Thursday Watch

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 56.50 -1.5 basis points.

• China Sovereign CDS 38.75 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index  65.71 +.05%.
• FTSE 100 futures +.57%.

• S&P 500 futures +.50%.

• NASDAQ 100 futures +.76%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (DLTH)/.11
• (KR)/.41
• (MCFT)/.81

After the Close:

• (AVGO)/5.13
• (ORCL)/.81

Economic Releases

8:30 am EST

• The CPI MoM for August is estimated to rise +.1% versus a +.3% gain in July.
• The CPI Ex Food and Energy MoM for August is estimated to rise +.2% versus a +.3% gain in July. 
• Real Avg. Weekly Earnings YoY for August.
• Initial Jobless Claims for last week are estimated to fall to 215K versus 217K the prior week.
• Continuing Claims are estimated to rise to 1675K versus 1662K prior.

2:00 pm EST

• The Monthly Budget Statement for Aug. is estimated at -$197.5B versus -$119.7B in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The ECB rate decision, Eurozone Industrial Production report, ECB Press Conference, $16B 30Y T-Bond auction, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, Democratic Presidential debate, (USB) investor day, (CRM) investor meeting, (CRL) investor day and the (MA) investment community meeting 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 higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the day.

Stocks Surging into Final Hour on China Trade Deal Hopes, Diminished Global Growth Concerns, Short-Covering, Biotech/Tech 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) 14.9 -1.78%

• Euro/Yen Carry Return Index 123.18 -.10%

• Emerging Markets Currency Volatility(VXY) 8.25 -.24%

• S&P 500 Implied Correlation 36.8 +2.51%

• ISE Sentiment Index 109.0 +12.4%
  

• Total Put/Call .73 -12.0%

• NYSE Arms .95 +20.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.12 -1.76%
  

• America Energy Sector High-Yield CDS Index 386.0 -4.22%

• European Financial Sector CDS Index 57.72 -.66%

• Italian/German 10Y Yld Spread 153.5 -3.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 57.60 -.63%
  

• Emerging Market CDS Index 200.35 -.56%
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.29 -.03%

• 2-Year Swap Spread -1.25 +.25 basis point

• TED Spread 19.25 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -12.75 +2.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.69 -.11%
• 3-Month T-Bill Yield 1.95% +1.0 basis point

• Yield Curve .05 unch.

• China Iron Ore Spot 91.10 USD/Metric Tonne +5.46%

• Citi US Economic Surprise Index 7.0 unch.

• Citi Eurozone Economic Surprise Index -36.80 +.4 point

• Citi Emerging Markets Economic Surprise Index -11.1 +4.5 points

• 10-Year TIPS Spread 1.60 +1.0 basis point
• 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 -112 open in Japan 
• China A50 Futures: Indicating +63 open in China

• DAX Futures: Indicating +16 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.4%

Sector Underperformers:

• 1) Road & Rail -.7% 2) Computer Services -.4% 3) Restaurants unch.

Stocks Falling on Unusual Volume: 

• ZS, PLAY, FARM, GH, BHGE, MRNA, VCYT, DAN and SATS

Stocks With Unusual Put Option Activity:

• 1) ZNGA 2) STLD 3) ZS 4) MNK 5) LL

Stocks With Most Negative News Mentions:

• 1) GME 2) MNK 3) WKHS 4) BANC 5) ROK

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.8%

Sector Outperformers:

• 1) Networking +1.9% 2) Computer Hardware +1.8% 3) Alt Energy +1.7%

Stocks Rising on Unusual Volume:

• LOVE, FRAN, IGV, AIMT, CDLX, ADES, IHG, RH, RARE, QDEL, VIAV, CVGW, FNKO, IQ, INMD, STC, CLW, HLIO, ARA, ATKR, LYFT, FSLY, CHEF, SMAR, GNRC, FSLY, PD, MDP, IMMU, MINI, CCS, URGN, WSR and BA

Stocks With Unusual Call Option Activity:

• 1) VIAV 2) XME 3) RH 4) ZGNX 5) PLAY

Stocks With Most Positive News Mentions:

• 1) SCHW 2) LXRX 3) RH 4) MU 5) AA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +25.3% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 62.2% of Issues Advancing, 34.8% Declining
• 88 New 52-Week Highs, 10 New Lows
• 59.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.8%
• Vix 14.7 -3.5%
• Total Put/Call .70 -15.7%
• TRIN/Arms 1.02 +29.1%

Wednesday Watch

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 58.0 unch.

• China Sovereign CDS 40.0 +.75 basis point.

• Bloomberg Emerging Markets Currency Index  65.76 -.01%.
• FTSE 100 futures +.13%.

• S&P 500 futures -.07%.

• NASDAQ 100 futures -.11%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• None of note

After the Close:

• (OXM)/1.86
• (TLRD)/.79

Economic Releases

8:30 am EST

• PPI Final Demand MoM for August is estimated unch. versus a +.2% gain in July.
• PPI Ex Food and Energy MoM for August is estimated to rise +.2% versus a -.1% decline in July.

10:00 am EST

• Wholesale Trade Sales MoM for July is estimated to rise +.5% versus a -.3% decline in June.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil  inventory decline of -2,655,170 barrels versus a -4,771,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -857,090 barrels versus a -2,538,000 barrel decline the prior week. Distillate inventories are estimated to fall by -509,360 barrels versus a -2,538,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.55% versus a -.4% decline prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The $24B 10Y T-Note auction, Japan Machine Orders report, weekly MBA Mortgage Applications report and the BofA Merrill Media/Communications/Entertainment Conference  could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial 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.