Stocks Higher into Final Hour on Short-Coverig, Technical Buying, Yen Weakness, Retail/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 23.6 -4.2%

• Euro/Yen Carry Return Index 133.29 +.30%

• Emerging Markets Currency Volatility(VXY) 9.94 -1.19%

• S&P 500 Implied Correlation 44.33 +8.25%

• ISE Sentiment Index 100.0 +31.5%
  

• Total Put/Call 1.17 -7.1%

• NYSE Arms .62 -38.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 69.98 -.93%
  

• America Energy Sector High-Yield CDS Index 520.0 +4.29%

• European Financial Sector CDS Index 93.75 +.61%

• Italian/German 10Y Yld Spread 310.0 +14.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.55 +1.05%

• Emerging Market CDS Index 205.97 -.98%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.0 -.16%

• 2-Year Swap Spread 19.5 -1.0 basis point

• TED Spread 19.25 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -48.0 +1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.49 +.14%
• 3-Month T-Bill Yield 2.32% +2.0 basis points

• Yield Curve 26.75 -.25 basis point

• China Iron Ore Spot 74.14 USD/Metric Tonne -1.15%

• Citi US Economic Surprise Index -1.0 +.9 point

• Citi Eurozone Economic Surprise Index -54.3 -14.7 points

• Citi Emerging Markets Economic Surprise Index -2.90 +1.6 points

• 10-Year TIPS Spread 2.06 unch.
• 71.8% chance of Fed rate hike at Dec. 19th meeting, 72.3% chance at Jan. 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +160 open in Japan 
• China A50 Futures: Indicating +2 open in China

• DAX Futures: Indicating +36 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 and some of my emerging market shorts

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.1%

Sector Underperformers:

• 1) Computer Services -1.6% 2) Shipping -.5% 3) Software -.3%

Stocks Falling on Unusual Volume: 

• AQUA, CMTA, TXRH, APTI, ARLP, NLS, PX, WAB, FLIR, GE, IRWD, UVE, SSTK, RDY APPF, EGRX, IBM, OMAB, AGN, WSO, AMSF, CSGP, RGS, PACW, CVLT, AN, REV, QTS, CTSH, RCKT, SCI, AEIS, INCY, FGEN, UVE, WAB, SSTK, APTI and IRWD

Stocks With Unusual Put Option Activity:

• 1) IMMU 2) ESRX 3) UA 4) XPO 5) GE

Stocks With Most Negative News Mentions:

• 1) GE 2) HOG 3) LL 4) IRWD 5) WFT

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.1%

Sector Outperformers:

• 1) Retail +2.4% 2) Road & Rail +2.2% 3) Video Gaming +2.1%

Stocks Rising on Unusual Volume:

• ESIO, VCYT, KS, HZO, UAA, AKAM, CHGG, VMC, SANM, ORBK, CGNX, NEO, KEM, INST, TTWO, AMED, HEES, EXP, MLM, IPGP, MHK, AMT, MTH, SUM, FSLR and EFII

Stocks With Unusual Call Option Activity:

• 1) QEP 2) KKR 3) VIRT 4) UA 5) NOG

Stocks With Most Positive News Mentions:

• 1) UAA 2) AKAM 3) KEM 4) TTWO 5) SHOO

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +57.2% Above 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 63.0% of Issues Advancing, 34.7% Declining
• 19 New 52-Week Highs, 272 New Lows
• 22.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.1%
• Vix 24.0 -2.7%
• Total Put/Call 1.22 -3.2%
• TRIN/Arms .88 -12.9%

Tuesday Watch

Evening Headlines

Bloomberg:           

• China Turns to Share Buybacks as Latest Weapon to Rescue Market.    
• China's Market Rescue Blurs Line Between Private and State Firms.
• China Regulator to Propose 50% Cut to Car Purchase Tax.
• Australian Bank Earnings Expected to Be the Worst in a Decade.  
• The Global Iron Ore Market Has a Junk Problem.
• Asia Stocks Set to Drop on Fresh Trade Strife. Asian stocks looked set for declines Tuesday after a fall in their U.S. counterparts on a report the Trump administration was considering extending tariffs to all Chinese imports. The dollar held gains. Futures on Japanese equity benchmarks pointed lower, while they were little changed in China and Hong Kong as the S&P 500 Index pared a drop in the final 15 minutes of trading. Australian stocks declined at the open. The Dow Jones Industrial Average slidines of the record-long bull market. more than 500 points at its worst, dipping into a correction, while the Nasdaq 100 Index tumbled to the lowest level since May. The S&P 500 and Nasdaq indexes are on track for the steepest monthly decline of the record-long bull market. Futures on the Nikkei 225 Stock Average fell 0.5 percent in Singapore. Australia’s S&P/ASX 200 Index lost 0.4 percent. Hong Kong’s Hang Seng Index futures were little changed as were the FTSE China A50 contracts. S&P 500 futures ticked 0.1 percent lower.  
• Five Things You Need to Know to Start Your Day.  
• How Big Tech Will Be Hit by U.K.’s New Digital Tax.  
• Investors Flee Materials ETF on Sluggish Earnings Expectations.

Wall St. Journal:

• College Kids Not Endorsing Socialism, But They’re Open to It.
• Why Are Drugs Cheaper in Europe?
• Americans Are Sticking With Their Old Phones.
• U.S. to Restrict Chinese Chip Maker From Doing Business With American Firms.
• U.K. to Roll Out First-of-Its-Kind Digital Tax.
• Military to Increase Southern Border Deployment to 5,000.
• A Weakened Merkel Steps Down as Party Chief, Bolstering Rivals.
• How to Get Political Ads Off Your Facebook(FB) Feed.

