Stocks Higher into Final Hour on Central Bank Hopes, Vaccine Optimism, Oil Gain, Biotech/REIT Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 25.4 -1.9%
• Bloomberg Global Risk On/Risk Off Index 386.0 +79.0 points

• Euro/Yen Carry Return Index 129.52 -.34%

• Emerging Markets Currency Volatility(VXY) 11.2 +.7%

• S&P 500 Implied Correlation 51.6 -2.3%

• ISE Sentiment Index 124.0 +8.0 points

• Total Put/Call .68 -17.1%

• NYSE Arms 1.14 +65.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.80 -1.45%
  

• US Energy High-Yield OAS 821.28 +.65%

• European Financial Sector CDS Index 62.37 -3.19%

• Italian/German 10Y Yld Spread 151.25 unch.
  

• Asia Ex-Japan Investment Grade CDS Index  57.53 -1.11%
  

• Emerging Market CDS Index 164.40 -2.81%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.99 +.04%

• 2-Year Swap Spread 8.25 unch.

• TED Spread 15.25 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -4.75 +2.0 basis points
  
• MBS  5/10 Treasury Spread  93.25 +2.0 basis points
  
• IHS Markit CMBX BBB- 6 66.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.76 +.14%
• 3-Month T-Bill Yield .11% unch.

• Yield Curve 53.25 -.5 basis point
  

• China Iron Ore Spot 122.88 USD/Metric Tonne -2.82%

• Citi US Economic Surprise Index 178.0 -3.5 points

• Citi Eurozone Economic Surprise Index 83.2 +.2 point

• Citi Emerging Markets Economic Surprise Index 49.6 +2.9 points

• 10-Year TIPS Spread 1.68 +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 -90 open in Japan 
• China A50 Futures: Indicating -16 open in China

• DAX Futures: Indicating -21 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long

 

Bear Radar

Style Underperformer:

• Small-Cap Value +.3%

Sector Underperformers:

• 1) Banks -1.3% 2) Homebuilding -1.1% 3) I-Banks -.9%

Stocks Falling on Unusual Volume: 

• CLX, ZUMZ, CVM, BK, TPR, CBRL, GOSS, UNFI, RNG, DPHC, C, SLQT, TRHC, LIND, WLL,  LEN, ATGE, NKLA, MRSN, FIZZ, GTHX, FRTA, OSTK, FRTA, MDLA, XENT, CUK, CCL, ORA and IMXI
  

Stocks With Unusual Put Option Activity:

• 1) IEF 2) C 3) LEN 4) QRVO 5) AEO
  

Stocks With Most Negative News Mentions:

• 1) NKLA 2) OBNK 3) RNST 4) PROG  5) XOM
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.3%

Sector Outperformers:

• 1) Semis +1.9% 2) Oil Service +1.6% 3) Software +1.5%

Stocks Rising on Unusual Volume:

• IPOB, SGMS, APPS, NLS, RVNC, ATNX, AVRO, MCFT, ZG, PTON, HCAC and NVCR
  

Stocks With Unusual Call Option Activity:

• 1) MRNS 2) NEE 3) PVH 4) VTR 5) PK

Stocks With Most Positive News Mentions:

• 1) MRNS 2) NVAX 3) FCAU 4) PLT 5) SAH

Charts:

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

 

Mid-Day Market Internals

 NYSE Composite Index:

• Volume Running -17.7% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 65.7% of Issues Advancing, 31.5% Declining
• 75 New 52-Week Highs, 3 New Lows
• 49.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.0% 
• Bloomberg Global Risk-On/Risk-Off Index 373.0 +80.0 points
• Vix 25.5 -1.4%
• Total Put/Call .68 -17.1%
• TRIN/Arms 1.23 +78.3%

Tuesday Watch

Evening Headlines

Bloomberg:              

• Investors Push Back on Emerging Asia’s Record Borrowing Spree.
• In Hong Kong, the Pedestrian Fences Are Political.  
  
