Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 70.0 -2.0 basis points.

• China Sovereign CDS 42.75 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 60.92 +.01%.
• FTSE 100 futures +.02%.

• S&P 500 futures -.10%.

• NASDAQ 100 futures -.14%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ABC)/1.58
• (BWA)/-.46
• (CVS)/1.91
• (DISCA)/.72
• (ENR)/.59
• (HMC)/-62.20
• (HUM)/6.05
• (MRNA)/-.36
• (ODP)/.08
• (BTU)/-1.28
• (REGN)/5.96
• (SSYS)/-.20
• (TEVA)/.53
• (W)/1.09
• (WEN)/.11
• (WWW)/-.12
  

After the Close:

• (DDD)/-.10
• (ADT)/.29
• (ALB)/.72
• (DOX)/1.05
• (UHAL)/1.78
• (CVNA)/-.79
• (CF)/.60
• (DLPH)/-.89
• (ETSY)/.48
• (FSLY)/-.01
• (HI)/.30
• (JACK)/1.03
• (MRO)/-.64
• (MET)/.91
• (PAAS)/.02
• (PTON)/.10
• (PSA)/2.53
• (RCII)/.60
• (RMD)/1.08
• (RGLD)/.52
• (SQ)/-.05
• (SPWR)/-.39
• (SYNA)/1.07
• (WDC)/1.22
  

Economic Releases

8:15 am EST

• The ADP Employment Change for July is estimated to fall to 1200K versus 2369K in June.

8:30 am EST

• The Trade Balance for June is estimated at -$50.2B in May versus -$54.6B in May.

10:00 am EST

• The ISM Services Index for July is estimated to fall to 55.0 versus 57.1 in June.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,309,300 barrels versus a -10,611,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -534,000 barrels versus a +654,000 barrel gain the prior week. Distillate supplies are estimated to rise by +464,900 barrels versus a +503,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.12% versus a +1.6% gain prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Services PMI report, weekly MBA Mortgage Applications report, Jefferies Industrials Conference, Barclays Building/Building Products Conference and the (COST) July Sales results could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down by industrial and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.1%

Sector Underperformers:

• 1) Homebuilding -1.1% 2) Software -1.1% 3) Biotech -1.0%

Stocks Falling on Unusual Volume: 

• PINS, BLDR, LOCO, LNTH, RNG, CVI, ZBH, BRKR, FIXX, TREX, W, ICHR, VCYT, IPHI, RL, TRHC, KPTI, LEG, SPR, PRPL, DOOR, ESI, HLNE, BCC, THC, LDOS, EPC, EMN, KMT, ITRI, AIG, CODX, SLP, IPGP, SITE, WKHS, IMUX, CRUS, KODK, EPZM, BYGR, EVRG, INGR, HAE, SPCE and TCMD
  

Stocks With Unusual Put Option Activity:

• 1) AMLP 2) AIG 3) EOG 4) MCHP 5) HPQ
  

Stocks With Most Negative News Mentions:

• 1) AIG 2) MNK 3) CODX 4) PRA  5) ENDP
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%

Sector Outperformers:

• 1) Gold & Silver +3.0% 2) Oil Service +3.0% 3) Alt Energy +2.9%

Stocks Rising on Unusual Volume:

• ITRC, SRNE, CRNC, MTSC, SYKE, BLNK, MOS, PSNL, EXPI, BMCH, VRNS, DPHC, AMD, SCPL, AQUA, HST, AMRC, NKLA, PRIM, FBM, HCAC and TTWO
  

Stocks With Unusual Call Option Activity:

• 1) ARCC 2) WLL 3) GME 4) PSTG 5) ADT

Stocks With Most Positive News Mentions:

• 1) GLDD 2) VRNS 3) TXRH 4) AMD 5) TTWO

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -13.0% Below 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 58.6% of Issues Advancing, 39.0% Declining
• 72 New 52-Week Highs, 6 New Lows
• 38.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.2%
• Vix 23.8 -2.1%
• Total Put/Call .58 -13.4%
• TRIN/Arms .75 -40.3%

Tuesday Watch

Evening Headlines

Bloomberg:   

