Morning Market Internals

NYSE Composite Index:

• Volume Running +51.6% Above 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 51.6% of Issues Advancing, 43.8% Declining
• 78 New 52-Week Highs, 44 New Lows
• 52.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.5%
• Vix 11.5 -2.3%
• Total Put/Call .81 -6.9%
• TRIN/Arms .84 +60.8%

Friday Watch

Evening Headlines

Bloomberg:     

• China Plans Broad Import Tax Cut as Soon as October.  

• Trump Is Denying Product Exclusions From New China Tariffs.

• Asia Stocks Build on Rally; U.S. Treasuries Steady. Stocks in Asia look set to round out two strong weeks on a high after U.S. equities climbed to fresh records and concerns surrounding trade tensions showed signs of easing. Treasury yields held near the highest level this year, while the dollar slipped. Japan’s Topix index is on course for the best week in two years, while futures signaled gains when markets open in China and Hong Kong. Emerging-market assets continued to rally from recent lows. The sell-off in sovereign bonds has steadied in the past two days following this week’s rise above 3 percent for 10-year U.S.yields, something equity investors are taking in their stride amid optimism over earnings and economic growth. Japan’s Topix index gained 0.5 percent as of 9:04 a.m. in Tokyo, bringing this week’s advance to 4 percent. Australia’s S&P/ASX 200 Index gained 0.2 percent. South Korea’s Kospi index added 0.4 percent. Futures on Hong Kong’s Hang Seng Index advanced 0.7 percent. FTSE China A50 Index futures rose 0.4 percent. Futures on the S&P 500 Index held steady.  

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

• Fed Recession Risk, Fealty to Xi, Trump Exemption Doubt: Eco Day.  

• OPEC’s Squabbles Don’t Really Matter for the Oil Market.

• Fed Likely to Push Aside Recession Worry in Unveiling 2021 View.  

• Medtronic(MDT) Agrees to Buy Mazor Robotics(MZOR) in $1.6 Billion Deal.

• Slew of Positive Reports Show U.S. Economy Still on Solid Track. 

• Online Luxury Goods Hub Farfetch's IPO Raises $885 Million.

Wall St. Journal:

• Youth Vaping Has Soared in 2018, New Data Show.

• Cocaine, Meth, Opioids All Fuel Rise in Overdose Deaths.

• Latin America Is the Murder Capital of the World.

• Google(GOOGL) Workers Discussed Tweaking Search Function to Counter Travel Ban.

• Growing Opposition Threatens Last U.S. Nuclear Plant.

Fox News:

• MCENANY: GOP win in Texas race is good sign that party can defy history.

• Haley: NY Times published unfair $50G curtains report despite knowing truth.

CNBC:     

• Dow and S&P 500 soar to record high as fears of a US-China trade war ease.

• Micron(MU) tumbles after CFO says Trump China tariffs will hit gross margins.

• Former Google(GOOG) CEO predicts the internet will split in two by 2028, with one part led by China.

• Wall Street's crypto guru says pot stocks feel like bitcoin last year — so he's shorting them.

• After-hours buzz: MU, UNFI & more. 

• FDA chief says agency is considering fast-track review for new e-cigs with tech to prevent youth use.

• America is winning the trade war and here's the proof, market watcher says. 

• The Dow just triggered a chart signal that could mean 'six to nine months of a higher stock market'.

Zero Hedge:

• Facebook(FB) Plans "War Room" And A.I. Software To Prevent Election Meddling Ahead Of Midterms.

• Destroying America: CBO Projects US National Debt Will Hit 99 Trillion Dollars By 2048.

• Fmr Scalia Clerk Expects "Compelling Evidence" To Exonerate Kavanaugh Next Week; Feinstein "Will Soon Be Apologizing".

• "Tomorrow Will Be A Huge Day": Quad Witch And Industry Reclassification To Unleash Fireworks.

• In Socialist Venezuela, The Poor Starve To Death While The Politically Powerful Feast.

• Stocks Surge To New Record Highs As Investors Dump Dollar & Bonds.