• Australia Aluminum Sector in Fight For Survival, Industry Warns.
  
• U.S. Cases Up 0.5%; Brazil Chief Justice Infected: Virus Update.
  
• Asian Stocks Drift; China’s Yuan at Year High: Markets Wrap. Asian stocks drifted at the open Tuesday after snapping two weeks of declines Monday. The dollar maintained losses and the yuan was steady after rising to the highest this year. Japan’s stocks edged lower, while Australia and South Korea had modest gains. S&P 500 futures edged up after the benchmark gained Monday. The Nasdaq 100 Index broke a two-day slide. Oracle Corp. jumped over 4% on reports it beat Microsoft Corp. for the U.S. operations of TikTok. Immunomedics Inc. almost doubled after Gilead Sciences Inc. agreed to buy the cancer drugmaker for $21 billion. Positive vaccine comments from Pfizer Inc.’s CEO, which boosted Asian shares Monday, helped sentiment. Treasuries were flat. S&P 500 futures rose 0.1% as of 9:05 a.m. in Tokyo. The S&P 500 Index gained 1.3%. Topix index fell 0.5%. Australia’s S&P/ASX 200 Index rose 0.3%. South Korea’s Kospi index rose 0.3%. Hong Kong’s Hang Seng Index futures were little changed. 
• Oil Trapped Between Bearish Demand Outlook and Rallying Equities.
• New Japan Leader, Rich And Poor, Destination Inflation: Eco Day.
• Amateur Air Pollution Trackers Are Mapping Western Wildfire Smoke.
  
• Citigroup to Resume Cutting Jobs, Ending Pause During Pandemic.
• IPO Busy Season Arrives as Snowflake, JFrog Boost Listing Plans.
• Morgan Stanley Says a Stimulus Bust Delays Recovery Six Months.  
• George Washington Enrollment Drops 24% in Pandemic Setback.  
• Bill Gross Says Investors Should Play Defense as Stimulus Ebbs.

Wall Street Journal:

• The Campaign’s Key Half-Hour? Start of the First Debate.
• Covid-19 Test Maker Examines False-Positive Results in Nursing Homes.
• Biden of the Climate Apocalypse.
• Confessions of a New Gun Owner.
• Amazon to Hire 100,000 in U.S. and Canada.
• Regulators to Reprimand Citigroup for Failing to Improve Risk Systems.
• Biden Budget to Result in Highest Spending in Decades, Study Finds.

Fox News:

• How a contested election could lead to this scenario.
• Official could face firing for social media post on shooting of LA cops.
• Lawmaker calls for probe of 'exploitation of children' in Netflix movie.
  

CNBC.com:

• TikTok relying on Trump to back off original demand to sell U.S. business and approve Oracle deal. 
• Expect new iPad Air and Apple Watch 6 at Apple’s Tuesday event, analyst says. 

 MarketWatch.com:     

• There’s $120 billion worth of commercial property debt threatened by West Coast fires.
• Hedge-fund billionaire Steve Cohen agrees to buy N.Y. Mets from Wilpon family.

Zero Hedge:    

• BoJo Wins First Vote On Bill To Modify Brexit Deal, Infuriating Brussels.
• "Everyone In The City Was Ready For War" - Terrifying Eye-Witness Account Of The Kenosha Riots.
• 'Rogue' Chinese Virologist Joins Twitter, Publishes "Smoking Gun" Evidence COVID-19 Created In Lab.
• Exhaustive Pentagon Review Finds No Evidence For NYTimes' "Russian Bounties" Story.
• "Murphy's Law": New York May Follow New Jersey With Trading Tax Of Its Own.
• Sen. Hawley Urges Trump Administration To Reject TikTok Deal.
• Sunday Night Football Ratings Post "Steep Decline" Compared To Last Year.
• Sally Strengthens Into Category 2 Hurricane Ahead Of Landfall Tuesday.​
• Nikola Slides On Report SEC Is Examining Hindenburg's Fraud Allegations.  
• Netflix Backlash: Fury Over "Cuties" Sparks #CancelNetflix Movement.
• Robinhooders Discover 3x Levered ETFs.
• Small Caps, Big-Tech, & Bullion Bounce As Dollar Dives.
  

