Stocks Dropping Substantially into Final Hour on US Election Uncertainty/Biden Tax Hike Proposals, Global Coronavirus Worries, Diminished US Stimulus Hopes, Commodity/Financial Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 28.7 +11.3%
• Bloomberg Global Risk On/Risk Off Index -108.0 -384.0 points

• Euro/Yen Carry Return Index 127.51 -.51%

• Emerging Markets Currency Volatility(VXY) 11.7 +3.4%

• S&P 500 Implied Correlation 60.5 +13.3%

• ISE Sentiment Index 96.0 -14.0 points

• Total Put/Call 102 +10.0%

• NYSE Arms 1.25 -74%

Credit Investor Angst:

• North American Investment Grade CDS Index 53.5 (new series)
  

• US Energy High-Yield OAS 828 +2.21%

• European Financial Sector CDS Index 77.5 (new series)

• Italian/German 10Y Yld Spread 145.0 +.5 basis point
  

• Asia Ex-Japan Investment Grade CDS Index  73.91 (new series)
  

• Emerging Market CDS Index 232.73 (new series)
  

• iBoxx Offshore RMB China Corporate High Yield Index 178.19 +.05%

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

• TED Spread 14.5 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.25 -.25 basis point
  
• MBS  5/10 Treasury Spread  97.0 +1.75 basis points
  
• IHS Markit CMBX BBB- 6 67.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.04 -.92%
• 3-Month T-Bill Yield .08% -1.0 basis point

• Yield Curve 54.5 +.5 basis point
  

• China Iron Ore Spot 115.23 USD/Metric Tonne -.65%

• Citi US Economic Surprise Index 166.1 -6.4 points

• Citi Eurozone Economic Surprise Index 48.60 -21.1 points

• Citi Emerging Markets Economic Surprise Index 49.3 -1.0 point

• 10-Year TIPS Spread 1.63 -5.0 basis points
• 100.0% chance of no change at Dec. 16th meeting, 100.0% chance of no change at Jan. 27th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -230 open in Japan 
• China A50 Futures: Indicating -101 open in China

• DAX Futures: Indicating -41 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -4.8%

Sector Underperformers:

• 1) Steel -8.2% 2) Oil Service -7.5% 3) Airlines -6.4%

Stocks Falling on Unusual Volume: 

• MWA, SPXC, IPOC, JPM, STAY, HCAC, FRTA, EPRT, ACM, HES, GTHX, MLHR, AXTA, KREF, FRME, CUK, BMCH, BKNG, GM, EPR, STL, DKNG, CNMD, AIMC, NWSA, REGI, LYV, HCA, NWS, H, WYNN, ILMN, AIN, WAB, MYOK, FCX, DAL, CNC, MOH, VVI, HA, CFX, RUTH, KODK, UHS, HEES, GRBK, THC and NKLA
  

Stocks With Unusual Put Option Activity:

• 1) TRIP 2) EWJ 3) COF 4) ILMN 5) GPS
  

Stocks With Most Negative News Mentions:

• 1) THC 2) NNOX 3) NKLA 4) UHS  5) HCA
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth -1.0%

Sector Outperformers:

• 1) Software +.3% 2) Internet +.2% 3) Video Gaming unch.

Stocks Rising on Unusual Volume:

• CUB, ROKU, BAND, PTON, ZM, NLS and IPOB
  

Stocks With Unusual Call Option Activity:

• 1) AMPE 2) DXCM 3) OLN 4) D 5) SIX

Stocks With Most Positive News Mentions:

• 1) RCII 2) TOL 3) MAN 4) MRTX 5) CG

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +10.8% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 8.9% of Issues Advancing, 90.0% Declining
• 16 New 52-Week Highs, 33 New Lows
• 46.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.0% 
• Bloomberg Global Risk-On/Risk-Off Index -171.0 -447.0 points
• Vix 30.5 +18.0%
• Total Put/Call .92 -1.1%
• TRIN/Arms 1.23 -9.6%

Monday Watch

Today's Headlines

Bloomberg:      

• China Raises Conflict Risk With Breach of Taiwan Buffer Zone.
• TikTok Owner Seeking $60 Billion Valuation in U.S. Deal.  
• U.K. at ‘Critical Point’ in Virus Surge With London at Risk.
• Picking Winners and Losers in Asia From the U.S. Election.
• Banks Moved $2 Trillion, Defying Money Laundering Orders: ICIJ.  
• U.S. Futures, Asia Stocks Drift; Yuan Ticks Higher: Markets Wrap. 
• It’s Mostly About Rates for Growth-Deprived Emerging Markets.
• U.S. Cases Steady as Death Toll Nears 200,000: Virus Update.
  
