Stocks Surging into Afternoon on Earnings Optimism, Stable Long-Term Rates, Oil Gain, Financial/Consumer Discretionary Sector Strength

 

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 20.4 -9.3%
• Bloomberg Global Risk On/Risk Off Index 2,533.0 +182.0 points

• Euro/Yen Carry Return Index 133.62 +.18%

• Emerging Markets Currency Volatility(VXY) 8.8 +.8%

• S&P 500 Implied Correlation 41.1 -7.9%

• ISE Sentiment Index 105.0  +19.0 points
  

• Total Put/Call .72 -28.7%

• NYSE Arms .60 -63.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.15 -.65%
  

• US Energy High-Yield OAS 445.15 +1.2%

• European Financial Sector CDS Index 56.99 +1.0%

• Italian/German 10Y Yld Spread 110.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 86.62 +1.56%
  

• Emerging Market CDS Index 163.24 -2.27%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 38.81 -.31%

• 2-Year Swap Spread 8.0 +1.25 basis points

• TED Spread 9.25 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.5 unch.
  
• MBS  5/10 Treasury Spread  74.0 +1.0 basis point
  
• IHS Markit CMBX BBB- 6 73.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.71 +.11%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 98.0 -8.0 basis points
  

• China Iron Ore Spot 213.0 USD/Metric Tonne +1.1%

• Citi US Economic Surprise Index 14.4 -3.2 points

• Citi Eurozone Economic Surprise Index 64.2 -3.2 points
  

• Citi Emerging Markets Economic Surprise Index 60.3 +1.1 points

• 10-Year TIPS Spread 2.26 -2.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

US Covid-19:

• 75 infections/100K people(last 7 days) +7/100K people
• 14% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +352 open in Japan 
• China A50 Futures: Indicating +9 open in China

• DAX Futures: Indicating +35 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and added consumer discretionary longs
  

• Market Exposure: Moved to 100% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Growth +1.7%

Sector Underperformers:

• 1) Shipping -.9% 2) Video Gaming +.2% 3) Gold & Silver +.4%

Stocks Falling on Unusual Volume: 

• NVAX, INSP, OMC, PPG, GKOS, NRXP, PLL and SWI
  

Stocks With Unusual Put Option Activity:

• 1) PRPL 2) WYNN 3) MCRB 4) IBM 5) KSS
  

Stocks With Most Negative News Mentions:

• 1) ARDX 2) GKOS 3) QFIN 4) OCGN 5) SPCE
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +3.0%

Sector Outperformers:

• 1) Airlines +5.1% 2) Banks +3.5% 3) Homebuilders +3.2%

Stocks Rising on Unusual Volume:

• HCA, PLXP, NAPA, CYH, CYTK, PACW, EVGO, AA, THC, NEGG, RRGB, PSTG, AN, ZION, NCLH, SPR, DOV, CCL, RPAI, MLI, UE, JBLU, CUK, SAVE, RCL, LTCH, SBNY, UAL, SWTX, SGRY, LUV, KRG, OLLI, HA, XENT, ANAB, RPD, FGEN, DAL, HUBB, DOCU, BV, ORI, KEY, EEFT, MCHP, INSW, ABC, HAL, R, HEP, HON, FRT, HOPE, KRON, SHO, CAH, BRG, MCK,
  

Stocks With Unusual Call Option Activity:

• 1) ARDX 2) PFGC 3) PPL 4) DOCU 5) AN

Stocks With Most Positive News Mentions:

• 1) NURO 2) CYTK 3) LTRN 4) HCA 5) PLXP
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -1.4% Below 100-Day Average 
• 11 Sectors Rising, 0 Sectors Declining
• 81.9% of Issues Advancing, 15.1% Declining
• 66 New 52-Week Highs, 21 New Lows
• 71.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.6%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,564.0 +213.0 points
• Russell 1000: Growth/Value 17,536 -.36%
  
• Vix 19.8 -12.2%
• Total Put/Call .67 -33.7%
• TRIN/Arms .54 -67.1%

Tuesday Watch

Evening Headlines

Bloomberg:            

• U.S. Raises U.K. Travel Alert as Covid Mars ‘Freedom Day’.  
• U.S. Warns on U.K., Indonesia Travel as Cases Rise: Virus Update.  
• Vale Output Disappoints in Fresh Blow to Tight Iron Market.
  
