Stocks Higher into Final Hour on Global Stimulus Hopes, Oil Gain, Short-Covering, Tech/Biotech 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) 24.3 -.6%

• Euro/Yen Carry Return Index 129.20 -.05%

• Emerging Markets Currency Volatility(VXY) 10.4 +1.3%

• S&P 500 Implied Correlation 54.5 -7.0%

• ISE Sentiment Index 144 .0 +75.0 points

• Total Put/Call .63 -23.2%

• NYSE Arms 1.10 -10.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.41 -2.96%
  

• US Energy High-Yield OAS 836.0 -1.4%

• European Financial Sector CDS Index 70.53 -3.65%

• Italian/German 10Y Yld Spread 152.0 +1.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  71.71 -1.91%
  

• Emerging Market CDS Index 188.84 -1.14%
  

• iBoxx Offshore RMB China Corporate High Yield Index 176.72 -.11%

• 2-Year Swap Spread 7.5 +.25 basis point

• TED Spread 16.5 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +1.5 basis points
• MBS  5/10 Treasury Spread  81.0 -6.25 basis points
• IHS Markit CMBX BBB- 6 67.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.87 -.36%
• 3-Month T-Bill Yield .08% -1.0 basis point

• Yield Curve 43.25 +2.25 basis points

• China Iron Ore Spot 111.57 USD/Metric Tonne -.04%

• Citi US Economic Surprise Index 225.4 -21.4 points

• Citi Eurozone Economic Surprise Index 182.80 +16.5 points

• Citi Emerging Markets Economic Surprise Index -7.5 -5.6 points

• 10-Year TIPS Spread 1.59 +4.0 basis points
• 100.0% chance of no change at Nov. 5th meeting, 100.0% chance of no change at Dec. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +185 open in Japan 
• China A50 Futures: Indicating +5 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.3%

Sector Underperformers:

• 1) Gold & Silver -2.6% 2) REITs -1.6% 3) Utilities -1.0%

Stocks Falling on Unusual Volume: 

• PSX, SHOO, SPH, CBRE, AIV, EPR, LEGN, RHP, VLO, FIZZ, STRA, IRT, PRDO, SFM, CATM, CUK, WWE, CCL, SIX, FL, LOCO, NTUS, BLNK, USAC, MDB, ZUMZ, NGVC, BLMN, SNAP, CLI, TUP, ALRM, REZI and KODK
  

Stocks With Unusual Put Option Activity:

• 1) DXC 2) APA 3) EWJ 4) MOS 5) RNG
  

Stocks With Most Negative News Mentions:

• 1) KOS 2) CAKE 3) PSX 4) DD  5) TWTR
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.7%

Sector Outperformers:

• 1) Alt Energy +3.2% 2) Video Gaming +2.9% 3) Steel +2.7%

Stocks Rising on Unusual Volume:

• ADT, JCAP, VAR, CODX, WKHS, FSLY, UPWK, TKR, CRUS, MXL, CWH, APPS, CHGG, GES, CHWY, XPEL, OSTK, BMCH, PRPL, INSG, CTB, INOV and PINS
  

Stocks With Unusual Call Option Activity:

• 1) EIX 2) MARA 3) APA 4) XSPA 5) MPC

Stocks With Most Positive News Mentions:

• 1) IMUX 2) NIO 3) PINS 4) CRNT 5) MRK

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -7.9% Below 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 58.9% of Issues Advancing, 38.2% Declining
• 90 New 52-Week Highs, 6 New Lows
• 37.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.6%
• Vix 24.8 +1.2%
• Total Put/Call .58 -29.3%
• TRIN/Arms 1.18 -4.1%

Monday Watch

Night Trading

• Asian indices are -.50% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 72.75 -.75 basis point.
• China Sovereign CDS 42.75 -1.0 basis point.
• Bloomberg Emerging Markets Currency Index 61.05 -.07%.
• FTSE 100 futures -.30%.
• S&P 500 futures +.05%.
• NASDAQ 100 futures +.30%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (CLX)/1.85
• (SNA)/.36
• (DISH)/.57
• (EME)/.91
• (GPN)/1.20
• (CLI)/.30
• (MCK)/2.36
• (TSN)/.90
  

After the Close:

• (AIG)/.53
• (CHGG)/.32
• (CRUS)/.30
• (DLB)/.27
• (H)/-1.41
• (IR)/.20
• (ITRI)/-.20
• (KLAC)/2.43
• (MOS)/-.01
• (RMBS)/.25
• (RNG)/.20
• (SBAC)/1.84
• (STE)/.98
• (TTWO)/1.60
• (THC)/-.71
• (TXRH)/-.62
• (TREX)/.65
• (VNO)/.91
• (WMB)/.24
  

Economic Releases
10:00 am EST

• ISM Manufacturing for July is estimated to rise to 53.6 versus 52.6 in June.
• ISM New Orders for July is estimated to fall to 55.2 versus 56.4 in June.
• ISM Prices Paid for July is estimated to rise to 52.0 versus 51.3 in June.
• Construction Spending MoM for June is estimated to rise +1.0% versus a -2.1% decline prior.
  

Afternoon

• Wards Total Vehicle Sales for July is estimated to rise to 14.0M versus 13.05M in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone PMI report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity 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.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Global Economy Week by Bloomberg. 
• The Week Ahead by Yahoo. (video)
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as global recession fears, coronavirus second wave worries and earnings jitters offset short-covering, technical buying and global stimulus hopes. My intermediate-term trading indicators are giving bearish signals and the Portfolio is 50% net long heading into the week.