Stocks Higher into Final Hour on Global Stimulus Hopes, Oil Gain, Short-Covering, Energy/Financial Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 24.5 -.04%

• Euro/Yen Carry Return Index 127.62 +.25%

• Emerging Markets Currency Volatility(VXY) 9.31 -.85%

• S&P 500 Implied Correlation 52.6 +1.2%

• ISE Sentiment Index 93.0 -5.0 points

• Total Put/Call .67 -13.0%

• NYSE Arms .62 -53.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 69.20 -1.37%
  

• US Energy High-Yield OAS 874.47 -1.20%

• European Financial Sector CDS Index 65.54 -3.96%

• Italian/German 10Y Yld Spread 155.0 -1.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  76.68 -1.55%
  

• Emerging Market CDS Index 174.11 -4.9%
  

• iBoxx Offshore RMB China Corporate High Yield Index 173.96 -.76%

• 2-Year Swap Spread 7.5 +.5 basis point

• TED Spread 15.75 -1.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -8.0 -1.0 basis point
• MBS  5/10 Treasury Spread  99.0 -2.0 basis points
• IHS Markit CMBX BBB- 6 67.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.39 +.98%
• 3-Month T-Bill Yield .11% unch.

• Yield Curve 46.25 -1.0 basis point

• China Iron Ore Spot 108.55 USD/Metric Tonne +.42%

• Citi US Economic Surprise Index 246.5 -4.2 points

• Citi Eurozone Economic Surprise Index 57.7 +50.6 points

• Citi Emerging Markets Economic Surprise Index -7.9 -.8 points

• 10-Year TIPS Spread 1.47 +2.0 basis points
• 100.0% chance of no change at Sept. 16 meeting, 100.0% chance of no change at Nov. 5th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -80 open in Japan 
• China A50 Futures: Indicating -81 open in China

• DAX Futures: Indicating -34 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/biotech sector longs, index hedges and emerging market shorts

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.7%

Sector Underperformers:

• 1) Biotech -1.5% 2) Software -1.0% 3) Internet -.9%

Stocks Falling on Unusual Volume: 

• TCDA, NSTG, PSNL, FSLR, EBAY, ITCI, PASG, PTCT, EBS, DNLI, FE, DVAX, OPCH and ACAD

Stocks With Unusual Put Option Activity:

• 1) MUR 2) CSX 3) OPK 4) IBM 5) TXN

Stocks With Most Negative News Mentions:

• 1) EBS 2) DHI 3) PHM 4) TREX  5) AAL

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +2.9%

Sector Outperformers:

• 1) Oil Service +7.4% 2) Energy +6.0% 3) Banks +3.6%

Stocks Rising on Unusual Volume:

• OMI, HIBB, CODX, FHB, MUSA, SPCE, SFM, NOV, UNIT, SYNA, LCA, NBL, MBUU, RFST, TGNA and KEY

Stocks With Unusual Call Option Activity:

• 1) WBT 2) FE 3) NBEV 4) XME 5) OIH

Stocks With Most Positive News Mentions:

• 1) OMI 2) HAL 3) SYNA 4) MUSA 5) OPK

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -13.7% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 80.7% of Issues Advancing, 17.2% Declining
• 131 New 52-Week Highs, 2 New Lows
• 32.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.2%
• Vix 24.2 -.1%
• Total Put/Call .66 -14.3%
• TRIN/Arms .67 -50.0%

Tuesday Watch

Evening Headlines

Bloomberg:       

• Hong Kong Bracing for Worst Wave of Virus and It’s Not Ready.  

• EU Edges Toward Massive Stimulus Package With New Proposal.

• Asian Stocks Track U.S. Higher; Dollar Declines: Markets Wrap.    

• Europe Compromise, U.S. Divide, Mnuchin-Pelosi Stimulus: Eco Day.

• Oil Erodes Gains as Virus Concerns Keep Bulls in Check.  

• U.S. Cases Rise 1.3%; Florida to Speed Up Testing: Virus Update.

• Double-Shot Covid Vaccine Tests Raise New Pandemic Challenge.

• Jeff Bezos Adds Record $13 Billion to His Fortune in One Day.

• Nasdaq Momentum Is Hottest in 20 Years With Amazon Leading Surge.  

• Wall Street Firms Consider Moving Jobs from NYC, Study Says.  

• Man Found Dead May Be Linked to Shooting at Federal Judge’s House.  

• Manhattan’s Retail Pain Worsens With Fifth Avenue Rent Slide.

• Wall Street Is Throwing Billions at Once-Shunned Gold Miners.

Wall Street Journal:

• Jack Ma’s Ant Group Plans Massive IPO, Bypassing the West.

• The Mess in Portland.

