the (INTU) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by industrial and commodity 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 Higher into Final Hour on Tax Reform Hopes, Economic Optimism, Short-Covering, Biotech/Defense Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.51 unch.

• Euro/Yen Carry Return Index 137.95 -.49%

• Emerging Markets Currency Volatility(VXY) 7.85 -.76%

• S&P 500 Implied Correlation 20.09 -9.38%

• ISE Sentiment Index 200.0 +132.5%
  

• Total Put/Call .90 -12.6%

• NYSE Arms 1.03 -14.87%

Credit Investor Angst:

• North American Investment Grade CDS Index 55.02 -1.46%
  

• America Energy Sector High-Yield CDS Index 406.0 +.55%

• European Financial Sector CDS Index 59.28 -.39%

• Western Europe Sovereign Debt CDS Index 5.33 +6.81%

• Asia Pacific Sovereign Debt CDS Index 18.88 -.68%

• Emerging Market CDS Index 182.05 -1.59%
  

• iBoxx Offshore RMB China Corporate High Yield Index 142.12 +.04%

• 2-Year Swap Spread 25.25 -.5 basis point

• TED Spread 29.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -40.75 -.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.51 -.24%
• 3-Month T-Bill Yield 1.01% -3.0 basis points
  

• Yield Curve 85.0 unch.

• China Import Iron Ore Spot $62.05/Metric Tonne unch.

• Citi US Economic Surprise Index 1.50 +9.4 points

• Citi Eurozone Economic Surprise Index 45.60 -4.6 points

• Citi Emerging Markets Economic Surprise Index 18.90 +3.9 basis points

• 10-Year TIPS Spread 1.84 -2.0 basis points
  
• 70.5% chance of Fed rate hike at Dec. 13 meeting, 71.7% chance at Jan. 31 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +95 open in Japan 
• China A50 Futures: Indicating +153 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• With Latest Data, U.S. Economy Finally Exceeds Expectations. Citigroup’s U.S. economic surprise index broke into positive territory for the first time since late April thanks to better-than-anticipated manufacturing and constructiondata released on Monday.
• OPEC Oil Output Climbed in September as Libya, Nigeria Recover.
• Your Evening Briefing.
• Manhattan Condos Are Barely Yielding More Than Government Treasuries.
• Vegas Attack Heightens Concerns About Safety at Live Events.

Wall Street Journal:

• Las Vegas Shooting Leaves at Least 58 Dead, More Than 500 Injured. Police identify suspect as 64-year-old local resident Stephen Paddock.
• Spain and Catalonia Carefully Weigh Their Next Steps. Carles Puigdemont says any declaration of separation from Spain won’t come for at least several days.
• China, With Methodical Discipline, Conjures a Market for Electric Cars. Nearly half of all plug-in vehicles are sold in China, driven by relentless subsidies and regulations.
• Tax Policy Center Propaganda. The media’s go-to think tank trashes GOP reform without evidence.

MarketWatch.com: 

• European stocks rise for 8th straight session as euro slides after violent Catalonia vote. The Stoxx Europe 600 index SXXP, +0.51% rose 0.5% to close at 390.13, rising for an eight straight session.

Fox News:

• Las Vegas shooting: At least 58 dead in massacre Trump calls 'act of pure evil'. (video)
• Hillary Clinton slammed for ‘ignorant’ statement on guns after Las Vegas shooting. (video)

CNBC:

• Las Vegas massacre: Scenes from the deadliest mass shooting in US history. (pic)
• Las Vegas hospitals are dealing with flood of hundreds of mass shooting victims.
• General Motors(GM) to ramp up electric vehicle plans, 20 new models planned over next 6 years.
• Charts point to more gains for this hot Dow stock: Technician. (video)
• Four stocks that are top picks for the fourth quarter. (video)

Zero Hedge:

• "Deadliest Mass Shooting In US History": At Least 58 Killed, 515 Injured After Shooter Opens Fire At Las Vegas Concert.
• Who Was Las Vegas Shooter Stephen Paddock And What Was His Motive.
• Iran Deploys Tanks To Border With Iraqi Kurdistan.
• This Is The Worst Year For US Construction Spending Since 2010.
• Islamic State Claims Responsibility For Vegas Attack; Says Paddock "Converted To Islam Months Ago".
• ISM Survey Says Manufacturing In America Is The Greatest In 13 Years. (graph)
• Bill Blain: "Catalan Separatists Made The Risk Of Spain’s Wealthiest Region Decoupling Into A High Probability Event".
• Spanish Bond Yields Spike As EU Washes Its Hands Of Catalonia, Puigdemont Demands Spanish Police Withdraw.