Stocks Falling into Final Hour on China Tensions, Commodity Weakness, Technical Selling, Tech/Biotech Sector Weakness

 

 Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 22.6 -.18%

• Euro/Yen Carry Return Index 129.40 -.45%

• Emerging Markets Currency Volatility(VXY) 11.6 +1.94%

• S&P 500 Implied Correlation 45.4 -1.3%

• ISE Sentiment Index 103 .0 -8.0 points

• Total Put/Call .70 +18.6%

• NYSE Arms 1.47 +17.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.39 -.25%
  

• US Energy High-Yield OAS 814.83 -.17%

• European Financial Sector CDS Index 64.98 -1.78%

• Italian/German 10Y Yld Spread 147.75 -.25 basis point
  

• Asia Ex-Japan Investment Grade CDS Index  67.61 -.25%
  

• Emerging Market CDS Index 189.44 -.26%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.03 -.02%

• 2-Year Swap Spread 8.5 +.5 basis point

• TED Spread 15.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -.75 +1.25 basis points
• MBS  5/10 Treasury Spread  80.25 -1.75 basis points
  
• IHS Markit CMBX BBB- 6 67.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.30 -.60%
• 3-Month T-Bill Yield .09% -1.0 basis point

• Yield Curve 40.5 -2.0 basis points

• China Iron Ore Spot 112.60 USD/Metric Tonne -.67%

• Citi US Economic Surprise Index 223.0 +1.1 points

• Citi Eurozone Economic Surprise Index 211.90 +3.5 points

• Citi Emerging Markets Economic Surprise Index 1.1 +8.4 points

• 10-Year TIPS Spread 1.61 -1.0 basis point
• 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 +31 open in Japan 
• China A50 Futures: Indicating -109 open in China

• DAX Futures: Indicating -47 open in Germany

Portfolio:

• Slightly Higher: On gains in my consumer staple/industrial/medical sector longs
  

• Disclosed Trades: Added to my emerging market shorts
  

• Market Exposure: Moved to 25% Net Long

Bear Radar

 

Style Outperformer:

• Mid-Cap Growth -1.5%

Sector Outperformers:

• 1) Gold & Silver -4.5% 2) Video Gaming -2.7% 3) Software -2.6%

Stocks Rising on Unusual Volume:

• PINS, APPN, VCYT, DPHC, DCP, PBYI, COLD, BCEI, OLN, SPCE, ELY, HTGC, HMSY, ONEM, CHNG, PSXP, VSLR, LPSN, CDAY, CYRX, ICHR, SONO, BEAM, TWLO, GTHX, HLF, AVLR, SQ, VIRT, CCOI, SMAR, ATVI, UBER, BE, CWH, ECPG, EOG, CARG, TRUP, EPAY, AAXN, TDOC, QTRX, NGVC, LVGO, MDB, EDIT, VAPO, GKOS, EVBG, DT, KODK, FLT, LYFT, VAPO, PMT, DBX, CATM, ACMR, SSP, BL, ILMN, FSLY, CVNA, YELP, VIVO, DDOG, PETQ and AYX
  

Stocks With Unusual Call Option Activity:

• 1) IFF 2) DISH 3) EWW 4) OSTK 5) CVNA

Stocks With Most Positive News Mentions:

• 1) AYX 2) YELP 3) DDOG 4) VIRT 5) UBER

Charts:

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

Bull Radar

 

Style Outperformer:

• Small-Cap Value +1.3%

Sector Outperformers:

• 1) Telecom +2.5% 2) Retail +2.2% 3) Utilities +1.9%

Stocks Rising on Unusual Volume:

• GRPN, UFS, TDC, SAIL, OSTK, STMP, Z, ZG, CHRS, KURA, IRTC, FSLR, RVNC, SWI, SRG, EXPI, BIIB, APPS, OTRK, SPWR, TMUS, UPS, VSAT, NLOK, PLUG and CELH
  

Stocks With Unusual Call Option Activity:

• 1) GRPN 2) AAP 3) AYX 4) STMP 5) PBI

Stocks With Most Positive News Mentions:

• 1) ZG 2) FSLR 3) GRPN 4) AAOI 5) TMUS

Charts:

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

Morning Market Internals

 

NYSE Composite Index:

• Volume Running -30.9% Below 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 49.1% of Issues Advancing, 47.5% Declining
• 64 New 52-Week Highs, 5 New Lows
• 42.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.5%
• Vix 22.6 -.4%
• Total Put/Call .52 -11.9%
• TRIN/Arms 1.56 +24.8%

Friday Watch

Night Trading 

• Asian equity indices are -1.5%  to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 67.5 -2.5 basis points.

• China Sovereign CDS 41.25 -1.5 basis points.

• Bloomberg Emerging Markets Currency Index 60.52 -.25%.
• FTSE 100 futures -.32%.

• S&P 500 futures -.46%.

• NASDAQ 100 futures -.56%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (CSIQ)/.12
• (DISH)/.57
• (EBIX)/.65
• (MGA)/-1.64
• (VIRT)/1.55
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for July is estimated to fall to 1480K versus 4800K in June.
• The Unemployment Rate for July is estimated to fall to 10.5% versus 11.1% in June.
• Average Hourly Earnings MoM for July is estimated to fall -.5% versus a -1.2% decline in June.
  

10:00 am EST

• Wholesale Trade Sales MoM for June.

3:00 pm EST

• Consumer Credit for June is estimated at $10.0B versus -$18.28B in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German Trade Balance report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Rising into Afternoon on Diminished Global Recession Fears, Technical Buying, Short-Covering, Gaming/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 22.8 -.74%

• Euro/Yen Carry Return Index 129.94 +.03%

• Emerging Markets Currency Volatility(VXY) 11.5 +4.4%

• S&P 500 Implied Correlation 48.1 -1.5%

• ISE Sentiment Index 111 .0 -3.0 points

• Total Put/Call .54 -20.6%

• NYSE Arms 1.25 +31.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.69 -.85%
  

• US Energy High-Yield OAS 815.77 +.06%

• European Financial Sector CDS Index 66.15 +1.94%

• Italian/German 10Y Yld Spread 148.0 -2.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  67.66 -1.75%
  

• Emerging Market CDS Index 189.44 unch,
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.07 -.04%

• 2-Year Swap Spread 8.0 +.25 basis point

• TED Spread 15.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -.5 basis point
• MBS  5/10 Treasury Spread  82.0 +1.0 basis point
  
• IHS Markit CMBX BBB- 6 67.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.92 -.51%
• 3-Month T-Bill Yield .09% -1.0 basis point

• Yield Curve 42.5 +2.0 basis points

• China Iron Ore Spot 114.10 USD/Metric Tonne -.90%

• Citi US Economic Surprise Index 221.9 +2.0 points

• Citi Eurozone Economic Surprise Index 208.40 +28.0 points

• Citi Emerging Markets Economic Surprise Index -7.3 -1.1 points

• 10-Year TIPS Spread 1.62 +1.0 basis point
• 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 -43 open in Japan 
• China A50 Futures: Indicating -36 open in China

• DAX Futures: Indicating +39 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long