Morning Market Internals

NYSE Composite Index:

• Volume Running -22.4% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 51.0% of Issues Advancing, 44.8% Declining
• 128 New 52-Week Highs, 32 New Lows
• 48.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.2%
• Vix 18.0 +.9%
• Total Put/Call 1.22 +22.0%
• TRIN/Arms .88 +51.7%

Friday Watch

Evening Headlines

Bloomberg:   

• Trump Promises Talk on Trade After China Defers Tariff Response.  

• U.S. Chamber Calls for Halting China Tariffs and Resuming Talks   

• U.K. and EU to Step Up Brexit Talks as Parliament Showdown Looms.

• Stocks Climb on Trade Optimism; U.S. Yields Steady. Stocks in Asia tracked a U.S. rally after China indicated it wouldn’t immediately retaliate against the latest American tariff increase. Treasuries steadied. Shares in Tokyo, Sydney and Seoul advanced on the final trading day of a tumultuous month dominated by the trade war. Earlier, the S&P 500 Index rose for a second day after a spokesman for China’s commerce ministry said that escalating the conflict won’t benefit either side and that it was more important to discuss removing the extra duties. A gauge of the dollar remained near a two-year high. Futures on the S&P 500 Index dipped 0.1% as of 9:02 a.m. in Tokyo. The underlying gauge increased 1.3% on Thursday. Japan’s Topix index advanced 0.8%. South Korea’s Kospi added 1%. Australia’s S&P/ASX 200 Index rose 0.4%.  

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

• RBA Deficit Dilemma, Hong Kong Pain, Korea Rate Guide: Eco Day.

• Dorian Expected to Become Category 4 Hurricane on Way to Florida.

• New Miami Hurricane Hazard: Dockless Scooters as Projectiles.

• Uber, Lyft Pledge $60 Million to Possible Labor Ballot Fight.

• Americans Pushed to the Suburbs as City Prices Soar Out of Reach.  

• Dell Rises After Strong Computer Demand Fuels Rosy Forecast.

Wall Street Journal:

• Young Chinese Spend Like Americans—and Take on Worrisome Debt.

• Aramco Plans Split IPO, Shunning London, Hong Kong.

• Sneaky, Leaky James Comey.

• U.S. Prosecutors Probe Huawei on New Allegations of Technology Theft.

• Proposed Opioid Deal With Purdue Drawing Pushback From States.

• Hong Kong Police Ban Huge Rally Aimed at China’s Liaison Office.

• The Most Powerful Women in Business Wear Dresses, Not Suits.

Fox News:

• Joe Biden told moving military story at campaign stop – but it 'never happened'.

• IG report highlights apparent inconsistencies in Comey's testimony.

MarketWatch.com:

• Here are 2019’s biggest stock market winners and losers in the Dow, S&P 500 and Nasdaq.

CNBC:

• Senators ask Jeff Bezos to crack down on thousands of unsafe products on Amazon(AMZN).

• Dow surges more than 300 points after China hints it won’t retaliate for now in trade war.

• Disney(DIS) sells its stake in YES Network to investor group that includes Amazon in $3.47 billion deal.

• Hackers are going after colleges, leaving students at risk of identity theft.

• ‘Grossly irresponsible’ – Larry Summers blasts ex-Fed president’s call to thwart Trump in 2020.

• Stocks making the biggest moves after hours: Ulta(ULTA), Ambarella(AMBA) and Dell(DELL).

Zero Hedge:

• "People Will Be Shocked" - Bannon On Huawei & The Communist China Threat.

• Burger-Backed Bonds: Companies Scramble To Securitize Everything.

• "I Feel Helpless": Bottled Water, Gas Shortages Reported As Floridians Brace For Hurricane Dorian.

• Stocks Erase Trump-Trade-Tantrum Dump As Dollar Soars To New Record High.

Telegraph:

• Brexit is vibrant democracy in the raw: it is Europe that risks sliding under authoritarian control.

• China to miss out on $2.5 trillion of GDP growth if trade war intensifies.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 64.5 -2.0 basis points.

