Stocks Rising into Final Hour on Less Emerging Markets/European Debt Angst, Diminishing Emerging Market Currency Fears, Oil Gain, Homebuilding/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.36 -1.04%

• Euro/Yen Carry Return Index 133.05 +1.17%

• Emerging Markets Currency Volatility(VXY) 12.2 -1.5%

• S&P 500 Implied Correlation 29.04 -2.16%

• ISE Sentiment Index 103.0 -23.1%
  

• Total Put/Call .77 -3.75%

• NYSE Arms .95 -10.69%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.11 -2.04%
  

• America Energy Sector High-Yield CDS Index 407.0 -2.36%

• European Financial Sector CDS Index 82.10 -4.3%

• Italian/German 10Y Yld Spread 265.75 -5.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.82 -1.55%

• Emerging Market CDS Index 202.68 -2.36%
  

• iBoxx Offshore RMB China Corporate High Yield Index 151.0 +.04%

• 2-Year Swap Spread 19.75 -.5 basis point

• TED Spread 26.0 -2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -8.5 +.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.88 +.46%
• 3-Month T-Bill Yield 2.06% +3.0 basis points

• Yield Curve 23.75 +.5 basis point

• China Iron Ore Spot 66.90 USD/Metric Tonne +.03%

• Citi US Economic Surprise Index -16.50 -.1 point

• Citi Eurozone Economic Surprise Index -9.0 +.4 point

• Citi Emerging Markets Economic Surprise Index -9.60 -.1 point

• 10-Year TIPS Spread 2.08 unch.
  
• 92.3% chance of Fed rate hike at Nov. 8th meeting, 97.5% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +121 open in Japan 
• China A50 Futures: Indicating +80 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.5%

Sector Underperformers:

• 1) Foods -.8% 2) Utilities -.7% 3) REITs -.4%

Stocks Falling on Unusual Volume: 

• NEWA, AMTD, COTY, EDU, SJM and TAL

Stocks With Unusual Put Option Activity:

• 1) TOL 2) UNIT 3) COTY 4) MO 5) SO

Stocks With Most Negative News Mentions:

• 1) HAIR 2) HPE 3) BKH 4) HLF 5) M

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.4%

Sector Outperformers:

• 1) Homebuilders +5.0% 2) Oil Service +2.4% 3) Semis +2.0%

Stocks Rising on Unusual Volume:

• CGC, TOL, RGS, SODA, FN, TDF, CTRL, PINC, KALA, SKY, BLFS, MDT, TUR, TRCO, TJX, WSBC, DDD, SKYW, REV, BZH, CTRN, SNY, PCTY, DBVT, SWCH, PINC, TLRY, AVNS, BZH, SGMS, MCHP and NXEO

Stocks With Unusual Call Option Activity:

• 1) TELL 2) XLB 3) URBN 4) CVNA 5)KSS

Stocks With Most Positive News Mentions:

• 1) TOL 2) PINC 3) FN 4) DISCA 5) TJX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -8.7% Below 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 65.4% of Issues Advancing, 30.9% Declining
• 120 New 52-Week Highs, 6 New Lows
• 54.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.2%
• Vix 12.3 -1.3%
• Total Put/Call .83 +3.8%
• TRIN/Arms .93 -12.1%

Tuesday Watch

Evening Headlines

Bloomberg:      

• Trump Accuses China, EU of Currency Manipulation.   

• Trump Vows No Concessions to Erdogan for U.S. Pastor's Release.

• BHP Lifts Dividend to Record as Profit Hits Four-Year High.

• Asia Futures Mixed; Dollar Falls on Trump Remarks. Asian stocks are set for a mixed start amid a muted rise in U.S. equities and a weaker dollar on comments from U.S. President Donald Trump. Futures ticked lower in Japan and Hong Kong, were little changed in Australia and rose in China. The Shanghai Composite Index will be closely watched after its rebound Monday, as state-backed funds were seen buying stocks to stabilize the market. U.S. equities pared gains in the 15 minutes of trading after Reuters reported that Trump said China and Europe manipulate their currencies. Even with the pull back, the S&P 500 Index advanced for a third day to close within 15 points of a record. Trump also hit the dollar with separate comments lamenting the Federal Reserve’s interest-rate increases, while Treasuries advanced ahead of a meeting of central bankers later this week. Futures on the Nikkei 225 Stock Average fell 0.1 percent in Singapore. S&P/ASX 200 Index futures were little changed. Hong Kong’s Hang Seng Index futures were down 0.2 percent. CSI 300 Index futures rose 1 percent. Futures on the S&P 500 Index ticked less than 0.1 percent lower as of 7:02 a.m in Tokyo.  

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

• Trump Pans Powell, China Data Doubts, Venezuela's Chaos: Eco Day.

