Morning Market Internals

NYSE Composite Index:

• Volume Running +1.0% Above 100-Day Average
• 1 Sector Rising, 10 Sectors Declining
• 28.8% of Issues Advancing, 68.6% Declining
• 165 New 52-Week Highs, 92 New Lows
• 54.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.1%
• Vix 18.6 +9.9%
• Total Put/Call 1.07 +2.9%
• TRIN/Arms 1.91 +203.0%

Friday Watch

Evening Headlines

Bloomberg:

• U.S. Holds Off on Huawei Licenses as China Halts Crop-Buying.

• China Goes Big on Commodities Purchase Amid Shifting Trade War.  

• Japan’s Economy Grows Faster Than Expected in Second Quarter.

• U.S. Stock Futures Fall as Trade Frictions Return. U.S. equity futures fell and the yen climbed as trade tensions resurfaced, dampening positive sentiment from a strong Wall Street session Thursday. Treasury futures and gold climbed. Contracts on the S&P 500 fell 0.6% as Bloomberg reported the White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei Technologies Co. after Beijing said it was halting purchases of U.S. farming goods. Asian futures had pointed higher after an almost 2% gain in the S&P 500 earlier. Investors have taken solace from efforts to stabilize the yuan and Friday’s fixing of the currency will be closely scrutinized. Treasuries remain volatile -- with the 10-year yield swinging nine basis points Thursday and closing at 1.72%. Futures on the S&P 500 Index lost 0.6% as of 8:08 a.m. in Tokyo. The underlying gauge increased 1.9% on Thursday. Futures on Japan’s Nikkei 225 gained 0.8%. Hang Seng futures earlier rose 0.5%.  

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

• Drop in U.S. Jobless Claims Shows Labor Market Remains Firm.  

• Investors Flee Junk Bonds in Droves as Trade War Batters Markets.

• Companies Use Borrowed Billions to Buy Back Stock, Not to Invest.

• DOJ Scrutinizes Google Advertising, Search in Antitrust Probe.

Wall Street Journal:

• FBI and Facebook Potentially at Odds Over Monitoring.

• Homeowners Rush to Refinance, Thanks to Falling Bond Yields.

• Trump Picks Acting Director of National Intelligence.

• GOP Groups Suspend Twitter Spending After McConnell Campaign Account Is Frozen.

Fox News:

• Onetime Miss Iraq clashes with ‘Squad’ member, says Dem ‘does not represent me as a Muslim’.

• New York Dems line up against bill to make cop soakings a felony.

• Gang member accused of stabbing rampage that killed 4, wounded 2.

MarketWatch.com:

• 20 companies, including Amazon and Chipotle, that are getting more profitable as sales improve.  

• More people are job-hopping, tempted by better salaries and the highest number of openings since 2000.

CNBC:

• Broadcom(AVGO) acquires Symantec’s(SYMC) enterprise business for $10.7 billion.

• Stocks making the biggest moves after hours: Uber, Yelp, and Farfetch.

• JP Morgan’s top stock market analysts say hold on tight and buy this market dip.

• Cramer: These two digital health stocks you can buy at a massive discount.

Zero Hedge:

• Nine Examples Of MSM Exploiting Mass Shootings To Spread Anti-Trump Propaganda.

• President Trump Readies Executive Order To Crack-Down Hard On Social Media Censorship Of Conservatives.

• NSA Whistleblower Confirms "They Can Use Your Data Against You Any Time".

• Scandal Erupts Over Murder-Porn Movie Where Elite Liberals Hunt Trump Supporters.

• Unconstitutional, Tyrannical Red Flag Gun Confiscation Laws Are Coming Fast.

• Tightening Nickel Supply Threatens Electric Vehicle Boom.

• New York Times Shares Continue Plunge After Company Admits Ad Revenue Will Decline Next Quarter.

• Nasdaq, Yuan Tumble After US Pulls Huawei Licenses.

• Stocks, Bonds, & Gold Gain As Easing Hopes Hide Global Risks. 

Business Insider:

• Uber(UBER) just reported massive losses that were larger than Wall Street expected — and the stock is sinking.

• Kashmir internet blackout so bad locals unaware India rewrote constitution.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 66.75 -1.5 basis points.

• China Sovereign CDS 51.0 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index  66.43 -.01%.

• FTSE 100 futures +.17%.

