Stocks Rising into Final Hour on Diminished China Trade Tensions, Quarter-End Window-Dressing, Short-Covering, Homebuilding/Healthcare Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 16.4 -4.9%

• Euro/Yen Carry Return Index 122.32 -.24%

• Emerging Markets Currency Volatility(VXY) 8.16 +.49%

• S&P 500 Implied Correlation 40.13 -5.6%

• ISE Sentiment Index 80.0 -1.2%
  

• Total Put/Call 1.07 +1.9%

• NYSE Arms 1.52 +55.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.22 -2.23%
  

• America Energy Sector High-Yield CDS Index 442.0 +1.42%

• European Financial Sector CDS Index 64.49 -2.71%

• Italian/German 10Y Yld Spread 139.25 -.5 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 76.34 -.12%
  

• Emerging Market CDS Index 208.07 -1.9%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.02 +.01%

• 2-Year Swap Spread .75 unch.

• TED Spread 32.0 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -36.75 -5.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.29 -.05%
• 3-Month T-Bill Yield 1.81% +3.0 basis points

• Yield Curve .05 +2.0 basis points

• China Iron Ore Spot 88.85 USD/Metric Tonne +.37%

• Citi US Economic Surprise Index 43.0 -1.3 points

• Citi Eurozone Economic Surprise Index -72.0 +2.9 points

• Citi Emerging Markets Economic Surprise Index -6.5 +1.6 points

• 10-Year TIPS Spread 1.49 -5.0 basis points
• 73.1% chance of Fed rate cut at Dec. 11th meeting, 84.5% chance of cut at Jan. 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +100 open in Japan 
• China A50 Futures: Indicating +13 open in China

• DAX Futures: Indicating -10 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.1%

Sector Underperformers:

• 1) Gold & Silver -2.7% 2) Oil Service -.9% 3) Shipping -.4%

Stocks Falling on Unusual Volume: 

• MAG, EGHT, ARES, VIRT, MRTX, AGIO, CALM, IMMU and GTHX

Stocks With Unusual Put Option Activity:

• 1) BKLN 2) KWEB 3) GPRO 4) SFIX 5) BX

Stocks With Most Negative News Mentions:

• 1) CALM 2) IMGN 3) OOMA 4) SXC 5) BA

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.8%

Sector Outperformers:

• 1) Homebuilding +2.5% 2) Medical Equipment +1.6% 3) Gaming +1.4%

Stocks Rising on Unusual Volume:

• DOVA, THO, SGEN, WGO, WORK, BBBY, NWL, CRWD, SFIX, URBN, CORE, KBH, MTOR, TPX, USCR and AMBC

Stocks With Unusual Call Option Activity:

• 1) MAT 2) URBN 3) NWL 4) APC 5) HYG

Stocks With Most Positive News Mentions:

• 1) DOVA 2) THO 3) SGEN 4) NWL 5) BBBY

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -16.2% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 51.1% of Issues Advancing, 45.4% Declining
• 61 New 52-Week Highs, 22 New Lows
• 56.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.6%
• Vix 16.8 -2.7%
• Total Put/Call 1.03 -1.9%
• TRIN/Arms 1.35 +36.7%

Monday Watch

Today's Headlines

Bloomberg: 

• Xi Military Parade to Showcase China Missiles Spooking the U.S.   

• China Screens Patriotic Films to Whip Up Nationalistic Fervor.   

• Global Risks Put Yen at Top of Pile for 2019 Currency Forecasts.

• Draghi Urges Closer Fiscal Union, Higher Government Spending.

• Boris Johnson Won’t Resign If Exit Day Is Delayed: Brexit Update.    

• China Vows to Continue Opening Financial Markets.