• Apple(AAPL) Is Planning a New Low-Cost MacBook, Pro-Focused Mac Mini.

Wall Street Journal:

• U.S. Moves Toward New Tariffs on China Despite Trade Talks.

• The Exercise That Helps Mental Health Most.

• China’s Museums Rewrite History to Boost Xi. 

• Videogame Developers Are Making It Harder to Stop Playing.

MarketWatch.com:

• Stocks may be finally about to break out of this trading range.

Fox News:

• California pushes bill forcing restaurants to serve kids water or unflavored milk.

• Media's 'hit' pieces against Supreme Court pick Kavanaugh trigger mockery.

CNBC:  

• Stocks making the biggest moves after hours: FN, HTZ and more.

• Nvidia(NVDA) spikes after CEO introduces new processors for gaming.

• Trump says he will keep criticizing Fed if it continues to raise interest rates.

• Trump says it's 'very dangerous' when Twitter, Facebook self-regulate content. 

• Apple(AAPL) and these other stocks have contributed the most to this historic bull market.  

• As semi stocks get wrecked, long-time tech investor sees two to buy on the dip.

• Negative bets against gold surge, could be tipping point.

• I’m ‘financially ruined’: Cryptocurrency investors are crushed by losses of 70% or more. 

• Oppenheimer's John Stoltzfus on why he believes the stock market will climb higher  

Zero Hedge: 

• "We Are Not Going Bankrupt" Musk Vows As Tesla Suppliers Panic Over Stopped Payments.

• Desperate China Unveils Plan To Tax Childless Couples To Avoid "Demographic Time Bomb".

• New Study: Robots Can Brainwash Children Into "Mindless Conformity".

• Sweden In Crisis: Leading PM Candidate Vows Migration Reforms As Nationalism Surges.

• Venezuela Slashes 5 Zeros From Currency In "One Of Greatest Devaluations Ever".

• Watch Out California! 53 Major Earthquakes Just Hit The Ring Of Fire In A 24 Hour Period.

• Brazil Deploys Troops To Venezuela Border After Migrant Chaos - "This Is Going To Turn Into War!".

• Trump Warns Turkey "No Concessions", Doubts China-Talks' Progress, Demands "Help" From Fed.

• Bond Bears Bruised As Yields Hit 3-Mo Lows; Brazil, Mexico, & Turkey Tumble.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 81.75 -.5 basis point. 

• Asia Pacific Sovereign CDS Index 11.0 unch.

• Bloomberg Emerging Markets Currency Index 66.58 unch.

• FTSE 100 futures -.46%

• S&P 500 futures -.15%.

• NASDAQ 100 futures -.23%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (SJM)/1.78

• (KSS)/1.64

• (MDT)/1.11

• (TJX)/1.05

• (TOL)/1.03

After the Close:

• (LZB)/.25

• (MYGN)/.33

• (RRGB)/.46

• (URBN)/.77

Economic Releases 

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Machine Orders report, weekly US retail sales reports and the Raymond James SMid-Cap Growth Conference could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by healthcare and consumer shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the day.

Stocks Higher into Final Hour on Diminished Trade War Fears, Less European Debt Angst, Oil Gain, Retail/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Light

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.57 -.55%

• Euro/Yen Carry Return Index 131.46 -.01%

• Emerging Markets Currency Volatility(VXY) 12.35 -.96%

• S&P 500 Implied Correlation 29.60 +3.86%

• ISE Sentiment Index 158.0 -25.8%
  

• Total Put/Call .80 -22.33%

• NYSE Arms 1.13 +78.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.53 +.73%
  

• America Energy Sector High-Yield CDS Index 417.0 +.07%

• European Financial Sector CDS Index 85.83 -1.12%

• Italian/German 10Y Yld Spread 271.25 -10.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 11.0 -.9%

• Emerging Market CDS Index 207.53 +.92%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.94 +.13%

• 2-Year Swap Spread 20.25 +.25 basis point

• TED Spread 28.0 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.25 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.49 -.24%
• 3-Month T-Bill Yield 2.03% unch.

• Yield Curve 23.25 -2.0 basis points

• China Iron Ore Spot 67.64 USD/Metric Tonne -.68%

• Citi US Economic Surprise Index -16.40 -.1 point

• Citi Eurozone Economic Surprise Index -9.40 +5.1 points

• Citi Emerging Markets Economic Surprise Index -9.50 -.1 point

• 10-Year TIPS Spread 2.08 -1.0 basis point
  
• 90.0% chance of Fed rate hike at Nov. 8th meeting, 96.7% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +21 open in Japan 
• China A50 Futures: Indicating +27 open in China

• DAX Futures: Indicating -8 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long