The Epoch Times:

• Senator Urges Additional Ban on Tencent-Owned Mobile App Over Security Threats.
• US Bars Imports of Cotton, Other Products Made With Forced Labor From Xinjiang.
  

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 +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 58.0 -1.5 basis points.

• China Sovereign CDS 36.25 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 60.67 unch.
• Bloomberg Global Risk-On/Risk Off Index 326.0 +18.0 points.
• Volatility Index(VIX) futures 31.35 -.08%
• FTSE 100 futures -.46%.

• S&P 500 futures -.13%.

• NASDAQ 100 futures -.16%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (CBRL)/-.95
• (SINA)/.50
  

After the Close:

• (ADBE)/2.40
• (FDX)/2.69
• (HTZ)/-3.48
  

Economic Releases

8:30 am EST:

• Empire Manufacturing for September is estimated to rise to 6.7 versus 3.7 in August.
• The Import Price Index MoM for August is estimated to rise +.5% versus a +.7% gain in July.
• The Import Price Index Ex Petro MoM for Aug. is estimated to rise +.3% versus a +.2% gain in July.
• The Export Price Index MoM for Aug. is estimated to rise +.4% versus a +.8% gain in July.
  

9:15 am EST

• Industrial Production MoM for Aug. is estimated to rise +1.0% versus a +3.0% gain in July. 
• Capacity Utilization for Aug. is estimated to rise to 71.4% versus 70.6% in July.
• Manufacturing Production for Aug. is estimated to rise +1.3% versus a +3.4% gain in July.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The President Trump ABC News Town Hall, German ZEW Index, US weekly retail sales reports, (AAPL) Event, (PTON) Investor/Analyst session, Raymond James Equities Conference, BofA Real Estate Conference, BofA Healthcare Conference, Cantor Fitzgerald Healthcare Conference, Goldman Communacopia Conference and the BofA Gaming/Lodging Conference 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 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 Final Hour on Buyout Speculation, Central Bank Stimulus Hopes, Short-Covering, Biotech/Healthcare Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 25.5 -5.0%
• Bloomberg Global Risk On/Risk Off Index 335.0 +141.0 points

• Euro/Yen Carry Return Index 129.93 -.26%

• Emerging Markets Currency Volatility(VXY) 11.2 -1.2%

• S&P 500 Implied Correlation 50.4 -5.0%

• ISE Sentiment Index 116.0 +16.0 points

• Total Put/Call .76 -23.2%

• NYSE Arms .77 +5.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.60 -1.49%
  

• US Energy High-Yield OAS 812.66 +1.02%

• European Financial Sector CDS Index 64.42 -1.9%

• Italian/German 10Y Yld Spread 151.25 +8.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  57.98 -1.66%
  

• Emerging Market CDS Index 169.49 -.93%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.92 +.02%

• 2-Year Swap Spread 8.25 unch.

• TED Spread 14.25 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -6.75 -1.25 basis points
  
• MBS  5/10 Treasury Spread  91.25 +1.0 basis point
  
• IHS Markit CMBX BBB- 6 66.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.69 +.26%
• 3-Month T-Bill Yield .11% unch.

• Yield Curve 53.75 unch.
  

• China Iron Ore Spot 125.58 USD/Metric Tonne +.54%

• Citi US Economic Surprise Index 181.5 -6.5 points

• Citi Eurozone Economic Surprise Index 83.0 -7.4 points

• Citi Emerging Markets Economic Surprise Index 46.7 +3.7 points

• 10-Year TIPS Spread 1.65 -2.0 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 -204 open in Japan 
• China A50 Futures: Indicating -83 open in China

• DAX Futures: Indicating -15 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long