Stocks Rising into Afternoon on Diminished Emerging Market Currency Fears, Less Eurozone/Emerging Markets Debt Angst, Earnings Optimism, Retail/Financial Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Gaining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.3 -10.2%

• Euro/Yen Carry Return Index 131.18 -.19%

• Emerging Markets Currency Volatility(VXY) 12.18 -4.92%

• S&P 500 Implied Correlation 31.73 -9.8%

• ISE Sentiment Index 126.0 +20.0%
  

• Total Put/Call .93 -13.89%

• NYSE Arms 1.17 -32.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.67 -.58%
  

• America Energy Sector High-Yield CDS Index 386.0 +1.42%

• European Financial Sector CDS Index 85.50 -3.49%

• Italian/German 10Y Yld Spread 270.25 -8.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.64 -2.12%

• Emerging Market CDS Index 205.28 -6.79%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.99 +.16%

• 2-Year Swap Spread 19.75 +1.0 basis point

• TED Spread 26.0 -1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -11.25 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.24 +1.1%
• 3-Month T-Bill Yield 2.07% +4.0 basis points

• Yield Curve 26.25 -.25 basis point

• China Iron Ore Spot 67.97 USD/Metric Tonne +.25%

• Citi US Economic Surprise Index -10.40 +.8 point

• Citi Eurozone Economic Surprise Index -19.50 +10.5 points

• Citi Emerging Markets Economic Surprise Index -6.60 -3.9 points

• 10-Year TIPS Spread 2.10 unch.
  
• 92.5% chance of Fed rate hike at Nov. 8th meeting, 97.8% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -41 open in Japan 
• China A50 Futures: Indicating +31 open in China

• DAX Futures: Indicating +50 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.7%

Sector Underperformers:

• 1) Gaming -1.0% 2) Gold & Silver -1.0% 3) Social Media -.8%

Stocks Falling on Unusual Volume: 

• SWCH, OPTN, YY, VERI, BZUN, FNKO, OSTK, CGC, JKS, JD, GDS, CPLG and CVIA

Stocks With Unusual Put Option Activity:

• 1) STZ 2) M 3) URBN 4) PLNT 5) COF

Stocks With Most Negative News Mentions:

• 1) VIPS 2) SWCH 3) SRCI 4) CB 5) PINC

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Retail +1.9% 2) Computer Hardware +1.7% 3) Restaurants +1.5%

Stocks Rising on Unusual Volume:

• TUR, DY, GSKY, TPR, AAP, NLSN, NANO, NEWT, NOBL, AFI, BGG, INDB, ICUI, GTT, STAA, TTD, BXP, BLD, AIN, WSFS, STZ, IGV, CVI, SIR, ANGI, CLI and M

Stocks With Unusual Call Option Activity:

• 1) STZ 2) HUN 3) PAGP 4) M 5) WDAY

Stocks With Most Positive News Mentions:

• 1) TPR 2) AAP 3) BYD 4) TILE 5) NLSN

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -8.6% Below 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 74.6% of Issues Advancing, 22.2% Declining
• 60 New 52-Week Highs, 49 New Lows
• 49.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.2%
• Vix 13.1 -11.1%
• Total Put/Call .95 -12.0%
• TRIN/Arms 1.03 -40.8%

Tuesday Watch

Evening Headlines

Bloomberg:        

• Turkey's Collapse Sinks Emerging Markets on ‘Manic Monday’.     

• Turkey Default Wagers Soar to Highest Since 2008 Crisis.

• Argentina Boosts World’s Highest Rates Amid Turkey Contagion.    

• China’s Yuan Slump Almost Over, Says StanChart Veteran.

• Trump Uses Sanctions to Spark Painful Market Moves for Adversaries.   

• Asian Stocks Set for Mixed Open; Dollar Holds Gain: Markets Wrap. Asian stocks pointed to a mixed opening Tuesday as the contagion from the economic crisis in Turkey remained relatively contained in developed markets overnight. U.S. stocks closed lower, the dollar rose to its highest in 14 months and Treasuries were little changed. Futures in Japan pointed to gains as the yen pared some of Monday’s rise. Australian and Korean futures were little changed while Hong Kong equivalents were lower. The S&P 500 Index declined for a fourth straight day, its longest losing streak in five months, though early signs that markets would buckle faded during the American trading day. Turkey’s lira steadied after slumping over 20 percent in four days while European banks dragged down stocks in the region, though equity measures closed well above the day’s lows. Still, emerging-market assets reeled. South Africa’s rand one-month implied volatility soared by the most since December 2015 while Argentina’s central bank unexpectedly hiked its key interest rate as the peso slumped to a record low. Nikkei 225 futures rose 0.6 percent in Singapore. Hang Seng futures fell 0.4 percent. SPI 200 futures rose 0.1 percent.  