• Microsoft’s Long History in China Complicates Potential TikTok Deal.
• South Korean Consumer Prices Rise for First Time Since April.
• Hedge Fund Boosts Cash on Growing Risk of U.S.-China Armed Clash.
• Asian Stocks to Open Higher; Dollar Holds Gain: Markets Wrap. Asian stocks looked poised for gains Tuesday after a technology-fueled rally in the U.S. amid positive economic data and the potential for further stimulus. The dollar held gains. Futures pointed higher in Japan, Australia and Hong Kong. S&P 500 contracts were little changed. Earlier, the Nasdaq 100 reached a record as traders sought out companies poised to do best in a stay-at-home economy. Apple Inc. set an all-time high and Microsoft Corp. gained as it tried to salvage a deal for the U.S. operations of TikTok. The dollar rebounded following its worst July in a decade and Treasuries fell across the curve as data showed U.S. manufacturing expanded in July at the fastest pace since March 2019. S&P 500 futures were little changed as of 8:18 a.m. in Tokyo. The S&P 500 Index advanced 0.7%. Nikkei 225 futures climbed 1%. Australia’s S&P/ASX 200 Index futures rose 1.4%. Hang Seng Index futures rose 0.7% earlier.
• Oil Rally Pauses as More OPEC Supply Offsets Economic Cheer.
• Fed Officials Talk Up Urgency of Fiscal Aid as Lawmakers Bicker.
• Bankruptcies Rip Through U.S. Mall Tenants With No End in Sight.
• Twitter Investigated by FTC for Alleged Misuse of User Data.
• The Pandemic Workday Is 48 Minutes Longer and Has More Meetings.
• Shale Driller Unloading Gas Fields for Pennies on the Dollar.
• Boeing Given Long List of Proposed Fixes for 737 Max Return.
• Hyatt’s Results Show Deep Pain from Collapse of Global Travel.
• Take-Two Jumps on Blockbuster Quarter for Grand Theft, NBA Games.

Wall Street Journal:

• School-Opening Extortion.
• Fear and Loathing in Covid America.
• Covid-19 Hastens the Work-at-Home Revolution.
• Democrats, White House Upbeat After New Talks on Coronavirus Aid Bill.
• Why the Teenage Brain Pushes Young People to Ignore Virus Restrictions.
• Covid Supercharges Federal Reserve as Backup Lender to the World.
• Hedge-Fund Launches Pick Up Despite Pandemic.
• Refiners Retrench as Demand for Gasoline, Jet Fuel Shrivels.

Fox News:

• Trump calls for re-run of 'total disaster' NY congressional race amid mail-in ballot problems.
• Lawmakers call on class to be replaced with ‘less racist’ curriculum.

CNBC.com:

• Here’s how the new SEC proposals could change the way US equity markets function.
• Trump says nationwide lockdown would ‘ultimately inflict more harm than it would prevent’.
• Trump says Microsoft should pay ‘key money’ to Treasury for facilitating TikTok deal.
• Trump wants broader role for telehealth services in Medicare.
• ‘Ominous’ market pattern may spark a summer slump.

MarketWatch.com:    

• Trump Could Use an Executive Order to Suspend Evictions and Payroll Tax Collection.
• A 10% selloff in the stock market is most likely, says expert who called March lows: ‘something has to give’
• Odds are ‘as high as 35%’ that next coronavirus aid package won’t become reality until September, analyst says.
• Take-Two Stock Jumps After the Company Posts Blowout Earnings.

Zero Hedge:

• Democratic Socialists Of America Teams Up With Teachers Unions To Reform Schools.
• BLM Uses 'Mafia Tactics' To Threaten Cuban Restaurant Owner With Diversity Demands.
• Twitter Shares Slide As Company Faces $250 Million FTC Fine.
• US Treasury Set To Spend Trillions In The Next Few Months.
• NJ Tightens Restrictions On Crowd Sizes, Houston Orders Police To Enforce Mandatory Mask Rules: Live Updates.
• This Time Is Different: The Death of Valuation - The Intellectual Calamity Of "Big Data".
• This Is "Unsustainable": Why Even Bullish Morgan Stanley Sees An Imminent Market Correction.
• Nasdaq Surges To Another Record High Despite Dollar Surge.

The Epoch Times:

• Millions Worth of PPP Loans Went to Chinese-Owned Companies, Report Finds.

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 +.75%  to +1.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 72.0 -1.5 basis points.

• China Sovereign CDS 42.5 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index 60.88 -.05%.
• FTSE 100 futures -.35%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.11%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ATI)/-.10
• (BP)/-.30
• (EMR)/.59
• (EXC)/.43
• (EXPD)/.72
• (IGT)/-.61
• (LEA)/-4.54
• (LPX)/.17
• (RL)/-1.71
• (VSH)/.08
• (VMC)/1.39
• (ZBH)/-.69
  

After the Close:

• (ATVI)/.42
• (ALL)/1.62
• (ANET)/1.95
• (BYND)/-.02
• (BOOT)/-.15
• (DVN)/-.26
• (ETH)/-.37
• (FOXA)/.57
• (LOPE)/.89
• (JAZZ)/3.11
• (MCHP)/1.44
• (MNST)/.49
• (PRU)/1.72
• (QGEN)/.55
• (TRUP)/.02
• (TWLO)/-.08
• (DIS)/-.64
• (WYNN)/-4.91
  

Economic Releases

10:00 am EST

• Factory Orders for June is estimated to rise +5.0% versus a +8.0% gain in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Manufacturing PMI report, weekly US retail sales reports and the William Blair Biotech Focus Conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly higher, boosted by industrial 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, 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