Stocks Slightly Higher into Final Hour on Vaccine Optimism, Global Stimulus Hopes, Short-Covering, Transport/Gaming Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 21.7 -1.9%

• Euro/Yen Carry Return Index 129.96 +.81%

• Emerging Markets Currency Volatility(VXY) 11.3 -1.2%

• S&P 500 Implied Correlation 41.8 -2.2%

• ISE Sentiment Index 130 .0 +19.0 points

• Total Put/Call .60 -9.09%

• NYSE Arms 1.08 +38.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 65.11 -1.25%
  

• US Energy High-Yield OAS 754.42 -.74%

• European Financial Sector CDS Index 62.32 -3.33%

• Italian/German 10Y Yld Spread 144.5 +1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  65.90 -2.1%
  

• Emerging Market CDS Index 182.0 -3.02%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.12 -.02%

• 2-Year Swap Spread 8.0 -1.0 basis point

• TED Spread 15.5 -.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -1.25 unch.
  
• MBS  5/10 Treasury Spread  81.0 +1.25 basis points
  
• IHS Markit CMBX BBB- 6 67.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.46 +.65%
• 3-Month T-Bill Yield .10% +1.0 basis point

• Yield Curve 45.25 +4.75 basis points
  

• China Iron Ore Spot 113.90 USD/Metric Tonne -1.14%

• Citi US Economic Surprise Index 225.2 -.3 point

• Citi Eurozone Economic Surprise Index 212.40 +4.4 points

• Citi Emerging Markets Economic Surprise Index 13.6 +9.9 points

• 10-Year TIPS Spread 1.64 +3.0 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 +99 open in Japan 
• China A50 Futures: Indicating -92 open in China

• DAX Futures: Indicating -21 open in Germany

Portfolio:

• Slightly Lower: On losses in my consumer biotech/tech sector longs
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.2%

Sector Underperformers:

• 1) Gold & Silver -7.6% 2) Video Gaming -2.4% 3) Utilities -1.9%

Stocks Falling on Unusual Volume: 

• NKLA, RVLV, IFF, OXY, SFM, TWOU, TDOC, TNDM, CHGG, AXNX, TPIC, AMD, STAA, NOVA, QLYS, CLX, SC, WTRG, KKR, GH, CSTL, ETSY, PETQ, EBS, PHYS, FLGT, SRG, OSUR, ZM, NARI, SCPL, FSK, SWI, NEM, TRUP, SDGR, RUN, VCRA, MCRB, ESPR, ZI, FIXX, XPER, ANGI, ARCT, STMP, NVAX, OTRK, SSTK, ADVM, UPLD, UCSG, SRNE, OMER and INO
  

Stocks With Unusual Put Option Activity:

• 1) KRE 2) CSCO 3) DE 4) XLI 5) TOL
  

Stocks With Most Negative News Mentions:

• 1) GEN 2) ED 3) ZNGA 4) GTT  5) XSPA
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.3%

Sector Outperformers:

• 1) Gaming +5.5% 2) Airlines +4.6% 3) Education +4.6%

Stocks Rising on Unusual Volume:

• JCOM, NLS, AVYA, PRTS, RNG, CNK, HDS, W, TGNA, ASIX, CARA, GRPN, AYX, USX, LVS, LITE, SPG, OSTK and GTHX
  

Stocks With Unusual Call Option Activity:

• 1) RF 2) PUMP 3) JCI 4) IBIO 5) RWT

Stocks With Most Positive News Mentions:

• 1) MSTR 2) ATCO 3) NLS 4) MESA 5) RCL

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +11.6% Above 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 68.6% of Issues Advancing, 29.2% Declining
• 88 New 52-Week Highs, 1 New Lows
• 47.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 56.8%
• Vix 21.9 -1.2%
• Total Put/Call .48 -27.3%
• TRIN/Arms 1.12 +43.6%

Tuesday Watch

Evening Headlines

Bloomberg: 

• Hong Kong’s Stocks Buckle Under Weight of Negative News Flow.  
• Singapore’s Economy Posts Worse Contraction in Second Quarter.
• Cases Top 20 Million as Pandemic Keeps Spreading: Virus Update.  
• Asian Stocks Set for Muted Start; Oil Rises. Asian stocks looked set for a muted open Tuesday after a lackluster session on Wall Street. Crude oil rallied and the dollar touched a one-week high. Futures were little changed in Japan, which reopens after a holiday Monday. Contracts were flat in Australia and edged higher in Hong Kong. S&P 500 futures were little changed after the benchmark approached its all-time high from February. The tech- heavy Nasdaq 100 lost ground. Treasuries slipped, pushing yields to the highest in two weeks. S&P 500 futures were little changed as of 8:30 a.m. in Tokyo. The S&P 500 Index increased 0.3%. Nikkei 225 futures rose 0.1%. Australia’s S&P/ASX 200 Index futures were flat. Hong Kong’s Hang Seng Index futures rose 0.4% earlier.  
• Lazard Sees Danger, Recovery Troubles, N.Z.’s Big Call: Eco Day.
• Active Managers Had Worst Stumble in Two Years Last Month.
• Trump’s Executive Action Fails to Jolt Stalled Relief Talks.
• Shale Job Losses Accelerating and the Worst May Be Yet to Come.
• Investor Who Pushed NFL Team Rebrand Shifts Focus to Evictions.
• U.S. Junk Bond Market Sets Record-Low Coupon in Relentless Rally.

