Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 78.75 +1.0 basis point. 

• Asia Pacific Sovereign CDS Index 16.50 unch.

• Bloomberg Emerging Markets Currency Index 73.23 +.14%.

• S&P 500 futures +.07%.

• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CUDA)/.17
• (HCSG)/.31
• (VOXX)/-.01

Economic Releases 

6:00 am EST:

• The NFIB Small Business Optimism Index for September is estimated to fall to 105.0 versus 105.3 in August.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking, Fed's Kaplan speaking, German Export Data report, China Money Supply report, UK Manufacturing PMI report, weekly retail sales report and the (WDAY) 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 Finish Slightly Lower on Geopolitical Concerns, Profit-Taking, Technical Selling, Medical/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.45 +8.3%

• Euro/Yen Carry Return Index 137.93 +.06%

• Emerging Markets Currency Volatility(VXY) 7.96 +2.45%

• S&P 500 Implied Correlation 18.77 +9.06%

• ISE Sentiment Index 67.0 -22.99%
  

• Total Put/Call .99 +16.5

• NYSE Arms 1.26 +31.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.28 +.51%
  

• America Energy Sector High-Yield CDS Index 398.0 -.39%

• European Financial Sector CDS Index 60.14 -.69%

• Western Europe Sovereign Debt CDS Index 5.18 -4.52%

• Asia Pacific Sovereign Debt CDS Index 16.52 +.55%

• Emerging Market CDS Index 178.69 -.04%
  

• iBoxx Offshore RMB China Corporate High Yield Index 142.18 +.22%

• 2-Year Swap Spread 27.5 unch.

• TED Spread 28.75 +.75 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -39.5 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.18 -.14%
• 3-Month T-Bill Yield 1.06% unch.
  

• Yield Curve 85.50 -.5 basis point

• China Import Iron Ore Spot $62.67/Metric Tonne +.69%

• Citi US Economic Surprise Index 6.50 +3.1 points

• Citi Eurozone Economic Surprise Index 49.90 +4.1 points

• Citi Emerging Markets Economic Surprise Index 17.40 -.5 basis point

• 10-Year TIPS Spread 1.87 -1.0 basis point
  
• 80.8% chance of Fed rate hike at Dec. 13 meeting, 81.5% chance at Jan. 31 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +20 open in Japan 
• China A50 Futures: Indicating +81 open in China

• DAX Futures: Indicating +20 open in Germany

Portfolio: 

• Slightly Lower: On losses in my retail/medical sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running -24.3% Below 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 43.2% of Issues Advancing, 52.0% Declining
• 143 New 52-Week Highs, 13 New Lows
• 48.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.2%
• Vix 10.0 +3.7%
• Total Put/Call .71 -16.5%
• TRIN/Arms 1.48 +54.7%

Monday Watch

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 77.75 unch.

• Asia Pacific Sovereign CDS Index 16.50 -1.5 basis points.

• Bloomberg Emerging Markets Currency Index 73.22 -.10%.

• S&P 500 futures +.13%.

• NASDAQ 100 futures +.18%.

Morning Preview Links

Earnings of Note

Company/Estimate

• None of note

Economic Releases 

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Manufacturing PMI report and the (PSMT) monthly sales report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by financial 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

• 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 mixed as tax reform hopes, yen weakness and economic optimism offset geopolitical concerns, profit-taking and oil weakness. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:

• Protesters in Spain’s Streets Want to Defuse Catalonia Crisis. Catalan’s separatist leaders pushing for the region’s independence will come under more pressure on Sunday when thousands of people plan to take to the streets of Barcelona to demand the secessionists shelve their plans. Already battered by a corporate stampede to exit the region, Catalan President Carles Puigdemont is seeking to hold the momentum as the clock ticks down to a meeting on Tuesday that could trigger the separation process. Spanish Prime Minister Mariano Rajoy, meantime, must decide whether to preemptively reassert control, as some of his main allies are urging him to do.

• Death Toll Rises to 24 in Pakistan Shrine Suicide Bombing. The death toll from a suicide bombing at a Shiite shrine in the country's southwest increased to 24 after four victims died at a hospital overnight, police said Saturday. A suicide bomber struck the shrine packed with worshippers in a remote village in Jhal Magsi district, about 400 kilometers (240 miles) east of Quetta in Baluchistan province on Thursday.

• Facebook(FB) Security Chief Warns of Dangers in Fake News Solutions. Alex Stamos, who’s handling the company’s investigation into Russia’s use of the social media platform ahead of the 2016 U.S. presidential election, cautioned about hoping for technical solutions that he says could have unintended consequences of ideological bias. It’s very difficult to spot fake news and propaganda using just computer programs, Stamos said in a series of Twitter posts on Saturday.

Wall Street Journal:

• Shooter May Have Had Target Practice in the Desert Two Days Before Las Vegas Massacre. A video shows Stephen Paddock driving to an area near his home where locals go to practice shooting, a law-enforcement official said.

• Warren Buffett Bets on the Fossil-Fuel Highway.

• October's Not as Bleak as Its Reputation for Stock Market.

• How Smartphones Hijack Our Minds. Research suggests that as the brain grows dependent on phone technology, the intellect weakens.

Barron's:

• Had bullish commentary on (WMT), (CHL) and (MTCH).

Fox News: 

• Hurricane Nate makes landfall as Category 1 storm. (video)

CNBC: 

• The economy is much stronger now with Trump, billionaire Nelson Peltz says. (video)

• Hurricane Nate threatens Gulf Coast energy sites spared by Harvey.

• India's economy is reeling from recent reforms, but business leaders want more.

• The secret lives of children and their phones.

• Apparel retailer Forever 21 tests the beauty market with its first Riley Rose store.

Zero Hedge:

• After Losing Millions To Nigerian Scammers, A Bankrupt Boris Becker Is Liquidating His Assets.

• Trump Hints At War With North Korea: "Sorry, But Only One Thing Will Work".

• White House Says Trump's "Calm Before The Storm" Comment Is "Extremely Serious".

• Trump To Sign Executive Order Rolling Back Obamacare Regulations.

• Gunman Storms Saudi Royal Palace, Is Killed After Shootout With Guards.

• State Of Emergency Declared Across Southeastern US As Hurricane Nate Looms.

• Junk Bond Debt Covenant Quality Drops To All Time Lows. (graph)

• "A Civil War Is Coming" - EU Commissioner Urges Madrid & Barcelona To Talk.

• Vegas Shooter Investigators "Puzzled", Believe He Was Not Alone For Two Reasons.

• The US Government Lost Nearly $1 Trillion In FY2017... Again!

• Weekend Reading: Bull Market In Complacency.

• Investors "Most Euphoric" In 23 Years Despite Korea, Crap Data, Crude Crash, & Coming Storms. (graph)

Business Insider:

• Police have chased down more than 1,000 leads, but they still don't know why the Las Vegas shooter carried out his massacre.

• 3 men arrested in connection with New York City terror plots targeting concerts and subway system.

• US citizens claim to have had symptoms similar to diplomats attacked in Cuba.