Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Biotech +.7% 2) Retail +.7% 3) Alt Energy +.7%

Stocks Rising on Unusual Volume:

• XRF, SYNT, PCG, HOG, GWW, KMG, SAVE, SONC, OSTK, TERP, ASYS, SJI, OMC, ABEO, SFBS, MPAA, UNH, VYGR, MSBI, SAM, SNDR, SPB, CXW, LULU, NL, VYGR and NAVI

Stocks With Unusual Call Option Activity:

• 1) HES 2) XLV 3) TRXC 4) HUN 5) SAVE

Stocks With Most Positive News Mentions:

• 1) HK 2) RXDX 3) UNH 4) OMC 5) CELG

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -11.5% Below 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 44.8% of Issues Advancing, 51.3% Declining
• 124 New 52-Week Highs, 22 New Lows
• 47.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.8%
• Vix 10.3 +4.3%
• Total Put/Call .89 -24.6%
• TRIN/Arms 1.14 +13.2%

Tuesday Watch

Evening Headlines

Bloomberg:

• Australia’s Central Bank Reaffirms Growth Is Set to ‘Increase Gradually’. The Reserve Bank of Australia says economic conditions at home and abroad “had been more positive since 2016,” according to minutes of this month’s policy meeting where interest rates were left unchanged.

• Initial Coin Offerings Rake in Another Billion in Under 2 Months.

• Asian Stocks to Gain as Fed Chair Talk Hits Bonds. Equity benchmarks rose in Tokyo and Sydney. Global stocks began the week supported by Fed chair Janet Yellen saying that she expects to continue raising rates gradually amid solid U.S. growth, even as inflation remains surprisingly low. Treasuries slid as John Taylor, a candidate for Fed chairman who is known for a monetary policy rule that would generally advocate higher interest rates, was said to have impressed President Donald Trump in an interview last week. The pound was steady after breaking a five-day winning streak on speculation that Brexit talks could be headed for a breakdown. Japan’s Topix index added 0.4 percent as of 9:12 a.m. Tokyo time. Australia’s S&P/ASX 200 Index rose 0.5 percent and South Korea’s Kospi index was little changed. Contracts on Hong Kong’s Hang Seng Index were flat.

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

• Rio on Track for Record Iron Ore Exports as China Imports Surge. Rio Tinto Group is on track for record annual shipments of iron ore as the world’s second-largest exporter’s rail capacity increases and imports by China’s steel mills keep surging. The company confirmed shipments from Western Australia will hit about 330 million metric tons in 2017, London-based Rio said Tuesday in its production report that showed quarterly cargoes continued to gain. The total would top the 327.6 million tons exported last year.

Wall Street Journal:

• U.S. Seeks to Stay Neutral in Iraq Conflict. Trump’s declaration comes as Baghdad government forces push into Kirkuk amid conflict with Kurds over disputed territory, threatening to disprupt fight against Islamic State.

• How Google’s(GOOGL) Quantum Computer Could Change the World. The ultra-powerful machine has the potential to disrupt everything from science and medicine to national security—assuming it works.

• Trump and McConnell Declare They Have a Common Agenda. President says they’re both ‘fighting for lower taxes’ and they’re ‘closer than ever’ after months of tension.

MarketWatch.com: 

• These stocks have popped more than 75% since Trump was elected.

Fox News:

• Comey drafted letter on Clinton email investigation before completing interviews, FBI confirms. (video)

• Las Vegas guard Jesus Campos vanished after visiting urgent-care clinic, union leader says. The Mandalay Bay security guard who disappeared last week moments before he was scheduled to break his silence in television interviews has not been seen since he went to a walk-in health clinic, his union president said.

CNBC:

• Netflix(NFLX) adds 5.3 million subscribers during Q3, beating analyst estimates. (video)

• Nobel-winning economist Shiller calls bitcoin a fad. (video)

• Apple(AAPL) explored buying a medical-clinic start-up as part of a bigger push into health care.

• CBS(CBS) earnings to disappoint due to weak NFL ratings, Credit Suisse says.

• US shale oil output will grow by another 81,000 barrels a day in November, Dept of Energy forecasts.

• Trump to interview Yellen about Fed chair appointment this week.

Zero Hedge: 

• Kobe Steel Scandal Goes Nuclear: Company Faked Data For Decades, Had A "Fraud Manual".

• North Korea Drops Propaganda Leaflets On Seoul: "Let's Behead Mad Dog Trump, Death To The Old Lunatic".

• "That Money's Already Been Spent" - Clinton Foundation Won't Return $250,000 Weinstein Donation.

• "He Shivved Me": Angry Hillary Lashes Out At Comey And Assange In Australian TV Interview.

• Catalan Independence Movement Furious After Spain Jails Two Leaders For Possible Sedition.

• Stocks Surge To Moar Record Highs But Taylor Chatter Spooks Bonds, Dollar, & Gold. (graph)

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 77.25 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 16.0 unch.

• Bloomberg Emerging Markets Currency Index 73.80 -.09%.

• S&P 500 futures -.03%.

• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CMA)/1.23

• (CSX)/.51

• (GS)/4.16

• (HOG)/.40

• (JNJ)/1.80

• (MS)/.81

• (PGR)/.36

• (UNH)/2.57

• (WWW)/.37

• (CP)/2.86

• (CREE)/.04

• (IBM)/3.28

• (IBKR)/.37

• (LRCX)/3.27

• (SCSS)/.68

Economic Releases 
8:30 am EST

• The Import Price Index MoM for September is estimated to rise +.6% versus a +.6% gain in August.

• The Export Price Index MoM for September is estimated to rise +.5% versus a +.6% gain in August.