Business Insider:

• 'We're going to see continued consolidation': Adobe’s(ADBE) $4.75 billion acquisition of Marketo could spur a takeover spree at Salesforce(CRM) and Oracle(ORCL).

• Amazon's(AMZN) latest onslaught of hardware proves it won't stop until it reaches every aspect of your life.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 83.25 +6.0 basis points. (new series) 

• Asia Pacific Sovereign CDS Index 11.25 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 66.60 -.05%.

• FTSE 100 futures +.25%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• None of note

After the Close:

• None of note

Economic Releases

9:45 am EST

• The Preliminary Markit US Manufacturing PMI for September is estimated to rise to 55.0 versus 54.7 in August.

• The Preliminary Markit US Services PMI for September is estimated to rise to 55.0 versus 54.8 in August.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI report, (AVP) investor day and the (BX) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by financial and industrial 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 Surging into Final Hour on Less Emerging Markets Currency/Debt Angst, Economic Optimism, Technical Buying, Tech/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 11.5 -2.0%

• Euro/Yen Carry Return Index 137.78 +1.04%

• Emerging Markets Currency Volatility(VXY) 11.64 -.43%

• S&P 500 Implied Correlation 33.44 -1.44%

• ISE Sentiment Index 238.0 +105.17%
  

• Total Put/Call .86 -7.5%

• NYSE Arms .56 +5.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.99 +8.6% (new series)
  

• America Energy Sector High-Yield CDS Index 393.0 -.86%

• European Financial Sector CDS Index 78.74 +16.0%

• Italian/German 10Y Yld Spread 241.0 +3.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 11.15 -6.77%

• Emerging Market CDS Index 199.27 unch.
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.35 -.33%

• 2-Year Swap Spread 18.75 +2.0 basis points

• TED Spread 17.25 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -12.0 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.63 +.66%
• 3-Month T-Bill Yield 2.16% unch.

• Yield Curve 26.75 -.75 basis point

• China Iron Ore Spot 68.61 USD/Metric Tonne -.31%

• Citi US Economic Surprise Index -5.1 +1.4 points

• Citi Eurozone Economic Surprise Index -20.70 -.1 point

• Citi Emerging Markets Economic Surprise Index -9.5 -.3 point

• 10-Year TIPS Spread 2.15 unch.
• 100.0% chance of Fed rate hike at Nov. 8th meeting, 100.0% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +65 open in Japan 
• China A50 Futures: Indicating +100 open in China

• DAX Futures: Indicating +31 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.7%

Sector Underperformers:

• 1) Homebuilders -1.8% 2) Defense -1.3% 3) Gold & Silver -.1%

Stocks Falling on Unusual Volume: 

• THO, SKY, RHT, SFIX, WLH, BRKR, CRSP, NVCR and NOC

Stocks With Unusual Put Option Activity:

• 1) NOC 2) MAT 3) GPRO 4) SO 5) RRC

Stocks With Most Negative News Mentions:

• 1) SFIX 2) SKX 3) WLH 4) SSW 5) BRKR

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.1%

Sector Outperformers:

• 1) Computer Hardware +1.8% 2) Alt Energy +1.7% 3) Biotech +1.4%

Stocks Rising on Unusual Volume:

• ALT, IEFA, GWPH, FTV, ACAD, EFV, BFR, BMA, TRC, TOCA, QTRX, NERV, ACXM, EGOV, SELB, IGV, OBSV, CRON, SURF, GGAL, ECH, STM, EDN, FOLD, CEPU, MTW, FATE, MLHR, YELP, UAA, RDC, UNVR, SCS and AFIN

Stocks With Unusual Call Option Activity:

• 1) DXJ 2) AXTA 3) XLF 4) ACAD 5) UAA

Stocks With Most Positive News Mentions:

• 1) ACAD 2) UAA 3) GALT 4) MTW 5) FBP

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +5.4% Above 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 62.1% of Issues Advancing, 33.9% Declining
• 68 New 52-Week Highs, 49 New Lows
• 50.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.4%
• Vix 11.5 -2.0%
• Total Put/Call .72 -22.6%
• TRIN/Arms .79 +48.9%