• Stocks Extend Drop on Virus; Treasuries Trim Gains: Markets Wrap.
• Oil Leads Market Plunge as Virus Rattles Faith in Recovery.
• NYC Won’t Re-Up Mask Mandate Indoors Despite Delta Variant Spike.
  
• Black Reveals Intimate Details in Denial of Sexual Assault.
• ‘A Lot of Very Young People’ Are Going to Buy the Dip in Stocks.
• Biden’s Antitrust Initiative Threatens a Big Railroad Takeover.  
• Schumer Tees Up Uncertain Wednesday Vote on Infrastructure.
• Meme Stocks Mired in Longest Losing Run Since Frenzy Began.

Wall Street Journal:

• The Flimsy Evidence Behind the CDC’s Push to Vaccinate Children 
• Virus Worries Ripple Through Markets.
• Vaccine Mandate by Indiana University Upheld in First Test.
• We’ll Always Have Covid. 
• The Hedgehogs of Critical Race Theory.
• Third Covid Wave Upends Fragile South Africa, a Warning for Developing World.

Fox News: 

• WH drops COVID test bombshell days after Harris met with infected Democrats.
• Ben & Jerry’s on thin ice after latest political stunt.
  

CNBC.com:

• Dow tumbles 700 points for its worst drop since October as investors fear a Covid resurgence.
• These stocks are already in a bear market amid Monday’s market sell-off.
• U.S. government tells individuals to avoid travel to the UK as Covid cases rise.
• GM confirms third electric pickup truck ahead of Hummer production.
• Fintech keeps minting billionaires as Robinhood co-founders prepare for massive IPO.
• Apple iPhones can be hacked with spyware even if you don’t click on a link, Amnesty International says. 
  

MarketWatch.com:      

• As delta variant spreads, younger Americans say fear of side effects is keeping them from getting vaccinated.
  
• Bitcoin heads toward lowest level in 2021 as crypto’s slide continues with stock-market rout.
  
• IBM stock gains after earnings show second consecutive quarter of sales growth.

Zero Hedge:

• Scramble Into Treasurys Could Spark Month-End Reverse Repo Chaos.
• Victor Davis Hanson: The American Descent Into Madness.
• Critical Race Enthusiasts Should Learn The Lesson Of "Defund The Police". 
• White House Transfers Its First Gitmo Detainee To Morocco In Effort To Shut Down Facility.
• JPM's Kolanovic: Stop Freaking Out About The Delta Case Spike.
• Watch Live: Epoch Times Panel Discusses Defending The Constitution - Why It Matters More Now Than Ever.
• The Shadow State: Embracing Corporations As Surrogates For Government Action.
• Tokyo Olympics Biggest Sponsor Toyota Bails At 11th Hour; Pulls Ads, Will Not Attend Opening Ceremony.
• State Of Emergency At Lake Powell: Fears Of Hydroelectric And Water Shutoffs Mount.
• "Fear" Nears 2020 Highs As Stocks, Bond Yields, & Crude Crash.

Newsmax:

• Democrat Introduces Legislation Limiting Speakership Role to Current House Members.
  

TheGatewayPundit.com:

• China Joe Says He Won’t Sanction China For Its Recent Widespread Hack of Microsoft Exchange Server (VIDEO).
• Hundreds of Illegal Aliens Try to Force Their Way Through Del Rio Border Gate – Large Majority Let In Are Single, Military-Aged Males (VIDEO).
• JUST IN: 60% of People Being Admitted to Hospital with Covid-19 in England Have Been Fully Vaccinated (VIDEO) *Updated*.
• ‘Proof of a Negative Covid Test Will No Longer Be Enough’ – UK PM Boris Johnson Says Proof of Full Vaccination will be Required to Enter Nightclubs (VIDEO).