Wall Street Journal:

• Lebanon’s Prime Minister, Cabinet Resign After Protests.
• Mayhem Continues, Protest Narrative Crumbles.
• Untangling the Media Myths of Covid-19.
• The No-Win School Reopening: One Superintendent’s Dilemma.
• Why Are Some Groceries Still So Hard to Find During Covid?
• U.S. Sent Workers Nearly $250 Billion in $600-a-Week Jobless Aid.
• Chicago Braces for More Looting After Chaotic Night.
• Jimmy Lai’s Arrest Signals New Limits for Hong Kong Dissent.
  

Fox News:

• Chicago takes steps to prevent another night of violence.
  

CNBC.com:

• Trump urges Americans to stop politicizing the coronavirus, blames China.
• China’s policies to boost chipmakers amid U.S. tensions may not help, analysts say.
• Big tech is bubbling up and could spark a correction: BTIG’s Julian Emanuel.
• TSA: July air travel down 75% from 2019, but gun confiscation rates triple.
• Trump’s extra unemployment could amount to $300 a week instead of $400, and you may not qualify.
• El-Erian says the biggest threat to stock market rally is wave of corporate bankruptcies.

MarketWatch.com:    

• After 150 days of the COVID-19 pandemic, here are the best- and worst-performing stocks.
• Uber and Lyft ordered to classify workers as employees in California.

Zero Hedge:

• Stelter Meltdown: CNN Host Says It's "Otherworldly, Offensive" To Question Biden's Mental Health.
• Police Comb "Thousands Of Hours" Of CCTV Footage, Make Looting Arrests Months After George Floyd Protests.
• Trump Pulled From Press Briefing After Shooting Outside White House.
• How Climate Alarmism Hijacked Environmentalism.
• China Mobilizes Invasion Craft On Coast Near Taiwan As Top US Official Arrives In Taipei: Report.
• What's Behind The Bizzare Break Between Breakevens And Crashing Real Rates.
• The Economy Is Mortally Wounded.
• Earnings Season Shocker: FAAMG Earnings Grew By 2% While EPS For The Other 495 S&P Companies Plunged 38%.
• Silver Soars Amid Momo Meltdown, Apple Almost As Big As Entire Russell 2000.

Business Insider:

• Some coronavirus patients say they're losing their hair in clumps. Doctors think it's a response to trauma.
• Young adults can't stop partying during the pandemic because they're wired that way

The Epoch Times:

• ‘Worst Fears’: Arrest of Hong Kong Media Mogul Jimmy Lai Draws International Condemnation.
• 49 Virginia Lawmakers Call for End to Torture, Organ Harvesting of Falun Gong 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 -.25%  to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 67.25 -.25 basis point.

• China Sovereign CDS 40.5 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index 60.07 -.02%.
• FTSE 100 futures +.57%.

• S&P 500 futures +.01%.

• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (GOOS)/-.42
• (LITE)/.83
• (SYY)/-.31
  

After the Close:

• (LRN)/.04
• (RRGB)/-3.26
  

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for July is estimated to fall to 100.5 versus 100.6 in June.
  

8:30 am EST

• The PPI Final Demand MoM for July is estimated to rise +.3% versus a -.2% decline in June.
• PPI Ex Food and Energy MoM for July is estimated to rise +.1% versus a -.3% decline in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK unemployment report, weekly US retail sales reports, $48B 3Y T-Note auction, Oppenheimer Tech/Internet/Communications Conference, Canaccord Growth Conference, UBS Financial Services Conference and the Wedbush PacGrow Healthcare Conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial 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.

Stocks Higher into Afternoon on Global Stimulus Hopes, Oil Gain, Short-Covering, Gaming/Commodity Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 22.1 -.3%

• Euro/Yen Carry Return Index 129.03 -.32%

• Emerging Markets Currency Volatility(VXY) 11.5 -.6%

• S&P 500 Implied Correlation 42.8 -4.9%

• ISE Sentiment Index 111 .0 +8.0 points

• Total Put/Call .64 -11.1%

• NYSE Arms .81 -25.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 65.89 +1.6%
  

• US Energy High-Yield OAS 760.95 -.27%

• European Financial Sector CDS Index 64.47 -.78%

• Italian/German 10Y Yld Spread 142.75 -5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  67.14 -.69%
  

• Emerging Market CDS Index 186.99 -1.23%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.15 +.07%

• 2-Year Swap Spread 9.0 +.5 basis point

• TED Spread 16.25 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -1.25 -.5 basis point
• MBS  5/10 Treasury Spread  79.75 -.5 basis point
  
• IHS Markit CMBX BBB- 6 67.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.16 -.29%
• 3-Month T-Bill Yield .09% unch.

• Yield Curve 40.5 unch.
  

• China Iron Ore Spot 114.65 USD/Metric Tonne +1.08%

• Citi US Economic Surprise Index 225.5 +2.5 points

• Citi Eurozone Economic Surprise Index 208.0 -3.9 points

• Citi Emerging Markets Economic Surprise Index 3.7 +2.6 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 +171 open in Japan 
• China A50 Futures: Indicating +47 open in China

• DAX Futures: Indicating +23 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long