• Biden Likely to Tap Kamala Harris to Prosecute Trump Court Pick.
  
• Virtual UN Is Latest Blow to New York City’s Battered Economy.   
• Adelsons Pump $25 Million Into GOP Senate Super-PAC in August. 
• Goldman Says Value, Not Cyclicals, Would Rally Most on Vaccine.

Wall Street Journal:

• Pandemic Threatens to Widen Racial Homeownership Gap.
• Princeton’s Confession of Bias.
• What It Would Take for Herd Immunity to Stop Pandemic.
• Banks Pile Into Treasurys, Helping to Fund Government Borrowing Spree.

Fox News:

• Speaker Pelosi won’t rule out using Trump impeachment to stop SCOTUS pick.

CNBC:

• What to expect from Tesla on ‘battery day’.
  

Zero Hedge: 

• "We Have Our Options": Pelosi Doesn't Rule Out Impeachment Over Supreme Court Pick.
• MSM Welcomes "Whistleblowers" Reporting Partying College Students Breaking COVID Rules.
• Bias.
• California Burnin' - A Warning Against One-Party Rule.
• The 'Gender-Feminist/New-Left/Marxist' Axis Attacks All Civil Society.
• "He Needs Cash": Ron Perelman's Leveraged Empire Collapses In A Deluge Of Fire Sales.
• "Protesters" In Philadelphia Chase Down And Assault Random Citizens For Being "Nazis".
• Record Numbers Of Companies Drown In Debt To Pay Dividends To Their Private Equity Owners.
• Massive FinCEN Leak Exposes How Biggest Western Banks Finance Drug Cartels, Terrorists & Mobsters.
• Portland Neighbors Frustrated After Police Take 90 Minutes Responding To Hostage Situation Involving 12-Year-Old.
• Global Debt Is Exploding At A Shocking Rate.
• US Believes Iran Likely To Have Enough Fissile Material For Nuclear Bomb By Year's End.
• Madrid Braces For Lockdown As UK Nears COVID-19 "Tipping Point": Live Updates.
• Iran's Rouhani Vows "Crushing Response" After Pompeo Declares Restoration Of All Sanctions.
• "Not There Yet" - The Correction Continues.
• Trump 'Blesses' Deal Valuing TikTok At $60 Billion As ByteDance Keeps 'Secret Sauce'.
• Here Are The Most Popular ESG Fund Holdings.
• Biden Refuses To Release List Of Supreme Court Contenders.
• US Close To Declaring Qatar Major Non-NATO Ally, Deepening Military Ties.
• Iranian Court Orders The Amputation of The Fingers Of Three Teenagers Under Sharia Law.
• Popular Children's App Allegedly Requests Minor To Take Naked Pictures.
• Taibbi: The Post-Objectivity Era.
• "Nobody Is Here!" - Movie Theaters Reopen, Audiences Stay Away.
• Too Much Centralization Is Turning Everything Into A Political Crisis.
• "Peak" SPAC: Playboy Enterprises Considering Going Public Through Blank Check Company. 
  

Business Insider:

• One stock market signal suggests the US presidential race is tightening, Goldman Sachs says.
• Officials identify a woman suspect after letter laced with deadly ricin poison sent to President Trump.
• Apps are tracking WhatsApp users' online activity, including whom they're likely talking to and when they're sleeping.

The Epoch Times:

• Taiwan President: Drills Show China Is Threat to Region.
  

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 indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 71.0 new series.
• China Sovereign CDS 42.5 new series.
• Bloomberg Emerging Markets Currency Index 60.64 +.08%.
• Bloomberg Global Risk-On/Risk Off Index 274.0 -1.0 point.
• Volatility Index(VIX) futures 29.85 -.75%. 
• Euro Stoxx 50 futures -.24%.
• S&P 500 futures +.26%.
• NASDAQ 100 futures +.49%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note
  

After the Close:

• (WUBA)/.60

Economic Releases

8:30 am EST

• The Chicago Fed National Activity Index for Aug. is estimated to rise to 1.19 versus 1.18 in July.

12:00 pm EST

• 2Q Household Change in Net Worth.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Oppenheimer Healthcare Life Sciences/MedTech Summit 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 consumer 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 week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Global Economy Week by Bloomberg. 
• The Week Ahead by Yahoo. (video)
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on US election uncertainties, global coronavirus worries, rising China tensions, yen strength, oil weakness and technical selling. My intermediate-term trading indicators are giving bearish signals and the Portfolio is 50% net long heading into the week.