Stocks Slightly Higher into Afternoon on Global Stimulus Hopes, Vaccine Optimism, Technical Buying, Tech/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 22.60 -.53%

• Euro/Yen Carry Return Index 129.27 -.60%

• Emerging Markets Currency Volatility(VXY) 11.28 -.18%

• S&P 500 Implied Correlation 42. -4.42%

• ISE Sentiment Index 111.0 +22.0 points

• Total Put/Call .69 -6.8%

• NYSE Arms .84 -33.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.80 +.49%
  

• US Energy High-Yield OAS 782.30 +.40%

• European Financial Sector CDS Index 63.66 -3.3%

• Italian/German 10Y Yld Spread 142.0 +1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  64.68 -.68%
  

• Emerging Market CDS Index 183.03 -1.4%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.20 -.02%

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

• TED Spread 16.5 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -1.0 -1.75 basis points
  
• MBS  5/10 Treasury Spread  88.75 +.25 basis point
  
• IHS Markit CMBX BBB- 6 68.25 -.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.02 -.44%
• 3-Month T-Bill Yield .9% unch.

• Yield Curve 49.25 -1.5 basis points
  

• China Iron Ore Spot 121.92 USD/Metric Tonne -2.3%

• Citi US Economic Surprise Index 254.6 +5.0 points

• Citi Eurozone Economic Surprise Index 132.50 -49.7 points

• Citi Emerging Markets Economic Surprise Index 26.1 +2.7 points

• 10-Year TIPS Spread 1.64 +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 -90 open in Japan 
• China A50 Futures: Indicating -48 open in China

• DAX Futures: Indicating -17 open in Germany

Portfolio:

• Slightly Lower: On losses in my biotech sector longs and emerging market shorts
  

• Disclosed Trades: Covered some of my emerging market shorts 

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.9%

Sector Underperformers:

• 1) Oil Service -3.0% 2) Gold & Silver -2.6% 3) Steel -2.2%

Stocks Falling on Unusual Volume: 

• AJG, MMC, RVLV, SCHN, CUTR, SUPN, NWS, DPHC, FLGT, PLUG, KEYS, CELH, TCDA, OTRK, NLS, XPEL and GRWG
  

Stocks With Unusual Put Option Activity:

• 1) DVN 2) IVR 3) DHI 4) KEYS 5) FL
  

Stocks With Most Negative News Mentions:

• 1) BLNK 2) CATO 3) VIPS 4) MMC  5) IP
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth unch.

Sector Outperformers:

• 1) Gaming +2.3% 2) Homebuilding +1.3% 3) Education +.6%

Stocks Rising on Unusual Volume:

• HARP, BKE, CYRX, OSUR, SHLL, ARCT, DE and RYN
  

Stocks With Unusual Call Option Activity:

• 1) KEYS 2) FL 3) DE 4) RSX 5) TAP

Stocks With Most Positive News Mentions:

• 1) BKE 2) BNTX 3) DE 4) EL 5) BJ

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -34.9% Below 100-Day Average
• 1 Sector Rising, 10 Sectors Declining
• 29.2% of Issues Advancing, 67.8% Declining
• 37 New 52-Week Highs, 14 New Lows
• Bloomberg Risk-On/Risk-Off Index 3.86 +.26 point
  
• 46.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.7%
• Vix 22.6 -.3%
• Total Put/Call .60 -18.9%
• TRIN/Arms 1.06 -15.9%

Friday Watch

Evening Headlines

Bloomberg:       

• Job Loss Fears Keep U.K. Consumer Confidence Subdued in August.
• Asia Stocks to Follow U.S. Higher; Treasuries Gain. Asian stocks looked set for gains Friday after a rise in U.S. technology shares drove the Nasdaq 100 to a record, tempering concern over a bumpy economic recovery. Treasuries climbed. Futures pointed higher in Japan, Hong Kong and Australia. S&P 500 contracts edged up after the index posted modest gains Thursday when a rally in technology heavyweights offset a slide for energy producers and banks amid light trading volume. The benchmark shrugged off earlier weakness from disappointing jobs data. The 10-year Treasury yield fell to 0.65% and the dollar weakened. Crude oil retreated, while gold rose. S&P 500 futures gained 0.2% as of 7:18 a.m. in Tokyo. The gauge rose 0.3%. Futures on Japan’s Nikkei 225 advanced 0.5%. Hang Seng futures earlier gained 0.7%. Futures on Australia’s S&P/ASX 200 Index rose 0.2%.
• Oil Holds Weekly Gain as Gloomy Economic Signals Damp Rebound.
• Trump Says Biden Would Destroy U.S. in Rebuttal of Nomination. 
  
• Pelosi Pressured by Moderate Democrats, GOP on Stimulus Talks. 
  
