Stocks Higher into Final Hour on Stimulus Hopes, Less European/Emerging Markets/US High-Yld Debt Angst, Technical Buying, Tech/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 26.8 +1.7%
• Bloomberg Global Risk On/Risk Off Index 61.0 -103.0 points

• Euro/Yen Carry Return Index 128.39 +.25%

• Emerging Markets Currency Volatility(VXY) 11.79 unch.

• S&P 500 Implied Correlation 56.1 -6.0%

• ISE Sentiment Index 125.0 +10.0 points
  

• Total Put/Call .74 -9.8%

• NYSE Arms 1.87 +261.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.19 -.06%
  

• US Energy High-Yield OAS 875.39 -.43%

• European Financial Sector CDS Index 77.62 -.8%

• Italian/German 10Y Yld Spread 136.0 -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 75.20 -2.85%
  

• Emerging Market CDS Index 224.41 -2.88%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.96 +.02%

• 2-Year Swap Spread 9.25 -.25 basis point

• TED Spread 13.25 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -11.75 +1.5 basis points
  
• MBS  5/10 Treasury Spread  92.0 -.75 basis point
  
• IHS Markit CMBX BBB- 6 66.75 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.46 +.20%
• 3-Month T-Bill Yield .08% -2.0 basis points

• Yield Curve 56.25 +4.0 basis points
  

• China Iron Ore Spot 116.94 USD/Metric Tonne -.09%

• Citi US Economic Surprise Index 167.9 -5.0 points

• Citi Eurozone Economic Surprise Index 49.60 +1.8 points

• Citi Emerging Markets Economic Surprise Index 50.6 +1.3 points

• 10-Year TIPS Spread 1.64 -2.0 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 +148 open in Japan 
• China A50 Futures: Indicating +163 open in China

• DAX Futures: Indicating -31 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.2%

Sector Underperformers:

• 1) Energy -3.1% 2) Oil Service -2.0% 3) Road & Rail -.9%

Stocks Falling on Unusual Volume: 

• SAGE, ANGO, GMHI, WLL, WMB, XOM, ALGN, HES, ATRC, DVA, FANG, HFC, VST, SBGI, SHLL, TPB, ABMD, HP, CELH, OSH, HAL, VLO, FROG, CRDF, PAR and KYMR
  

Stocks With Unusual Put Option Activity:

• 1) BBBY 2) CLR 3) AEO 4) CAR 5) VLO
  

Stocks With Most Negative News Mentions:

• 1) SELB 2) TXT 3) VLO 4) PT  5) DVA
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.2%

Sector Outperformers:

• 1) Alt Energy +2.6% 2) Retail +2.4% 3) Gaming +1.8%

Stocks Rising on Unusual Volume:

• AMAG, AEL, BBBY, NKLA, SAIL, ODT, BRP, CNST, CDNA, LAD, DECK, FVAC, RUN and SUI
  

Stocks With Unusual Call Option Activity:

• 1) BBBY 2) AXTA 3) ON 4) FTAI 5) PEP

Stocks With Most Positive News Mentions:

• 1) BBBY 2) Z 3) PENN 4) SAIL 5) DPZ

Charts:

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

 

Morning Market Internals

NYSE Composite Index:

• Volume Running -17.6% Below 100-Day Average
• 5 Sectors Rising, 6 Sectors Declining
• 57.3% of Issues Advancing, 38.8% Declining
• 56 New 52-Week Highs, 18 New Lows
• 41.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.2% 
• Bloomberg Global Risk-On/Risk-Off Index 114.0 -50.0 points
• Vix 26.3 -.1%
• Total Put/Call .88 +7.3%
• TRIN/Arms 2.27 +336.5%

Thursday Watch

Night Trading 

• Asian equity indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 77.25 unch.

• China Sovereign CDS 48.25 -3.0 basis points.

• Bloomberg Emerging Markets Currency Index 59.37 +.05%.
• Bloomberg Global Risk-On/Risk Off Index 146.0 -18.0 points.
• Volatility Index(VIX) futures 32.45 -1.29%
• FTSE 100 futures +.29%.

• S&P 500 futures +.41%.

• NASDAQ 100 futures +.41%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (BBBY)/-.29
• (CAG)/.57
• (STZ)/2.51
• (PEP)/1.49
  

After the Close:

• None of note
  

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for Sept.
  

8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 850K versus 870K the prior week.
• Continuing Claims are estimated to fall to 12200K versus 12580K the prior week.
• Personal Income for Aug. is estimated to fall -2.5% versus a +.4% gain in July.
• Personal Spending for Aug. is estimated to rise +.8% versus a +1.9% gain in July.
• The PCE Core MoM for Aug. is estimated to rise +.3% versus a +.3% gain in July.
  

10:00 am EST

• Construction Spending MoM for Aug. is estimated to rise +.7% versus a +.1% gain in July.
• ISM Manufacturing for Sept. is estimated to rise to 56.4 versus a reading of 56.0 in Aug.
• ISM Prices Paid for Sept. is estimated to fall to 58.8 versus 59.5 in Aug. 

Afternoon:

• Wards Total Vehicle Sales for Sept. are estimated to rise to 15.7M versus 15.19M in Aug.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bowman speaking, Eurozone PMI report, weekly Bloomberg Consumer Comfort Index and the (TWLO) investor day could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finished modestly lower. The Portfolio is 50% net long heading into the day.

 

Stocks Higher into Afternoon on Stimulus Hopes, US Economic Data, End-of-Quarter Window-Dressing, Healthcare/Homebuilding 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) 25.6 -2.6%
• Bloomberg Global Risk On/Risk Off Index 192.0 +87.0 points

• Euro/Yen Carry Return Index 128.16 -.33%

• Emerging Markets Currency Volatility(VXY) 11.90 -1.0%

• S&P 500 Implied Correlation 56.9 +1.88%

• ISE Sentiment Index 115.0 +6.0 points
  

• Total Put/Call .77 -2.5%

• NYSE Arms .45 -73.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.9 -3.4%
  

• US Energy High-Yield OAS 880.89 +.28%

• European Financial Sector CDS Index 78.25 -2.4%

• Italian/German 10Y Yld Spread 139.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 77.41 +.24%
  

• Emerging Market CDS Index 228.45 -3.08%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.93 -.07%

• 2-Year Swap Spread 9.5 unch.

• TED Spread 13.0 -.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -13.25 +2.75 basis points
  
• MBS  5/10 Treasury Spread  92.75 -.5 basis point
  
• IHS Markit CMBX BBB- 6 66.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 589.35 +.67%
• 3-Month T-Bill Yield .10% +1.0 basis point

• Yield Curve 52.25 -.75 basis point
  

• China Iron Ore Spot 117.0 USD/Metric Tonne -.10%

• Citi US Economic Surprise Index 172.9 +4.7 points

• Citi Eurozone Economic Surprise Index 47.80 -.8 point

• Citi Emerging Markets Economic Surprise Index 49.3 +1.9 points

• 10-Year TIPS Spread 1.66 +2.0 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 +215 open in Japan 
• China A50 Futures: Indicating +36 open in China

• DAX Futures: Indicating +29 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
  

• Market Exposure: 50% Net Long