• China Sovereign CDS 46.0 -2.5 basis points.

• Bloomberg Emerging Markets Currency Index  64.87 +.01%.

• FTSE 100 futures +.06%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.08%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (BIG)/.40

• (CPB)/.41

• (JKS)/.33

After the Close:

• None of note

Economic Releases
8:30 am EST

• Personal Income for July is estimated to rise +.3% versus a +.4% gain in June.

• Personal Spending for July is estimated to rise +.5% versus a +.3% gain in June.

• The PCE Core MoM for July is estimated to rise +.2% versus a +.2% gain in June.
  

9:45 am EST

• The MNI Chicago PMI for August is estimated to rise to 47.5 versus 44.4 in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI report could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology 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 75% net long heading into the day.

Stocks Surging into Afternoon on Diminished China Trade Tensions, Less Global Growth Pessimism, Oil Gain, Tech/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 17.8 -8.1%

• Euro/Yen Carry Return Index 122.36 +.24%

• Emerging Markets Currency Volatility(VXY) 9.10 +.66%

• S&P 500 Implied Correlation 43.99 -4.6%

• ISE Sentiment Index 80.0 -7.0%
  

• Total Put/Call 1.01 -13.7%

• NYSE Arms .82 +57.69%

Credit Investor Angst:

• North American Investment Grade CDS Index 53.80 -2.67%
  

• America Energy Sector High-Yield CDS Index 421.0 -.89%

• European Financial Sector CDS Index 58.25 -3.78%

• Italian/German 10Y Yld Spread 175.75 -7.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 66.65 +1.05%
  

• Emerging Market CDS Index 218.29 +1.23%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.91 +.05%

• 2-Year Swap Spread -.25 +.5 basis point

• TED Spread 13.75 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -13.75 +1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.89 +.07%
• 3-Month T-Bill Yield 1.98% unch.

• Yield Curve -.01 +3.0 basis points

• China Iron Ore Spot 81.30 USD/Metric Tonne +.94%

• Citi US Economic Surprise Index -11.6 +1.0 point

• Citi Eurozone Economic Surprise Index -34.10 +7.2 points

• Citi Emerging Markets Economic Surprise Index -18.1 +1.6 points

• 10-Year TIPS Spread 1.61+5.0 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 +270 open in Japan 
• China A50 Futures: Indicating +150 open in China

• DAX Futures: Indicating +25 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +1.3%

Sector Underperformers:

• 1) Gold & Silver -2.8% 2) Tobacco -.8% 3) Utilities +.5%

Stocks Falling on Unusual Volume: 

• OLLI, SY, MFGP, BBY, ANF, OKTA, GLNG, HRB, ELF, WSM, BMA, GGAL, PAM, ENPH, AU, AG and MOV

Stocks With Unusual Put Option Activity:

• 1) SWN 2) DG 3) BBY 4) MNK 5) ANF

Stocks With Most Negative News Mentions:

• 1) RLGY 2) ANF 3) MOV 4) ABMD 5) TPR

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.8%

Sector Outperformers:

• 1) Semis +2.8% 2) Airlines +2.4% 3) Banks +2.3%

Stocks Rising on Unusual Volume:

• NTNX, USMV, BURL, NOBL, TLYS, MTRX, ESTC, GES, IGV, TECD, DG, IEFA, WRLD, SCVL, TSE, FSLY, MBUU, FIVE, AMSWA, QDEL, PVH, GEF, JBL, HAIN, BYSI, SCVL, MEI, ZUO, RGS and HEES

Stocks With Unusual Call Option Activity:

• 1) FOXA 2) XRT 3) XHB 4) GME 5) XLI

Stocks With Most Positive News Mentions:

• 1) BURL 2) GES 3) NTNX 4) TECD 5) DG

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -1.9% Below 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 78.2% of Issues Advancing, 19.0% Declining
• 127 New 52-Week Highs, 48 New Lows
• 45.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.1%
• Vix 17.6 -8.9%
• Total Put/Call 1.07 -8.6%
• TRIN/Arms .84 +61.5%