9:15 am EST

• Industrial Production MoM for September is estimated to rise +.3% versus a -.9% decline in August.

• Capacity Utilization for September is estimated to rise to 76.2% versus 76.3% in August.

• Manufacturing Production for September is estimated to rise +.2% versus a -.3% decline in August.
  

10:00 am EST

• The NAHB Housing Market Index for October is estimated at 64 versus 64 in September.
  

4:00 pm EST

• Net Long-Term TIC Flows for August.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI report, UK CPI report, weekly US retail sales reports, BIO Investor Forum and the (YUMC) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity 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 Higher into Final Hour on Tax Reform Hopes, Oil Gain, Yen Weakness, Financial/Gaming Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.88 +2.8%

• Euro/Yen Carry Return Index 137.96 +.09%

• Emerging Markets Currency Volatility(VXY) 8.11 +.12%

• S&P 500 Implied Correlation 15.47 -1.28%

• ISE Sentiment Index 730 -32.4%
  

• Total Put/Call 1.21 +42.35%

• NYSE Arms .96 -15.34%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.36 -.84%
  

• America Energy Sector High-Yield CDS Index 394.0 +.03%

• European Financial Sector CDS Index 58.74 +.12%

• Western Europe Sovereign Debt CDS Index 4.99 -2.06%

• Asia Pacific Sovereign Debt CDS Index 16.1 +.06%

• Emerging Market CDS Index 177.75 +.11%
  

• iBoxx Offshore RMB China Corporate High Yield Index 144.43 +1.49%

• 2-Year Swap Spread 26.0 +.25 basis point

• TED Spread 28.0 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -40.75 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.84 +.66%
• 3-Month T-Bill Yield 1.07% unch.
  

• Yield Curve 77.0 -1.0 basis point

• China Import Iron Ore Spot $62.94/Metric Tonne +.66%

• Citi US Economic Surprise Index 2.50 -1.4 points

• Citi Eurozone Economic Surprise Index 55.40 -.3 point

• Citi Emerging Markets Economic Surprise Index 20.10 -2.2 basis points

• 10-Year TIPS Spread 1.85 -1.0 basis point
  
• 80.4% chance of Fed rate hike at Dec. 13 meeting, 81.5% chance at Jan. 31 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +135 open in Japan 
• China A50 Futures: Indicating +22 open in China

• DAX Futures: Indicating -11 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• Zhou Baffles China Watchers With Hints on 3Q Growth Surprise. (video)
• Your Evening Briefing. 
• The World's Largest Oil Hedge Is Complete. Mexico has completed its annual oil hedge for 2018, which will lock in an average export price of $46 per barrel of crude, Deputy Finance Minister Vanessa Rubio said in an interview. In addition to the put options bought on the market, a larger Oil Revenue Stabilization Fund, with the help of the central bank’s exchange-rate surplus, will help guarantee the price, Rubio told Bloomberg News. "We have completed it and we’re assured that the hedge perfectly covers the price of a barrel that we included in the 2018 budget of $46 dollars," Rubio said.
• How Goldman(GS) and Morgan Stanley's(MS) Profits Might Still Surprise.

Wall Street Journal:

• China’s Xi Approaches a New Term With a Souring Taste for Markets. As a Communist Party congress opens, the pro-market talk from Xi’s first term has faded as China’s priorities turn to economic intervention and supporting state companies.
• As Islamic State Recedes, Iraqi Forces and Kurds Turn on Each Other. Elite Iraqi forces take control of local government building in Kirkuk. 
• EU Foreign Ministers Agree to Stand by Iran Nuclear Deal. Ministers criticize Trump’s decision to pull out of agreement, warn that U.S. administration could become isolated.

Fox News:

• Trump delivers statement after meeting with Mitch McConnell -- live blog. (video)
• Dana Loesch forced to move due to 'repeated threats from gun control advocates'. (video)

CNBC:

• Trump and Mitch McConnell say they want tax reform done by the end of the year.
• Americans would see up to a $9,000 raise if US cuts corporate taxes, says Trump economic advisor.
• Major Wi-Fi security flaw could allow hackers to listen in on any of your devices. (video)
• Top Trump advisor Cohn says tax reform has to get done this year.
• The new iPhones will be Apple’s(AAPL) most successful ever, says analyst Ives.
• Mobile-only customers are the key to the next wave of Netflix(NFLX) growth.
• Iraq made 'declaration of war' when its troops seized parts of oil-rich region, Kurdish forces say.
• Adobe(ADBE) warns that hackers are exploiting its Flash software.

Zero Hedge:

• US Deploys Special Forces "Decapitation" Team To South Korea.
• Firm Behind "Trump Dossier" Refuses To Comply With Congressional Subpoena.
• Sears(SHLD) Crashes After Second Largest Shareholder Resigns From Board.
• Gold Drops Below $1300 As Taylor Reportedly Trump's Warsh For Fed Chair.  (graph)
• USDJPY Jumps And Dumps After Conflicting Reports Over North Korean Willingness To Negotiate. (graph)
• Healthcare Stocks Slide After Trump Says "Drug Prices Out Of Control". (graph)
• After Lightning Offensive, Kirkuk Is Now Fully Under Iraqi Military Control.
• NAFTA Talks Heat Up As Trump Administration Takes Aggressive Stance On Autos.
• Recession Red Flag Rears Its Ugly Head - Treasury Yield Curve Crashes To Post-Crisis Flats. (graph)
• Cable Plummets On Report Brexit Talks Headed For "Catastrophic Breakdown" If No EU Compromise.
• Empire Fed Survey Soars To Highest In 8 Years (As New Orders Plunge). (graph)