Bear Radar

Style Underperformer:

• Small-Cap Value -.5%

Sector Underperformers:

• 1) Oil Service -1.4% 2) Airlines -.9% 3) Gold and Silver -.8%

Stocks Falling on Unusual Volume: 

• DBVT, HAS, JP, GE, OSTK, ARNC, HIG, AJRD and BHGE

Stocks With Unusual Put Option Activity:

• 1) RSX 2) AMJ 3) RCII 4) ETM 5) HBI

Stocks With Most Negative News Mentions:

• 1) GE 2) MELI 3) AJRD 4) ITGR 5) IBKC

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.1%

Sector Outperformers:

• 1) Computer Hardware +2.3% 2) Disk Drives +2.0% 3) Retail +1.0%

Stocks Rising on Unusual Volume:

• AIMT, KALV, STX, BSFT, CRESY, QURE, VFC, PETS, ESIO, SKX, HYGS, CIFS, PHG, TUSK, UHAL, YPF, LII, CVTI, CARO, CAI, SEM, HTHT, DVA, PZN and ASML

Stocks With Unusual Call Option Activity:

• 1) NRG 2) AFL 3) STX 4) CC 5) TXN

Stocks With Most Positive News Mentions:

• 1) PETS 2) STX 3) AIMT 4) CAI 5) VFC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -2.4% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 43.1% of Issues Advancing, 52.9% Declining
• 165 New 52-Week Highs, 18 New Lows
• 48.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.4%
• Vix 10.1 +1.5%
• Total Put/Call 1.1 +34.2%
• TRIN/Arms .95 -1.0%

Monday Watch

Today's Headlines

Bloomberg:

• China's Home Prices Rise in Fewest Cities Since January 2016. China home prices rose in the fewest cities since January 2016, adding to signs of a property slowdown as curbs on buyers bite. New-home prices, excluding government-subsidized housing, in September rose in 44 of 70 cities tracked by the government, compared with 46 in August, the National Bureau of Statistics said on Monday. Prices fell in 18 cities from the previous month and were unchanged in eight.
• Yen Falls, Japan Stocks Advance on Abe Victory. A landslide election victory for Japan Prime Minister Shinzo Abe sent the yen down and stocks in Tokyo higher, with the path paved for a continuation of loose monetary policy. With Abe now in good political shape ahead of a pending decision on nominating the Bank of Japan’s leadership, the Japanese currency slumped to its weakest since July. The nation’s two main benchmarks extended their recent rallies that sent them to the highest in at least a decade. Elsewhere in Asia, equities nudged higher. The New Zealand dollar extended losses amid continued skepticism among traders about the country’s economic-growth outlook under incoming Prime Minister Jacinda Ardern. Japan’s Topix index climbed 0.9 percent, cementing a rally to the highest since mid 2007. The Nikkei jumped 1.1 percent to continue trading at the highest since 1996. South Korea’s Kospi index fluctuated. Hong Kong’s Hang Seng was little changed. Australia’s S&P/ASX 200 gained 0.1 percent. New Zealand is closed for a holiday.
• Five Things You Need to Know to Start Your Day. (video)
• Oil Extends Gains as OPEC Says All Options Open on Re-Balancing. Oil extended gains as OPEC and its allies reiterated that all options are open to re-balance the market. December futures increased as much as 0.8 percent in New York. OPEC and its partners including Russia achieved a record level of compliance to output cuts during September, according to a statement Saturday from the committee responsible for monitoring the agreement. In the U.S., drillers reduced the rig count a third week to the lowest since June, according to Baker Hughes.
• Tesla(TSLA) Reaches Deal for Shanghai Facility, WSJ Reports. Tesla Inc. has reached an agreement with the Shanghai government to set up its own manufacturing facility in the city, the Wall Street Journal reported Sunday, citing people briefed on the plan. The Palo Alto, California-based carmaker is working with the local government on the timing and details of an announcement, the people told the newspaper. The deal, which without a local partner likely won’t negate China’s 25 percent import tax, will still allow Tesla to reduce its production costs drastically, according to the report.
• Cisco(CSCO) Near Deal for Software Maker BroadSoft. Cisco Systems Inc. is close to a deal to acquire software maker BroadSoft Inc., according to people with knowledge of the situation. A deal could be announced as soon as Monday, the people said, asking not to be identified because the details aren’t public. BroadSoft, which has a market value of about $1.7 billion, has been working with Jefferies Group to seek suitors. It earlier attracted interest from buyout firms Searchlight Capital Partners and Siris Capital Group, people familiar with the matter said Oct. 4.

