Morning Market Internals

NYSE Composite Index:

• Volume Running +10.8% Above 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 79.4% of Issues Advancing, 18.0% Declining
• 116 New 52-Week Highs, 137 New Lows
• 44.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.1%
• Vix 19.3 -8.9%
• Total Put/Call 1.31 +12.9%
• TRIN/Arms .71 -48.9%

Friday Watch

Evening Headlines

Bloomberg:   

• China Preps Tariff Response as Trump Sees a Xi Call ‘Very Soon’.   

• North Korea Fired Two More Projectiles, South Korea Says.  

• Nobody Likes These Curves as Global Economy Bends Out of Shape.

• Japan Yields Slide to Three-Year Low, Edge More From BOJ Target.   

• Banks Announced Almost 50,000 Job Cuts This Year, Led by Europe.

• Asia Stocks Slip as Bond Yields Extend Recent Fall. Stocks in Asia slipped after another tumultuous session on Wall Street and further declines in Treasury yields, on heightened trade uncertainty and fears of a slowing global economy. Japanese shares opened lower along with South Korea. Contracts on the S&P 500 Index edged higher after the U.S. gauge swung more than 1% for a 12th straight day in above-average volume before finally ending the day up. The dollar was little changed. Money continued to pile into bonds, with these the latest milestones reached: Japan’s Topix index fell 0.4% as of 9:03 a.m. in Tokyo. Futures on the S&P 500 Index added 0.1%. The underlying gauge rose 0.3% on Thursday. Australia’s S&P/ASX 200 Index lost 0.1%. South Korea’s Kospi declined 0.8%.  

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

• Beijing Hits Back, Next Fed Cut, Hong Kong Status Risk: Eco Day.

• Powell Expected to Seek Another Cut Despite Strong Spending.

• Fed's Bullard Doesn't See Need to Rush Into Emergency Rate Cut.

• The $3.4 Trillion Haven Where Investors ‘Hide Out for a While’.

Wall Street Journal:

• GE Is New Target of Madoff Whistleblower.

• Advertisers Blacklist News Stories Online.

• U.S. Shoppers Splurge in Face of Global Headwinds.

• Earnings Outlook for S&P 500 Companies Looks Bleak.

• China’s Paramilitary Police Flex Muscles Opposite Hong Kong.

• Israel Blocks Visit by Two U.S. Congresswomen.

• Mick McGuire’s Marcato Capital Loses 90% of Assets.

Fox News:

• Man who says he witnessed CNN host Don Lemon's alleged assault speaks out.

• WATCH LIVE: President holds rally in front of NH crowd, as feuds with 'Squad,' 2020 Dems simmer.

CNBC:

• Nvidia(NVDA) jumps on earnings beat.

• GE CEO Larry Culp bought nearly $2 million worth of the company’s stock after fraud accusation.

• Growth forecasts are rising and economy looks nowhere near as bad as bond market predicts.

• Jeffrey Epstein had broken neck bones — raising questions about his cause of death.

Zero Hedge:    

• Dayton Shooter Had Cocaine, Alcohol & Antidepressents In His System During Attack.

• Japan Overtakes China As Top Foreign Holder Of US Treasuries.

• Biden Backers Want To Prevent 'Sundowning' Gaffes As Senior Moments Threaten 2020 Run.

• Why Were Hillary Clinton's Emails Blind-Copied To Gmail Address Named After Chinese Firm?

• U.S. Customs Continues To "Modernize" Its System To Include Biometrics For All Passengers.

• Chicago Defends Title Of 'Highest Sales Tax Rate In The Nation'.

• Bond Yields Crash To Record Lows, Stocks Barely Bounce After Bloodbath.

Night Trading 

• Asian equity indices are -1.0% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 70.0 unch..

• China Sovereign CDS 56.0 +.75 basis point.

• Bloomberg Emerging Markets Currency Index  65.62 -.02%.

• FTSE 100 futures +.38%.

