Stocks Slightly Higher into Afternoon on Diminishing Trade War Fears, Economic Optimism, Technical Buying, REIT/Restaurant Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.3 +1.4%

• Euro/Yen Carry Return Index 135.42 +.35%

• Emerging Markets Currency Volatility(VXY) 12.21 -2.63%

• S&P 500 Implied Correlation 29.66 +12.6%

• ISE Sentiment Index 115.0 +27.8%
  

• Total Put/Call .80 +11.11%

• NYSE Arms 1.29 +120.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.64 -.37%
  

• America Energy Sector High-Yield CDS Index 395.0 -.30%

• European Financial Sector CDS Index 80.30 -.07%

• Italian/German 10Y Yld Spread 280.75 +2.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.29 -2.47%

• Emerging Market CDS Index 207.74 +.89%
  

• iBoxx Offshore RMB China Corporate High Yield Index 151.21 +.02%

• 2-Year Swap Spread 17.5 -.75 basis point

• TED Spread 20.75 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.0 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.62 -.40%
• 3-Month T-Bill Yield 2.11% +1.0 basis point

• Yield Curve 21.50 +1.0 basis point

• China Iron Ore Spot 66.05 USD/Metric Tonne unch.

• Citi US Economic Surprise Index -20.10 +.8 point

• Citi Eurozone Economic Surprise Index 3.60 -1.6 points

• Citi Emerging Markets Economic Surprise Index -10.30 -.8 point

• 10-Year TIPS Spread 2.12 +1.0 basis point
  
• 94.8% chance of Fed rate hike at Nov. 8th meeting, 98.5% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +7 open in Japan 
• China A50 Futures: Indicating -24 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/retail/medical/biotech sector longs and emerging market shorts

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.2%

Sector Underperformers:

• 1) Gold & Silver -1.6% 2) Tobacco -1.1% 3) Alt Energy -1.0%

Stocks Falling on Unusual Volume: 

• AKCA, CRON, BBY, CGC, IONS, CTRL, AMD and ZUO

Stocks With Unusual Put Option Activity:

• 1) ZS 2) LCI 3) DKS 4) CHS 5) CREE

Stocks With Most Negative News Mentions:

• 1) MITK 2) NEWT 3) AMSWA 4) CTRL 5) SIG

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Robotics +1.0% 2) Airlines +1.0% 3) Restaurants +.6%

Stocks Rising on Unusual Volume:

• AHL, BRKS, WMGI, DSW, VRAY, KRNT, TIF, TRI, ACRS, HEI, LE, BILI, PEB, TLND, RYAAY, SCVL, OSTK, SMCI, COTY, PDD, AUDC, QCOM, OMAB, SPLK, GHDX, EHTH, GLOB and SCSC

Stocks With Unusual Call Option Activity:

• 1) HAIN 2) VFC 3) WDAY 4) BBY 5) KRE

Stocks With Most Positive News Mentions:

• 1) COTY 2) HEI 3) TIF 4) DSW 5) QCOM

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -16.8% Below 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 45.1% of Issues Advancing, 50.2% Declining
• 93 New 52-Week Highs, 16 New Lows
• 56.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.2%
• Vix 12.2 +.5%
• Total Put/Call .77 +6.9%
• TRIN/Arms 1.06 +82.2%

Tuesday Watch

Night Trading 

• Asian equity indices are +.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 78.0 -2.0 basis points. 
• Asia Pacific Sovereign CDS Index 10.5 unch.
• Bloomberg Emerging Markets Currency Index 66.86 -.04%.
• FTSE 100 futures +.55%
• S&P 500 futures +.17%.
• NASDAQ 100 futures +.27%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (BMO)/2.26
• (BBY)/.83
• (BJ)/.30
• (DSW)/.47
• (HAIN)/.26
• (TIF)/1.01

After the Close:

• (HRB)/-.77
• (SCVL)/.55

Economic Releases 
8:30 am EST

• The Advance Goods Trade Balance for July is estimated to widen to -$69.0B versus -$67.9B in June.
• Wholesale Inventories MoM for July are estimated to rise +.2% versus a +.1% gain in June.
• Retail Inventories MoM for July.

9:00 am EST

• The S&P CoreLogic CS 20-City MoM for June is estimated to rise +.2% versus a +.2% gain in May.
  

10:00 am EST

• The Richmond Fed Manufacturing Index for August is estimated to fall to 17.0 versus 20.0 in July.
• Conference Board Consumer Confidence for August is estimated to fall to 126.6 versus 127.4 in July. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone M3 Money Supply report, $37B 5Y T-Note auction, AZ Senate primary, weekly US retail sales reports, (HSY) analyst day and the Jefferies Semi/Hardware/Communications Conference could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by industrial and industrial shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the day.

Stocks Surging into Final Hour on Diminishing Trade War Fears, Economic Optimism, Technical Buying, Financial/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.2 +1.92%

• Euro/Yen Carry Return Index 134.97 +.36%

• Emerging Markets Currency Volatility(VXY) 12.56 unch.

• S&P 500 Implied Correlation 29.09 -.58%

• ISE Sentiment Index 87.0 -25.64%
  

• Total Put/Call .92 -8.91%

• NYSE Arms .61 -42.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.86 -1.72%
  

• America Energy Sector High-Yield CDS Index 395.0 -1.2%

• European Financial Sector CDS Index 80.35 -.21%

• Italian/German 10Y Yld Spread 278.0 -2.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.55 -.47%

• Emerging Market CDS Index 205.44 -1.86%
  

• iBoxx Offshore RMB China Corporate High Yield Index 151.18 +.07%

• 2-Year Swap Spread 18.25 +.25 basis point

• TED Spread 21.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.75 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.90 -.04%
• 3-Month T-Bill Yield 2.10% +1.0 basis point

• Yield Curve 20.50 +.5 basis point

• China Iron Ore Spot 65.78 USD/Metric Tonne +.17%

• Citi US Economic Surprise Index -20.90 -1.7 points

• Citi Eurozone Economic Surprise Index 5.20 +10.2 points

• Citi Emerging Markets Economic Surprise Index -9.50 +.2 point

• 10-Year TIPS Spread 2.11 +2.0 basis points
  
• 97.0% chance of Fed rate hike at Nov. 8th meeting, 99.1% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +96 open in Japan 
• China A50 Futures: Indicating +28 open in China

• DAX Futures: Indicating +9 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long