Wall Street Journal:

• Fear of Violent Protests Raises Cost of Free Speech on Campus. White nationalist’s speech at University of Florida was peaceful but the school spent $500,000 on security.
• Hunt For Yield Fuels Boom in CLOs. Volumes of collateralized loan obligations, which slice and dice risky, leveraged bank loans, hit a record so far this year.
• Health Advocates Gear Up for Open Enrollment. Groups and some states push to get people signed up for coverage under the ACA.
• Trump Backs Some GOP Senators as Bannon Escalates ‘War’ on Incumbents. Former White House chief strategist courts primary competitors in several states, while president makes calls of support to at least three senators.

Fox News:

• Deserter Bergdahl says Taliban more 'honest' than US Army.
• House also probing Obama-era Uranium One deal, DeSantis says. (video)

CNBC:

• US warns public about attacks on energy, industrial firms.
• Here's why China is buying up assets in Australia. (video)
• President Trump: With tax reform we can make it morning in America again.

Zero Hedge:

• For The First Time In 26 Years, US To Put Nuclear Bombers On 24 Hour Alert.
• Censorship In The Digital Age.
• 93-Year-Old President Carter: Russians Didn't Alter Election, Obama Didn't Deliver, We Didn't Vote For Hillary.
• "They Called Him 'The Pig'" - Driver Speaks Out About Harvey Weinstein's Disgraceful Behavior. 
• China's Government Is Expected To Buy 24% Of All Residential Real Estate For Sale In 2017.
• Maxine Waters Threatens To "Go And Take Out 'Moron' Trump", The Most "Dangerous President Ever".
• "It Could Open A Pandora's Box": Italy's 2 Richest Regions Are Voting In Historic Autonomy Referendums.
• Big Tech's Dangerous Influence: "Coming Between Us And Reality".
• Turkish Lira Tumbles As Erdogan Re-Escalates US Tensions.
• Exit Polls Project Sweeping Victory, Supermajority For Japan's Abe.
• Trump To Allow Release Of 3,000 Never Before Seen Documents On JFK Assassination.
• What The ECB Will Announce This Week: A Summary Of All QE Tapering Scenarios.

Night Trading

• Asian indices are -.25% to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 74.5 -.75 basis point.
• Asia Pacific Sovereign CDS Index 15.50 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 73.46 +.01%.
• S&P 500 futures +.02%.
• NASDAQ 100 futures +.02%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (HAL)/.38
• (HAS)/1.95
• (ITW)/1.65
• (KMB)/1.54
• (PETS)/.30
• (STX)/.86
• (STT)/1.61
• (VFC)/1.13
• (CR)/1.10
• (OI)/.74
• (WHR)/3.93

Economic Releases 
8:30 am EST

• The Chicago Fed National Activity Index for Sept. is estimated to rise to -.1 from -.31 in August.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Sept. House Price report 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 modestly higher and to weaken into the afternoon, finishing mixed.  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 mixed as tax reform hopes, yen weakness and earnings optimism offset geopolitical concerns, profit-taking and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:

• A Record in Records for U.S. Stocks Rallying Sixth Straight Week. Earnings-day blowups, leverage warnings in China, Apple’s worst rout since August. Oh, and a sixth straight week of gains for the S&P 500. No matter what happens lately, stocks just keep rising, with record closes piling up in U.S. benchmarks at a rate that is starting to defy precedent. The Nasdaq 100 Index has finished at all-time highs 62 different times this year, on par with the most ever in 1999, while the S&P 500 and Dow Jones Industrial Average are closing in on history, too. For bears, the elongating list of highs bespeaks euphoria, particularly when the market has been spared a 3 percent pullback for more than a year. Investors have ignored bad news ranging from North Korea to political drama at the White House to what may be the biggest profit slowdown in six years.

• Spain’s Rajoy Will Oust Catalan Leaders. Prime Minister Mariano Rajoy invoked the most far-reaching powers in the Spanish Constitution as he aimed to strike a decisive blow against the Catalan separatist campaign that has divided the nation and put its economic expansion at risk. Spain will dismiss Catalan President Carles Puigdemont and the rest of his regional government as part of a barrage of actions under Article 155 of the Constitution, Rajoy said at a press conference in Madrid Saturday. The decision has to be ratified by a vote in the Senate, potentially within a week.