• China May Retaliate Against Nokia, Ericsson If EU Countries Ban Huawei.

• Republicans Put Down Marker on Next Coronavirus-Aid Bill.

Fox News:

• Anti-cop 'mob' swarms 'Back the Blue' event.

CNBC.com:

• Big Tech stocks add $291 billion in market value in one day.

• Khan Academy founder explains how to keep kids learning when schools are closed.

• ‘U.S. is pressing the accelerator to trash’ relations, China says.

MarketWatch.com:    

• Here’s how a Biden presidency could hurt financial stocks.

Zero Hedge:

• The Real Unemployment Rate Is 21%... And Heading Higher.

• St. Louis Couple Charged With Felony After Using Firearms To Ward Off Trespassing Protesters.

• Suspect Who Killed Son Of Epstein-Linked Judge Identified.

• Universities Nationwide Promote Mental Health App To Treat "Anxiety Over Racism".

• As America's Economic Suffering Grows, The Calls For More Socialism Grow Louder.

• IBM Revenues Tumble Most In 5 Years But Beat Of Sharply Lower Expectations Sends Stock Surging.

• Silver Soars As Turbocharged-Tech Sends "Greed' To Record High.

Business Insider:

• 'Everybody's a genius in a bull market': Mark Cuban says behavior around the stock market's current rally is eerily similar to the 1999 dot-com bubble.

• Spiking COVID cases raise risk of a W-shaped economic cycle with a 2nd downturn, IHS Markit says.

The Epoch Times:

• Republicans Urge President to Sanction China-Linked Hackers.

• International Calls Mount to End Religious Persecution in China.

Digital Blackboard:

• Daily New Cases by Region.

Worldometer:

• New Cases/Deaths by state.

Rt Covid-19:

• How fast virus is growing by state.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 77.25 -1.5 basis points.

• China Sovereign CDS 43.0 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index 60.83 +.07%.

• FTSE 100 futures +.25%.

• S&P 500 futures +.14%.

• NASDAQ 100 futures +.42%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (CIT)/-.66

• (KO)/.41

• (CMA)/.22

• (LMT)/5.70

• (NVS)/1.31

• (PCAR)/.32

• (PM)/1.10

• (SBNY)/2.26

After the Close:

• (CNI)/1.26

• (COF)/-1.04

• (CSL)/1.14

• IBKR)/.31

• (ISRG)/.52

• (IRBT)/.29

• (SNAP)/-.10

• (SUM)/.25

• (AMTD)/.854

• (TER)/1.03

• (TXN)/.92

• (UAL)/-9.25

• (USNA)/1.19

Economic Releases

8:30 am EST

• The Chicago Fed National Activity Index for June is estimated to rise to 4.0 versus a reading of 2.61 in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Canada Housing Data report and weekly US retail sales reports could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly higher, boosted by consumer 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 day.

Stocks Higher into Final Hour on Global Stimulus Hopes, Technical Buying, Short-Covering, Tech/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 24.7 -3.8%

• Euro/Yen Carry Return Index 127.19 +.34%

• Emerging Markets Currency Volatility(VXY) 9.48 -.21%

• S&P 500 Implied Correlation 52.5 -3.8%

• ISE Sentiment Index 98.0 -2.0 points

• Total Put/Call .77 unch.

• NYSE Arms .93 -44.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 69.94 -2.22%
  

• US Energy High-Yield OAS 886.91 -.79%

• European Financial Sector CDS Index 68.24 -3.89%

• Italian/German 10Y Yld Spread 156.5 -5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  77.59 -1.5%
  

• Emerging Market CDS Index 183.54 -4.4%
  

• iBoxx Offshore RMB China Corporate High Yield Index 175.30 +.06%

• 2-Year Swap Spread 7.0 +.75 basis point

• TED Spread 16.75 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -7.0 -1.0 basis point
• MBS  5/10 Treasury Spread  101.0 +1.25 basis points
• IHS Markit CMBX BBB- 6 67.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.77 +.20%
• 3-Month T-Bill Yield .11% unch.

• Yield Curve 47.25 -.75 basis point

• China Iron Ore Spot 106.89 USD/Metric Tonne +.81%

• Citi US Economic Surprise Index 250.7 -8.4 points

• Citi Eurozone Economic Surprise Index -7.1 +6.9 points

• Citi Emerging Markets Economic Surprise Index -7.1 +34.9 points

• 10-Year TIPS Spread 1.45 +1.0 basis point
• 100.0% chance of no change at Sept. 16 meeting, 100.0% chance of no change at Nov. 5th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +72 open in Japan 
• China A50 Futures: Indicating unch. open in China

• DAX Futures: Indicating -11 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/biotech sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long