Stocks Falling Substantially into Afternoon on Diminished Stimulus Hopes, Rising Virus Lockdown Worries, Biden Presidency/Tax Hike Fears, Transport/Energy Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 33.0 +19.6%
• Bloomberg Global Risk On/Risk Off Index -113.0 -431.0 points

• Euro/Yen Carry Return Index 128.32 -.32%

• Emerging Markets Currency Volatility(VXY) 11.07 +1.5%

• S&P 500 Implied Correlation 61.05 +21.6%

• ISE Sentiment Index 134.0 +35.0 points
  

• Total Put/Call .81 +2.53%

• NYSE Arms 1.44 +30.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.76 +3.58%
  

• US Energy High-Yield OAS 804.38 +.43%

• European Financial Sector CDS Index 75.86 +4.6%

• Italian/German 10Y Yld Spread 132.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 65.69 +.22%
  

• Emerging Market CDS Index 208.93 +2.72%
  

• iBoxx Offshore RMB China Corporate High Yield Index 179.66 +.06%

• 2-Year Swap Spread 8.5 +.25 basis point

• TED Spread 13.0 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -14.5 -1.0 basis point
  
• MBS  5/10 Treasury Spread  81.50 +1.5 basis points
  
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.51 -.38%
• 3-Month T-Bill Yield .09% unch.

• Yield Curve 66.5 -3.5 basis points
  

• China Iron Ore Spot 112.40 USD/Metric Tonne -1.1%

• Citi US Economic Surprise Index 113.2 -14.7 points

• Citi Eurozone Economic Surprise Index 9.90 -5.8 points
  

• Citi Emerging Markets Economic Surprise Index 39.20 -1.3 points

• 10-Year TIPS Spread 1.72 -1.0 basis point
• 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 -84 open in Japan 
• China A50 Futures: Indicating -26 open in China

• DAX Futures: Indicating -35 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -3.2%

Sector Underperformers:

• 1) Airlines -6.4% 2) Gaming -5.6% 3) Homebuilding -4.8%

Stocks Falling on Unusual Volume: 

• STL, ON, GDV, BSTZ, GDEN, AB, INSW, GBX, INTC, MHO, USAC, PXD, SNAP, FFIV, SMPL, BCOV, MAT, UA, AMSC, BZH, PINS, GT, FGEN, MTH, BCLI, HXL, PETS, CXO, SBE, AXGN, TPTX, APPN, HGEN, BLMN, BEAM, CCL, SDC, EGAN, HAS, TTCF, RCL and RVMD
  

Stocks With Unusual Put Option Activity:

• 1) KWEB 2) HOG 3) HPQ 4) SMH 5) RCL
  

Stocks With Most Negative News Mentions:

• 1) NKLA 2) FSLR 3) BOOT 4) KEY 5) SPWR
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -2.3%

Sector Outperformers:

• 1) Utilities -.6% 2) Pharma -.9% 3) Gold & Silver -1.1%

Stocks Rising on Unusual Volume:

• CODX, DNKN and MRTX
  

Stocks With Unusual Call Option Activity:

• 1) HAS 2) ATUS 3) CODX 4) MARK 5) MIK

Stocks With Most Positive News Mentions:

• 1) MRTX 2) AEP 3) PLTR 4) ABX 5) JAZZ
  

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -12.2% Below 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 8.5% of Issues Advancing, 89.4% Declining
• 9 New 52-Week Highs, 33 New Lows
• 56.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.4% 
• Bloomberg Global Risk-On/Risk-Off Index -8.0 -326.0 points
• Vix 31.4 +13.8%
• Total Put/Call .95 +13.1%
• TRIN/Arms 1.68 +52.0%

Monday Watch

Today's Headlines

Bloomberg:    

• China’s New Growth Plan May Push Economy Past U.S. Within Decade.
• World Economy Gets Temperature Check Before U.S. Vote.
• U.S. Vote Atop Emerging-Market Risk List to Keep Bulls at Bay.
• Italy Approves Partial Lockdown; Spain Sets National Curfew.
• SAP Cuts 2020 Sales Outlook Citing Covid-19 Impact on Demand.  
• U.S. Futures Slip; Asian Stocks See Muted Gains: Markets Wrap.  U.S. equity futures started the week on the back foot as a stimulus deal remained elusive and coronavirus infections hit a record for a second day. Asian stocks saw modest gains. S&P 500 contracts retreated though were off their session lows. Stocks in Japan, Australia and South Korea edged higher. U.S. House Speaker Nancy Pelosi said the chamber could pass a pandemic relief plan this week, though a deal with the White House remains elusive as chances faded of a resolution before next week’s election. The pound ticked higher after trade talks between the U.K. and the European Union were extended to Oct. 28. Hong Kong is closed for a public holiday Monday. S&P 500 futures fell 0.3% as of 9:06 a.m. in Tokyo. The S&P 500 Index rose 0.3% Friday. Topix index edged up 0.2%. Australia’s S&P/ASX 200 Index rose 0.5%.
  South Korea’s Kospi index rose 0.2%.
• Oil Drops Toward $39 on Surging Virus and Stimulus Stalemate.   
• China’s U.S. Challenge, Expectations Reset, Rates, GDP: Eco Day.
• Record Flows Pour Into ESG Funds as Their ‘Wokeness’ Is Debated.
• Carlyle Nears $2.4 Billion Deal for Siemens’s Flender Business.  
• PG&E Begins Cutting Power in California to Prevent Fires.  
• AOC Says Young Voters Are Pragmatic, Will Back Biden.  
• Cenovus Energy Agrees to Buy Husky Energy in All-Stock Deal.  
• Fruity Pot Gummies Risk Repeating E-Cig Mistake.