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Confirmed Global Covid-19 Cases(7-day rolling average graphs by country). New Covid Hospital Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph)
• NYTimes.com:  Trends and Clusters.
  
• Brown School of Public Health:  Covid Severity by State/County(map).
• CovidActNow:  Covid Severity by Metro Area.
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. 
• Carnegie Mellon: Covid Symptom Searches on Google.
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 85.5 +1.0 basis point.

• China Sovereign CDS 38.5 +1.0 basis point.
  

• Bloomberg Emerging Markets Currency Index 59.65 unch.
• Bloomberg Global Risk-On/Risk Off Index 2,369.0 +18.0 points.
• Volatility Index(VIX) futures 22.60 -4.5%.
• FTSE 100 futures +.66%.

• S&P 500 futures +.41%.

• NASDAQ 100 futures +.46%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ALLY)/1.50
• (BMI)/.46
• (CIT)/.99
• (HAL)/.23
• (HCA)/3.16
• (KEY)/.54
• (MAN)/1.41
• (PM)/1.55
• (TRV)/2.38
  

After the Close:

• (AIR)/.44
• (CNI)/1.48
• (CMG)/6.48
• (IBKR)/1.06
• (ISRG)/3.06
• (NFLX)/3.15
• (UAL)/-3.98
  

Economic Releases

8:30 am EST

• Housing Starts for June is estimated to rise to 1590K versus 1572K in May.
• Building Permits for June are estimated to rise to 1696K versus 1681K in May.
  

Upcoming Splits

• (NVDA) 4-for-1
  

Other Potential Market Movers

• The GFK Consumer Confidence report and the US weekly retail sales reports could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by commodity and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Falling Substantially into Final Hour on Global Virus Shutdown Worries, Earnings Outlook Concerns, Oil Plunge, Commodity/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Performing Inline
  

Equity Investor Angst:

• Volatility(VIX) 24.5 +32.6%
• Bloomberg Global Risk On/Risk Off Index 2,243.0 -622.0 points

• Euro/Yen Carry Return Index 133.37 -.60%

• Emerging Markets Currency Volatility(VXY) 8.7 +2.7%

• S&P 500 Implied Correlation 54.3 +3.4%

• ISE Sentiment Index 80.0  -8.0 points
  

• Total Put/Call 1.0 -.99%

• NYSE Arms 1.42 -12.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.21 +4.44%
  

• US Energy High-Yield OAS 434.68 +6.0%

• European Financial Sector CDS Index 56.41 +.28%

• Italian/German 10Y Yld Spread 110.0 +4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 85.20 +.9%
  

• Emerging Market CDS Index 167.26 +3.5%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 38.89 -.35%

• 2-Year Swap Spread 6.75 -1.25 basis points

• TED Spread 9.0 -.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.5 -.5 basis point
  
• MBS  5/10 Treasury Spread  73.0 +1.75 basis points
  
• IHS Markit CMBX BBB- 6 73.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.66 -.75%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 106.0 -3.0 basis points
  

• China Iron Ore Spot 210.9 USD/Metric Tonne -1.25%

• Citi US Economic Surprise Index 17.6 -2.3 points

• Citi Eurozone Economic Surprise Index 67.4 -6.6 points
  

• Citi Emerging Markets Economic Surprise Index 59.2 -4.5 points

• 10-Year TIPS Spread 2.28 -6.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

US Covid-19:

• 68 infections/100K people(last 7 days) +1/100K people
• 13% of Jan. 7th, 2021 peak(highest daily avg. new infections) unch.

Overseas Futures:

• Nikkei 225 Futures: Indicating -507 open in Japan 
• China A50 Futures: Indicating -169 open in China

• DAX Futures: Indicating -52 open in Germany

Portfolio:

• Slightly Lower: On losses in my commodity/tech/industrial/medical sector longs
  

• Disclosed Trades: Took profits in my commodity sector longs and added to my tech sector longs
  

• Market Exposure: 50% Net Long