Fox News:   

• Sanders challenges media’s ‘outrageous’ claim Trump shares blame for hate-filled attacks.

CNBC:         

• Amazon(AMZN) shares are cratering — down 6% today, down 23% in the past month.
• Facebook(FB) suddenly banned ads for start-up that gives users an alternative to a Facebook product.
• Here's what could turn this stock market sell-off around, according to investors. 
• Traders are making a boatload betting against once-beloved FAANG stocks.
• The Fed may have to make an important adjustment to the way it's raising rates.
• US reportedly planning tariffs on remaining $257 billion in Chinese goods if Trump-Xi talks fail.
• Retail analyst: Holiday season without Toys R Us is 'good news' for certain retailers.
• Stocks making the biggest moves after hours: Akamai, Cognex and more.

Zero Hedge: 

• Beijing, Brazil, Bitcoin, Bonds, & Bullion Drop As FANG Bloodbath Batters Stocks.
• Chinese Military Scientists Have Infiltrated "Five Eyes" Western Universities.  
• "They All Look The Same" - Hillary Cracks Racist Joke After Booker/Holder Mix-Up.
• Disaster Awaits: National Debt Will Be 6 Times The Size Of The Economy.
• Stocks, Yuan Tumble On Report US To Announce Tariffs On All China Imports If Trump-Xi Meeting Fails. 
• Media Waging 'Psychological Warfare' Against Trump With Warnings Of Looming 'Staff Exodus'.

Night Trading 

• Asian equity indices are -1.0% to -.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 92.75 +1.5 basis points. 
• Asia Pacific Sovereign CDS Index 10.5 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 66.41 +.03%.
• FTSE 100 futures n/a.
• S&P 500 futures +.02%.
• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (AET)/2.81
• (AGCO)/.82
• (AMT)/1.66
• (BP)/.14
• (EAT)/.45
• (KO)/.55
• (CTSH)/1.13
• (CMI)/3.76
• (FLIR)/.56
• (GE)/.20
• (HCA)/1.91
• (HMC)/81.23
• (LL)/.17
• (LYB)/2.68
• (MA)/1.68
• (BTU)/1.06
• (PFE)/.75
• (SNE)/104.14
• (VMC)/1.40
• (WLH)/.66
• (WH)/.86

After the Close:

• (DDD)/.03
• (AMGN)/3.45
• (APC)/.86
• (BIDU)/2.56
• (CAKE)/.58
• (EBAY)/.54
• (EA)/.58
• (FB)/1.44
• (HLF)/.66
• (H)/.25
• (MXIM)/.75
• (MGM)/.21
• (NCR)/.54
• (OI)/.75
• (SKYW)/1.40
• (YUMC)/.46

Economic Releases

9:00 am EST

• The S&P CoreLogic CS 20-City MoM for August is estimated to rise +.1% versus a +.09% gain in September. 

10:00 am EST

• The Conference Board Consumer Confidence Index for October is estimated to fall to 135.9 versus 138.4 in September.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI/Industrial Production, GDP  reports, weekly US retail sales reports, (KEY) investor meeting and the (AAPL) special event could also impact trading today.

BOTTOM LINE:  Asian indices are lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the day.

Stocks Reversing Sharply Lower into Final Hour on Trade War Fears, Emerging Market Debt/Currency Angst, Earnings Jitters, Tech/Commodity Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 25.9 +7.3%

• Euro/Yen Carry Return Index 132.97 +.22%

• Emerging Markets Currency Volatility(VXY) 9.91 -.90%

• S&P 500 Implied Correlation 45.32 +4.69%

• ISE Sentiment Index 79.0 -9.2%
  

• Total Put/Call 1.12 -14.5%

• NYSE Arms 1.24 +12.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.83 +1.13%
  

• America Energy Sector High-Yield CDS Index 490.0 +2.15%

• European Financial Sector CDS Index 93.13 -2.31%

• Italian/German 10Y Yld Spread 296.0 -13.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.44 +1.71%

• Emerging Market CDS Index 208.85 +2.44%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.25 +.02%

• 2-Year Swap Spread 20.5 -.25 basis point

• TED Spread 20.75 +1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -49.75 -3.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.42 -.45%
• 3-Month T-Bill Yield 2.30% -2.0 basis points

• Yield Curve 27.0 unch.

• China Iron Ore Spot 74.35 USD/Metric Tonne -.34%

• Citi US Economic Surprise Index -1.9 +1.6 points

• Citi Eurozone Economic Surprise Index -39.6 +2.7 points

• Citi Emerging Markets Economic Surprise Index -4.50 +1.6 points

• 10-Year TIPS Spread 2.06 -1.0 basis point
• 71.8% chance of Fed rate hike at Dec. 19th meeting, 72.3% chance at Jan. 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -150 open in Japan 
• China A50 Futures: Indicating -96 open in China

• DAX Futures: Indicating -100 open in Germany

Portfolio: 

• Slightly Higher: On gains in my (IWM)/(QQQ) hedges and my emerging markets shorts

• Disclosed Trades:Added to my (IWM)/(QQQ) hedges and to my emerging market shorts

• Market Exposure: 25% Net Long