Stocks Lower into Final Hour on Global Growth Worries, Profit-Taking, Technical Selling, Financial/Energy Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 16.99 +.65%

• Euro/Yen Carry Return Index 122.53 -.10%

• Emerging Markets Currency Volatility(VXY) 8.82 +.46%

• S&P 500 Implied Correlation 44.48 +.23%

• ISE Sentiment Index 83.0 +31.8%
  

• Total Put/Call .87 -6.45%

• NYSE Arms 1.26 +56.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.52 +.98%
  

• America Energy Sector High-Yield CDS Index 415.0 -1.35%

• European Financial Sector CDS Index 65.20 +.93%

• Italian/German 10Y Yld Spread 206.25 -2.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 66.07 -1.18%
  

• Emerging Market CDS Index 211.13 +.44%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.77 -.07%

• 2-Year Swap Spread .5 -.75 basis point

• TED Spread 25.0 -2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -7.25 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.43 +.12%
• 3-Month T-Bill Yield 1.90% unch.

• Yield Curve 4.75 -1.5 basis points

• China Iron Ore Spot 83.81 USD/Metric Tonne -3.03%

• Citi US Economic Surprise Index -10.9 +2.4 points

• Citi Eurozone Economic Surprise Index -60.30 +1.2 points

• Citi Emerging Markets Economic Surprise Index -25.6 -4.4 points

• 10-Year TIPS Spread 1.54 -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 -147 open in Japan 
• China A50 Futures: Indicating -50 open in China

• DAX Futures: Indicating -16 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.5%

Sector Underperformers:

• 1) Oil Service -1.2% 2) Banks -1.1% 3) Retail -.9%

Stocks Falling on Unusual Volume: 

• MSG, SRPT, FN, SE, ELAN, ANAB, KSS and HAIN

Stocks With Unusual Put Option Activity:

• 1) AVYA 2) KSS 3) TJX 4) CAG 5) SLCA

Stocks With Most Negative News Mentions:

• 1) NOVA 2) GE 3) FTCH 4) EROS 5) ITRI

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Gold & Silver +2.5% 2) Homebuilders +1.4% 3) Medical Equipment +.9%

Stocks Rising on Unusual Volume:

• AVYA, AOSL, BIDU, INMD, TPIC, HGV, HD, SOLY, EVER, FUN, LYFT, MRNA, ASR, TPVG, MDT, CRMT, IRBT, FSLY, RUBI, VGLT, VAC, LOW, PAYS, APO, RUBI, GSX, TACO, SONO and TPVG

Stocks With Unusual Call Option Activity:

• 1) BSX 2) GPS 3) AVYA 4) HD 5)APC

Stocks With Most Positive News Mentions:

• 1) MDT 2) BIDU 3) HD 4) PPC 5) ABBV

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -11.5% Below 100-Day Average
• 1 Sector Rising, 10 Sectors Declining
• 37.7% of Issues Advancing, 59.2% Declining
• 129 New 52-Week Highs, 40 New Lows
• 49.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.2%
• Vix 17.1 +1.4%
• Total Put/Call .87 -6.5%
• TRIN/Arms 1.18 +47.5%

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 65.89 -1.44%.

• China Sovereign CDS 48.0 -4.0 basis points.

• Bloomberg Emerging Markets Currency Index  65.33 -.02%.
• FTSE 100 futures -.3%.

• S&P 500 futures -.25%.

• NASDAQ 100 futures -.32%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (HD)/3.08
• (KSS)/1.53
• (MDT)/1.19
• (TJX)/.62

After the Close:

• (CREE)/.10
• (JKHY)/.77
• (LZB)/.34
• (TOL)/.81
• (URBN)/.58

Economic Releases

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Quarles speaking, Eurozone Construction Output report and the weekly US retail sales reports could also impact trading today.

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

Stocks Surging into Final Hour on Global Stimulus Hopes, Oil Gain, Short-Covering, Energy/Homebuilding 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) 16.8 -8.9%

• Euro/Yen Carry Return Index 122.71 +.19%

• Emerging Markets Currency Volatility(VXY) 8.73 -.34%

• S&P 500 Implied Correlation 43.58 -6.62%

• ISE Sentiment Index 58.0 -37.0%
  

• Total Put/Call .99 -8.33%

• NYSE Arms .90 +143.20%

Credit Investor Angst:

• North American Investment Grade CDS Index 55.74 -5.3%
  

• America Energy Sector High-Yield CDS Index 421.0 -1.57%

• European Financial Sector CDS Index 64.60 -5.14%

• Italian/German 10Y Yld Spread 208.50 +.5 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 66.57 -3.68%
  

• Emerging Market CDS Index 210.43 +2.98%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.89 +.15%

• 2-Year Swap Spread 1.25 -.5 basis point

• TED Spread 27.0 +4.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -8.5 +3.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.36 -.53%
• 3-Month T-Bill Yield 1.90% +3.0 basis points

• Yield Curve 6.25 +.25 basis point

• China Iron Ore Spot 86.90 USD/Metric Tonne +.47%

• Citi US Economic Surprise Index -13.3 +4.3 points

• Citi Eurozone Economic Surprise Index -61.50 +2.1 points

• Citi Emerging Markets Economic Surprise Index -21.2 +1.9 points

• 10-Year TIPS Spread 1.57 +2.0 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 +82 open in Japan 
• China A50 Futures: Indicating -74 open in China

• DAX Futures: Indicating -19 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long