Wall Street Journal:

• European Countries Impose New Virus Restrictions.
• The U.S. Has an ‘Intelligence’ Problem.
• Supreme Court Nomination Set to Advance.
• Wall Street-Funded Plan to Gentrify Affordable Housing Stumbles in Harlem.
• Retail Stocks Are Hot Heading Into the Holiday Season.
• U.S., India Expected to Sign Military Pact as China Prompts Closer Ties.
• Key al Qaeda Leader Killed in Afghanistan.
• California’s Racial Scare Campaign.
• The Trump Boom Is Real.
• How Free Speech Dies.
• Why You Might Have Trouble Getting the Refrigerator or Car You Want.

Fox News:

• Biden grilled on 'transition' away from oil and gas comment in Pennsylvania TV interviews.
• AOC claims young voters will choose Biden to 'lobby' him.
• Joe claims he created ‘voter fraud organization’, ripped online.
• WATCH: Maskless anti-protesters throw rocks, attack 'Jews for Trump' convoy.
• COVID lockdowns have increased America's other deadly health crisis.

CNBC:

• The pandemic is helping Chromebooks become a bigger force in the PC market
• Will masks become the ‘new normal’ even after the pandemic has passed? Some Americans say so.
  

Zero Hedge: 

• Odds Of A "Blue Wave" Tumble, Hammering Risk.
• Putin Defends Bidens, Becomes 'Visibly Irritated' When Asked About $3.5 Million Moscow Payment To Hunter.
• In Bizarre Freudian Slip, Biden Brags About Assembling "Most Extensive Voter Fraud Organization In History".
• Outrage After WaPo Says To 'Treat Biden Leaks As Foreign Intel Operation - Even If They Probably Aren't'.
• Visualizing The Vacant Office Space In San Francisco.
• Biden And Trump Promises: Compare And Contrast.
• Monday Barrett Nomination Cleared For Go After Senate Votes To End Debate.
• New York Becomes 4th US State To Top 500k COVID-19 Cases As Dr. Gottlieb Warns US Hitting A "Dangerous Tipping Point": Live Updates.
• France Recalls Ambassador After Erdogan Said Macron "Needs Mental Help" Over "Islamist Terrorism" Label.
• Why Biden's Tax Hikes Matter: US Households Sit On $1 Trillion In Unrealized Capital Gains.
• Vermont Goes "Tone Deaf" On Free Speech: Principal Fired Over "All Lives Matter" Statement.
• 76% of US CEOs Will Slash Office Space As Remote Work Dominates.
• Italians Rise Up Against "Health Dictatorship" As Country Moves Toward New Lockdown.
• Biden Boosters Dox Nuns For The Sin Of Attending Trump Rally.
• Twitter Nukes Alleged Hunter Biden Sex Tape After Letting Borat-Giuliani Sex Scene Trend.
• Taibbi: With Hunter Biden Expose, Suppression Is A Bigger Scandal Than The Actual Story.
• US Suffers Back-To-Back Record New COVID-19 Cases; Spain Imposes 6-Month State Of Emergency: Live Updates.  
• NYC Hotel Occupancy Rate Crashes Toward 10% As Permanent Closures Loom.
• Sweden Refuses To Impose New Lockdown Measures, Saying People Have Suffered Enough.
• China's Elite-Capture Strategy & The Bidens.
• Sam's Club To Deploy Robot Cleaners For All US Stores Amid Contactless Shift.  
• "It's Time To Defund NPR": GOP Rep Slams NPR For Refusing To Cover Hunter Biden Laptop Bombshell.

  MarketWatch.com:

• Stock-market investors brace for busiest week of earnings in October’s final hurrah.

The Epoch Times:

• How China’s Communist Party Squelches Academic Freedom Globally, and How to Fight Back: Charles Burton.  
• Chinese Citizens Sue Wuhan Officials Over Virus Coverup, Calling Mayor a ‘Murderer’.
  

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 unch. to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 65.5 -.25 basis point.
• China Sovereign CDS 37.0 -.75 basis point.
• Bloomberg Emerging Markets Currency Index 59.34 +.%.
• Bloomberg Global Risk-On/Risk Off Index 301.0 -17.0 points.
• Volatility Index(VIX) futures 29.0 +.78%. 
• Euro Stoxx 50 futures -.22%.
• S&P 500 futures -.42%.
• NASDAQ 100 futures -.34%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (AMG)/2.85
• (HAS)/1.61
• (HCA)/2.26
• (SAP)/1.29
• (OTIS)/.56
  

After the Close:

• (BYD)/.20
• (BRO)/.43
• (FFIV)/2.37
• (NXPI)/1.60
• (TWLO)/-.04
  

Economic Releases

8:30 am EST

• The Chicago Fed National Activity Index for Sept. is estimated to fall to .6 versus .79 in Aug.

10:00 am EST

• New Home Sales for Sept. is estimated to rise to 1025K versus 1011K in Aug.

10:30 am EST

• Dallas Fed Manufacturing for Oct. is estimated to fall to 13.5 versus 13.6 in Sept.

Upcoming Splits

• (NEE) 4-for-1
  

Other Potential Market Movers

• The China Industrial Profits report, Germany IFO Index and the (JAZZ) investor update could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are modestly higher, boosted by consumer and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• 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 mixed as US election uncertainties/Biden tax hike proposals, global virus fears and global recession worries offset earnings optimism, short-covering and stimulus hopes. My intermediate-term trading indicators are giving bearish signals and the Portfolio is 50% net long heading into the week.