• Five Things You Need to Know to Start Your Day.

• Ether Tumbles as Concern Increases That ICOs Are Cashing Out. 

• Icahn Drops Fight to Block Cigna's Takeover of Express Scripts.

Wall Street Journal:

• Turkish Lira Plunges Further as Erdogan Fails to Assuage Investors’ Concerns.

• Canada Backtracks on a Carbon Tax.

• Banks Finally Start to Pay Their Depositors.

• France Takes On Cellphone Addiction With a Ban in Schools.

MarketWatch.com:

• Strategists see 4 ways out of Turkey’s currency crisis.

Fox News:

• Fired FBI agent Peter Strzok sets up anti-Trump Twitter account, GoFundMe page seeking $150G.

CNBC:  

• 'What happens in Turkey won't stay in Turkey': Why this debt crisis could be different.

• US reaps more than $1.4 billion from steel and aluminum tariffs.

• Trump gives $717 billion defense bill a green light. Here's what the Pentagon is poised to get.

• Stocks making the biggest moves after hours: SWCH, VIPS and more.

• Turkey's crashing currency likely to unleash wave of bad loans in region.

• Nvidia(NVDA) is a ‘top pick’ because of the chipmaker’s upcoming chips, Cowen says.

• Goldman lays out a scenario that could see the stock market surge.

Zero Hedge:  

• The Revenge Of Hillary: Senator Mark Warner Proposes The End Of Free Speech.

• China Credit Impulse Shrinks To 2 Year Low Amid Collapsing Shadow Banking Debt.

• Google Is Constantly Tracking, Even If You Turn Off Device 'Location History'.

• Sweden Is Burning: Migrant Gangs Unleash Coordinated Fire-Bomb Rampage Across Multiple Cities.

• Crypto Bubble Unwind Images: Fast In Altcoins, Slower In Bitcoin.

• CBO Cuts 2018 GDP Outlook, Sees Fewer Fed Rate Hikes.

• Russell Napier: "Turkey Will Be The Largest EM Default Of All Time".

• Global Stocks 'Miraculously' Brush Off Emerging Markets Massacre.

Business Insider:

• Rapper Azealia Banks claims she was at Elon Musk's house over the weekend as he was 'scrounging for investors'.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 84.25 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 10.75 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 65.52 unch.

• FTSE 100 futures +.10%

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.21%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (AAP)/1.85

• (EAT)/1.19

• (ARRY)/-.30

• (CSIQ)/.24

• (HD)/2.85

• (TPR)/.57

After the Close:

• (A)/.63

• (DDS)/-.48

• (MYGN)/.33

• (CREE)/.08

Economic Releases 
6:00 am EST

• The NFIB Small Business Optimism for July is estimated to fall to 106.8 versus 107.2 in June.

8:30 am EST

• The Import Price Index MoM for July is estimated unch. versus -.4% in June.

• The Export Price Index MoM for July is estimated to rise +.2% versus a +.3% gain in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Retail Sales/Industrial Production reports, Japan Industrial Production report, Eurozone GDP report, weekly US retail sales and the Wedbush Healthcare Conference could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by technology and consumer shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.

Stocks Falling into Final Hour on Emerging Markets Currency Weakness, European/Emering Markets Debt Angst, Oil Decline, Commodity/Homebuilding Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.3 +8.6%

• Euro/Yen Carry Return Index 131.26 -.33%

• Emerging Markets Currency Volatility(VXY) 12.87 +5.93%

• S&P 500 Implied Correlation 33.23 +5.4%

• ISE Sentiment Index 140.0 +53.9%
  

• Total Put/Call 1.09 -9.17%

• NYSE Arms 1.70 +24.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.04 +2.70%
  

• America Energy Sector High-Yield CDS Index 379.0 +2.44%

• European Financial Sector CDS Index 88.55 +2.97%

• Italian/German 10Y Yld Spread 279.0 +11.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.87 +2.74%

• Emerging Market CDS Index 221.28 +11.43%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.75 -.05%

• 2-Year Swap Spread 18.75 -.5 basis point

• TED Spread 27.75 -2.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -11.5 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.28 -1.04%
• 3-Month T-Bill Yield 2.03%-1.0 basis point

• Yield Curve 26.50 +.5 basis point

• China Iron Ore Spot 69.12 USD/Metric Tonne +.14%

• Citi US Economic Surprise Index -11.20 +.7 point

• Citi Eurozone Economic Surprise Index -30.0 +2.9 points

• Citi Emerging Markets Economic Surprise Index -2.70 -.7 point

• 10-Year TIPS Spread 2.10 unch.
  
• 90.3% chance of Fed rate hike at Nov. 8th meeting, 96.1% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +213 open in Japan 
• China A50 Futures: Indicating +13 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech sector longs and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long