• S&P 500 futures +.20%.

• NASDAQ 100 futures +.25%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (DE)/2.84

• (QD)/.52

After the Close:

• None of note

Economic Releases
8:30 am EST

• Housing Starts for July is estimated to rise to 1256K versus 1253K in June.

• Building Permits for July is estimated to rise to 1270K versus 1220K in June.

10:00 am EST

• Univ. of Mich. Consumer Confidence for August is estimated to fall to 97.0 versus 98.4 in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Trade Balance report could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Slightly Higher into Final Hour on US Economic Data, Less European/Emerging Markets/US High-Yield Debt Angst, Short-Covering, Financial/Utility Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Heavy

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 21.9 -.8%

• Euro/Yen Carry Return Index 122.30 -.16%

• Emerging Markets Currency Volatility(VXY) 9.0 +.78%

• S&P 500 Implied Correlation 50.3 -1.9%

• ISE Sentiment Index 82.0 +18.8%
  

• Total Put/Call 1.15 -9.5%

• NYSE Arms 1.55 -56.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.69 +2.2%
  

• America Energy Sector High-Yield CDS Index 423.0 +5.17%

• European Financial Sector CDS Index 71.97 -3.5%

• Italian/German 10Y Yld Spread 204.5 -11.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 71.32 +2.2%
  

• Emerging Market CDS Index 21210.97 -2.4%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.65 -.01%

• 2-Year Swap Spread 1.0 +.25 basis point

• TED Spread 22.5 +5.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -16.25 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.65 +.17%
• 3-Month T-Bill Yield 1.89% -6.0 basis points

• Yield Curve 3.25 +2.5 basis points

• China Iron Ore Spot 85.25 USD/Metric Tonne -1.4%

• Citi US Economic Surprise Index -12.7 +7.2 points

• Citi Eurozone Economic Surprise Index -64.10 +.4 point

• Citi Emerging Markets Economic Surprise Index -21.0 +1.4 points

• 10-Year TIPS Spread 1.55 -3.0 basis points
• 100.0% chance of Fed rate cut at Oct. 30th meeting, 100.0% chance of cut at Dec. 11th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -100 open in Japan 
• China A50 Futures: Indicating -97 open in China

• DAX Futures: Indicating -15 open in Germany

Portfolio:

• Slightly Lower: On losses in my retail/industrial sector longs

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.6%

Sector Underperformers:

• 1) Steel -2.5% 2) Networking -2.4% 3) Retail -2.1%

Stocks Falling on Unusual Volume: 

• HONE, DCPH, ACMR, PCN, TPR, VMW, STNE, NXST, W, CGC, CSCO, GMAB, SUN, MYGN, NOVA, ASR, WK, M, WES, SEDG, CAE, CPRI, CBS, CLNC, PTY, CBS and AMAG

Stocks With Unusual Put Option Activity:

• 1) ODP 2) GE 3) LB 4) SWK 5) CSCO

Stocks With Most Negative News Mentions:

• 1) GE 2) BGG 3) CPRI 4) F 5) URBN

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.1%

Sector Outperformers:

• 1) Gold & Silver +.8% 2) Utilities +.8% 3) REITs +.4%

Stocks Rising on Unusual Volume:

• PVTL, SPTN, OSTK, CVET, PRSP, REAL, A, HSC, WMT, INMD, CSIQ, CHNG, GGAL, BMA, PAM, NTAP and CRCM

Stocks With Unusual Call Option Activity:

• 1) MNK 2) CBS 3) TPR 4) ADS 5)K

Stocks With Most Positive News Mentions:

• 1) A 2) VIPS 3) CSIQ 4) BABA 5) SHAK

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +24.9% Above 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 56.2% of Issues Advancing, 40.3% Declining
• 80 New 52-Week Highs, 258 New Lows
• 44.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.5%
• Vix 21.9 -1.0%
• Total Put/Call 1.43 +12.6%
• TRIN/Arms 1.48 -59.1%