• S&P 500 futures -.40%.

• NASDAQ 100 futures -.50%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (YRCW)/.11

• (TRCO)/.71

• (SSP)/-.06

After the Close:

• (TDW)/-.17

Economic Releases
8:30 am EST

• The PPI Final Demand MoM for July is estimated to rise +.2% versus a +.1% gain in June.

• PPI Ex Food and Energy MoM for July is estimated to rise +.1% versus a +.3% gain in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Inflation Data report and the UK Industrial Production report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Surging into Final Hour on Earnings Optimism, Less European/Emerging Markets/US High-Yield Debt Angst, Oil Gain, Tech/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 17.4 -10.6%

• Euro/Yen Carry Return Index 123.12 -.39%

• Emerging Markets Currency Volatility(VXY) 8.38 -1.76%

• S&P 500 Implied Correlation 40.6 -8.7%

• ISE Sentiment Index 71.0 -2.7%
  

• Total Put/Call 1.04 -16.8%

• NYSE Arms .94 -5.05%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.75 -1.39%
  

• America Energy Sector High-Yield CDS Index 400.0 -28.9%

• European Financial Sector CDS Index 67.42 -3.38%

• Italian/German 10Y Yld Spread 209.25 +9.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 67.96 -2.04%
  

• Emerging Market CDS Index 174.82 -3.91%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.99 +.04%

• 2-Year Swap Spread -2.75 -1.75 basis points

• TED Spread 19.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -11.5 -3.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.45 +.54%
• 3-Month T-Bill Yield 2.01% +1.0 basis point

• Yield Curve 10.25 -.25 basis point

• China Iron Ore Spot 92.25 USD/Metric Tonne +1.72%

• Citi US Economic Surprise Index -31.6 +1.9 points

• Citi Eurozone Economic Surprise Index -53.0 +.3 point

• Citi Emerging Markets Economic Surprise Index -19.9 +1.3 points

• 10-Year TIPS Spread 1.65 +5.0 basis points
• 100.0% chance of Fed rate cut at Sept. 18th meeting, 100.0% chance of cut at October 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +157 open in Japan 
• China A50 Futures: Indicating -10 open in China

• DAX Futures: Indicating -27 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +1.4%

Sector Underperformers:

• 1) Oil Service -.5% 2) I-Banks -.1% 3) Foods +.5%

Stocks Falling on Unusual Volume: 

• GDOT, ICUI, WMGI, MGTX, GKOS, SRPT, Z, KHC, ZG, VIRT, ARNA, RUN, FLO, RDFN, MUR and TPIC

Stocks With Unusual Put Option Activity:

• 1) MNST 2) EOG 3) RDFN 4) CHK 5) KHC

Stocks With Most Negative News Mentions:

• 1) AGS 2) GDOT 3) RYAM 4) ICUI 5) XNCR

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +2.1%

Sector Outperformers:

• 1) Semis +2.5% 2) Steel +2.5% 3) Software +2.4%

Stocks Rising on Unusual Volume:

• INMD, AVDR, IEFA, USMV, STMP, CVNA, JACK, IGV, RRR, LYFT, LBTYA, TLND, EFAV, CDLX, NOBL, IOTS, AMC, AERI, PTLA, AOSL, ROKU, TVTY, PETQ, NEWR, LITE, GTHX, FTDR, HUN, AMD, CECO, MMS, AZPN, AVLR, SYMC, SILK, NTRA, PTLA, FSCT, FBM, PVAC, LAUR, ECPG, TALO, ALB, BKNG, BECN, LPSN, PEGA, SYNA, MRO, EB, CXO, TRGP, SHAK, INGN, LRN, EPAM, UNVR, SWCH, PS, AXGN, LTRPA, MODN, LXP, COMM, AIG and TRIP

Stocks With Unusual Call Option Activity:

• 1) EOG 2) CVNA 3) CAH 4) Z 5) GTT

Stocks With Most Positive News Mentions:

• 1) AMD 2) ROKU 3) CVNA 4) INFN 5) BKNG

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +15.3% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 78.1% of Issues Advancing, 19.8% Declining
• 144 New 52-Week Highs, 92 New Lows
• 50.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.2%
• Vix 17.6 -9.8%
• Total Put/Call 1.07 -14.4%
• TRIN/Arms 1.07 +8.1%