• Stocks Set for Cautious Start on Trade Tensions. Stocks in Asia were set to start the week lower as investors weighed the latest signs of escalating trade tensions and awaited data on China’s economy. U.S. equity futures recovered some of Friday’s losses. Futures in Tokyo, Hong Kong and Sydney slipped after the S&P 500 retreated on Friday, when Bloomberg reported the Trump administration is considering sweeping limits to capital-market investments. The U.S. has no plans “at this time” to stop Chinese companies from listing on American exchanges, a Treasury official said over the weekend. Treasury futures retreated after U.S. bonds ended flat with the 10-year yield at 1.68%. In China, it’s the final day of trading before a week-long holiday. Futures on the S&P 500 Index rose 0.2% as of 8:07 a.m. in Tokyo. The underlying gauge fell 0.5% on Friday. Futures on Japan’s Nikkei 225 fell 0.3%. Hang Seng futures dropped 1.2%. Futures on Australia’s S&P/ASX 200 Index lost 0.2%.  

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

• Democrats Desperate to Derail Economy to Beat Trump, Ross Says.

• Clashes Intensify With Petrol Bombs and Fires: Hong Kong Update.

• Wall Street Falls in Love Again With Companies Loaded Up on Debt.

• Credit Suisse Saga Reveals Ever-Present Bank Surveillance State.

Wall Street Journal:

• Probe the Effort to Sink Kavanaugh.

• Leaks Resulted in Clampdown on Trump Call Records.

• Ugly Clashes as Hong Kong Protesters Battle Police Ahead of China Anniversary.

• WeWork’s Troubles Drag on NYC’s Office Market.

• Google(GOOG) Draws House Antitrust Scrutiny of Internet Protocol.

• Fewer Stocks Are Participating in the Market’s Rally.

• Shale Boom Is Slowing Just When the World Needs Oil Most.

MarketWatch.com:

• These three overlooked stocks are undervalued, says Greenwich Wealth.

• Trump re-election campaign rakes in $13 million two days following Pelosi impeachment announcement.  

• IPO market has begun pushing back on growth-at-all-costs private companies.

Fox News:

• Trump attorney Giuliani wasn’t alone in seeking intel on Biden in Ukraine drama, official tells Fox News.

• Trump attorney Giuliani defends probe into Dems, says he is simply a lawyer ‘defending a client’.

CNBC:

• Chinese delegation to travel to US for trade talks in two weeks.

• Wall Street analysts say these stocks are a ‘must own’.

• Why Facebook and Amazon have joined the race to bring computing to your face.
  

Zero Hedge:

• Here Is The Dirt Trump Wanted About The Bidens (And Why Zelensky Doesn't Want To Give It To Him).

• NYC Bans Calling Someone An "Illegal Alien", Threatening To Call ICE "When Motivated By Discrimination".

• Clinton Emailers Rattled After State Department Fires Off 'Culpability Letters' For Homebrew Server Messages.

• After Trump Accused Of Cover-Up, Susan Rice Admits Obama Put Transcripts On Top Secret Server Too.

• For Dems, Ukraine Is Perfect Extension Of Russian Narrative.

• Chipotle Now Installing Drive-Thru "Chipotlanes" For Customers Who Order Online.

• Biden Campaign Demands TV Networks Stop Booking Rudy Giuliani.

• Chaos Continues In Hong Kong; Undercover Cops Pull Guns Amid 'Aggressive Clearance Operation'.

• Yet More, High-Quality Video Of Trudeau In Blackface Has Emerged.

• Italy: Salvini Out, Migrants In.

Business Insider:

• Amazon(AMZN) may soon be able to track your phone’s location even if you don’t use any of its products or services.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 76.75 +.5 basis point.

• China Sovereign CDS 48.5 +.75 basis point.

• Bloomberg Emerging Markets Currency Index 65.31 -.02%.

• FTSE 100 futures -.09%.

• S&P 500 futures +.28%.

• NASDAQ 100 futures +.30%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (CALM)/-.94

• (THO)/1.49

After the Close:

• None of note

Economic Releases

9:45 am EST

• The MNI Chicago PMI for Sept. is estimated to fall to 50.0 versus 50.4 in Aug.
  

10:30 am EST

• Dallas Fed Manufacturing Activity for Sept. is estimated to fall to 1.5 versus 2.7 in Aug. 
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German Unemployment Rate report could also impact trading today.

BOTTOM LINE: Asian indices are mostly 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 mixed.  The Portfolio is 50% net long heading into the week.