• Iran Nuclear Deal Terms Can't Be Renegotiated, Minister Says. The nuclear deal between Iran and world powers can’t be renegotiated despite U.S. President Donald Trump’s objection to the terms, according to the Middle East country’s deputy foreign minister. That includes all annexes, clauses and proposed additions, Abbas Araghchi was quoted by the state-owned Islamic Republic News Agency as saying. The U.S. has already violated the accord through actions that undermine its implementation, he said. “We say clearly and unequivocally, no possibility exists for any negotiations regarding the nuclear deal or its annexes or any additions,” the minister told a conference in Moscow on Saturday.

• OPEC Says ‘All Options are Open’ With Compliance at Record Level. OPEC and its non-OPEC allies reiterated that all options to rebalance the oil market “are left open” as the producers announced the highest level of compliance with their agreement to curtail production. The joint ministerial committee responsible for monitoring the agreement, known as JMMC, said on Saturday that producing countries achieved a record-high conformity level on their voluntary production adjustments at 120% in September, according to a statement on the website of the Organization of Petroleum Exporting Countries.

• Oil Investors Jump Back Into the Fray. Oil investors are back in the ring. Hedge funds are finding betting on West Texas Intermediate crude more attractive again, with total positioning on the U.S. benchmark increasing to the highest in almost a year. The surge comes as oil prices have held steady above $50 a barrel -- a key psychological level -- for about two weeks.

Wall Street Journal:

• Spain Moves to Seize Control of Catalan Government, Call Regional Elections. Prime Minister Mariano Rajoy seeks to use measures to quell Catalonia’s push for independence.

• Drop in Teen Birthrate Helps Drive Decline in Fertility. Economists track the trend because it suggests how many people will be competing for food—and jobs.

• Trump Signals Yellen Still a Top Candidate for Fed Job After Meeting This Week. President also highlights candidates Taylor and Powell by name.

• GOP Gears Up for Tax-Overhaul Push. With passage of Senate budget, Republicans are setting their sights on finishing a tax bill before year-end.

• China’s Road to Electric-Car Domination Is Driven in Part by Batteries. But foreign auto makers and experts say it has set up the market to favor domestic suppliers.

Barron's:

• Had bullish commentary on (MS), (DWDP), (COH), (CZR) and (GDX).

Fox News:

• Air Force could recall up to 1,000 retired pilots after Trump order.

• Rachel Maddow called out by fellow liberals for pushing anti-Trump conspiracy.

CNBC:

• Tax reform 'not fully priced in', and it could be the spark that extends the rally, Russell's Doug Gordon says.

• By one measure, the Dow is the most overbought in 117 years, but that may not be a bad thing. (video)

• Machine learning could lead to economic hypergrowth, new research suggests.

• Bitcoin smashes through $6,100 to hit a new record high.

• Apple(AAPL) retail chief Angela Ahrendts: We will not upsell customers to the iPhone X.

• Fasting: A trending food idea and new frontier in longevity science. (video)

Zero Hedge:

• "It's A Coup": Catalan President Slams "Worst Attack" By Spain "Since Franco Dictatorship".

• Trump To Allow Release Of 3,000 Never Before Seen Documents On JFK Assassination.

• Gold Star Widow Releases Trump's Call: "Tell Your Children I Said Their Father Was A Great Hero".

• Spain Activates "Nuclear Option": Will Seize Control Of Catalan Government, Force New Elections.

• UC Santa Cruz 'Liberals' Declare Mainstream Republicans Nazis: A Threat To Their Safety For Simply Existing.

• Socialist Group Calls For "Extermination" Of Capitalists, "Worth Shooting" Donald Trump.

• "We Can't Welcome All The World's Poor" - Macron Unveils Crackdown On Criminal Illegal Aliens.

• "Carnival Barker" Krugman & The Inevitable Weimar Endgame.

• What Do Hillary, Uranium One, And An FBI Bust Of A Deep Cover Russian Spy Network Have In Common?

• "God Is All I Have" - One Month In, Puerto Ricans Fight For Survival Amid Sluggish Recovery.

• Emails Reveal Bill Clinton Met With Vladimir Putin Just Before Uranium One Deal.

• Weekend Reading: Dow 24,000 By Christmas.

• GE-Dip-Buying-Panic Sends Dow To 'Most Overbought' In 62 Years, Yield Curve Collapse Continues. (graph)

Business Insider:

• Google(GOOG) built a new Trojan Horse to get inside every aspect of your life.

• The 21 US cities with the highest startup growth.