• CDC Says Sun-Belt Cases Ease; Europe Fights Spike: Virus Update.   
• Money Managers Bracing for Upheaval With Stocks Near Record.   
• Urban Exiles Are Fueling a Suburban Housing Boom Across the U.S. 
• Tech Reclaims Market Leadership With Recovery Showing Cracks.

Wall Street Journal:

• Covid-19 Data Will Once Again Be Collected by CDC, in Policy Reversal.
• The Joe Biden We Know.
• The Obama-Biden Virus Response.
• What Kamala Harris Isn’t Saying About Her Mother’s Background.
• Putin Rival Alexei Navalny in Critical Condition After Suspected Poisoning.
  

Fox News:

• Biden to formally accept nomination at DNC after president rips him from hometown.
  

CNBC.com:

• Jim Cramer recommends Nvidia on the next dip: ‘You need to buy’.
• Stocks making the biggest moves after hours: Ross Stores, Keysight Technologies & more.
• There are a lot more losing than winning stocks in the S&P 500, Jim Cramer says.
• Economist David Rosenberg questions need for more virus aid, cites ‘tremendous’ household cash.

MarketWatch.com:       

• Uber and Lyft granted emergency stay, shutdown averted in California.
  
• Investor who scored big in coronavirus rout and now says stock-market ‘environment presents…largest set of tail risks we’ve seen’ in 15years.
• Mortgage rates are going back up — just as home prices begin to skyrocket.

Zero Hedge:  

• Steve Bannon Pleads Not Guilty To Fraud Charges, Freed On $5 Million Bail.
• Pompeo Blasts European Allies As "Siding With Ayatollahs" After Rejecting Iran 'Snapback Sanctions'.
• Virtue Reversal: Goodyear Bends The Knee After Trump Sparks Boycott.
• San Francisco Bay Area Has The Worst Air Quality In The World As Wildfires Rage.
• 750 Million Genetically Engineered Mosquitoes To Be Released In Florida Keys Despite Objections Over 'Jurassic Park Experiment'.
• Big-Tech, Bonds, Bitcoin, & Bullion Bid As Dollar Dive Continues.

The Epoch Times:

• US Should Sanction Chinese Drone Maker DJI for Sending Data to China, Report Says.
  

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 65.0 +.5 basis point.

• China Sovereign CDS 39.5 +1.0 basis point.

• Bloomberg Emerging Markets Currency Index 60.31 +.02%.
• FTSE 100 futures +.43%.

• S&P 500 futures +.35%.

• NASDAQ 100 futures +.31%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (BZUN)/1.72
• (BKE)/.06
• (DE)/1.23
• (FL)/.69
  

After the Close:

• (UI)/1.37

Economic Releases

9:45 am EST

• Markit US Manufacturing PMI for August is estimated to rise to 52.0 versus 50.9 in July.
• Markit US Services PMI for August is estimated to rise to 51.0 versus 50.0 in July.
  

10:00 am EST

• Existing Home Sales for July is estimated to rise to 5.4M versus 4.72M 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 modestly higher, boosted 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 day.

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

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Light

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 23.0 +2.0%

• Euro/Yen Carry Return Index 130.09 -.10%

• Emerging Markets Currency Volatility(VXY) 11.45 +2.1%

• S&P 500 Implied Correlation 45.54 +.24%

• ISE Sentiment Index 89.0 -16.0 points

• Total Put/Call .76 +2.7%

• NYSE Arms 1.30 +23.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.09 +.82%
  

• US Energy High-Yield OAS 779.86 +.49%

• European Financial Sector CDS Index 65.83 +1.45%

• Italian/German 10Y Yld Spread 140.25 +1.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  65.02 +1.33%
  

• Emerging Market CDS Index 187.19 +1.11%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.23 +.01%

• 2-Year Swap Spread 7.75 +.25 basis point

• TED Spread 16.5 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap .75 +1.75 basis points
  
• MBS  5/10 Treasury Spread  88.5 +1.0 basis points
  
• IHS Markit CMBX BBB- 6 68.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.20 -.30%
• 3-Month T-Bill Yield .9% unch.

• Yield Curve 50.75 -1.5 basis points
  

• China Iron Ore Spot 123.75 USD/Metric Tonne -1.2%

• Citi US Economic Surprise Index 249.6 -3.5 points

• Citi Eurozone Economic Surprise Index 182.20 -.8 point

• Citi Emerging Markets Economic Surprise Index 23.4 +3.2 points

• 10-Year TIPS Spread 1.63 -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 +90 open in Japan 
• China A50 Futures: Indicating +50 open in China

• DAX Futures: Indicating +17 open in Germany

Portfolio:

• Higher: On gains in my tech/medical sector longs and emerging market shorts
  

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

• Market Exposure: Moved to 50% Net Long