Stocks Higher into Final Hour on Diminished Virus Lockdown Fears, Earnings Optimism, Oil Gain, Gaming/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.3 -3.6%
• Bloomberg Global Risk On/Risk Off Index 2,668.0 +100.0 points

• Euro/Yen Carry Return Index 134.18 +.26%

• Emerging Markets Currency Volatility(VXY) 8.8 +.5%

• S&P 500 Implied Correlation 49.1 -.7%

• ISE Sentiment Index 108.0  -21.0 points
  

• Total Put/Call .80 -3.6%

• NYSE Arms 1.7 +114.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.39 -1.5%
  

• US Energy High-Yield OAS 440.22 -.31%

• European Financial Sector CDS Index 53.94 -.31%

• Italian/German 10Y Yld Spread 103.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 90.13 +.01%
  

• Emerging Market CDS Index 163.25 +.83%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 38.0 -.55%

• 2-Year Swap Spread 8.5 +.5 basis point

• TED Spread 7.75 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 unch.
  
• MBS  5/10 Treasury Spread  74.25 unch.
  
• IHS Markit CMBX BBB- 6 73.5 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.93 -.20%
• 3-Month T-Bill Yield .05% unch.
  

• Yield Curve 101.0 unch.
  

• China Iron Ore Spot 165.50 USD/Metric Tonne -5.74%

• Citi US Economic Surprise Index -3.4 -.6 point

• Citi Eurozone Economic Surprise Index 32.8 +2.0 points
  

• Citi Emerging Markets Economic Surprise Index 40.0 +2.3 points

• 10-Year TIPS Spread 2.32 -3.0 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:

• 202 new infections/100K people(last 7 days total) +10/100K people
• 38% of Jan. 7th, 2021 peak(highest daily avg. new infections) +2.0 percentage points
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +92 open in Japan 
• China A50 Futures: Indicating -155 open in China

• DAX Futures: Indicating -3 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +.5%

Sector Underperformers:

• 1) Healthcare Providers -2.7% 2) Steel -1.6% 3) Gold & Silver -1.0%

Stocks Falling on Unusual Volume: 

• AMD, GPRE, FMC, UPWK, FSLY, OCDX, XRAY, FTCV, LESL, ETSY, THS, ATEC, FTDR, MAXR, TVTY, LMND, CI, GDDY, CAH, SWIM, CCMP, RVLV, MOD, COMM, CENX, BYSI, PETQ, AMED, NVRO and ITRI
  

Stocks With Unusual Put Option Activity:

• 1) BYSI 2) XOP 3) ETSY 4) GPRE 5) CLR
  

Stocks With Most Negative News Mentions:

• 1) NVRO 2) HOOD 3) AMED 4) INGN 5) FVRR
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.6%

Sector Outperformers:

• 1) Gaming +5.3% 2) Airlines +3.7% 3) Oil Service +2.2%

Stocks Rising on Unusual Volume:

• ZY, ASTR, CCRN, ARCT, MVIS, SRPT, AHCO, HMHC, EDIT, DDOG, GOGO, BXC, SSSS, NTLA, ORMP, SEAS, HUBS, DFIN, W, PING, NVAX, BTBT, PENN, SQ, WYNN, ZI, HBI, VREX, ATCX, ELF, ALB, BOOT, OPCH, AES, BCRX, ATQT, CUTR, VG, NEWT, DVAX, CDLX, UBER, VIR, XLNX, BPMP, NLS, REGN and GM
  

Stocks With Unusual Call Option Activity:

• 1) IGV 2) XLNX 3) KKR 4) HBI 5) PENN

Stocks With Most Positive News Mentions:

• 1) SITM 2) MELI 3) HUBS 4) PING 5) BKNG
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -7.9% Below 100-Day Average 
• 10 Sectors Rising, 1 Sector Declining
• 63.0% of Issues Advancing, 32.7% Declining
• 136 New 52-Week Highs, 41 New Lows
• 72.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.2%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,639.0 +71.0 points
• Russell 1000: Growth/Value 17,751 +.17%
  
• Vix 17.5 -2.8%
• Total Put/Call .79 -4.8%
• TRIN/Arms .86 -57.4%

Thursday Watch

Evening Headlines

Bloomberg:     

• China Clampdown Sparks a Pupil Exodus From Hong Kong Schools.  
• Emerging Markets Hardest Hit by China Crackdown, Virus Outbreaks.
• U.K. Eases Quarantine Rules, Opening Up to Travel With France.  
• Brazil Hikes Rates by 100 Basis Points, Pledges More to Come.
  
• Investors Are Ignoring a Dangerous Crackdown on Press Freedom.
  
• Infections Top 200 Million; WHO Seeks Booster Halt: Virus Update.
• U.S. Weighs Requiring Vaccinations for All Foreign Visitors.
• Asian Stocks Set to Dip as Traders Mull Fed Views: Markets Wrap.
• Cuomo Struggles to Hang On to Power as N.Y. Awaits Next Move.  
• Pershing Said to Seek $1 Billion to Fund Universal Music Bet.  
• Yellen Sees Inflation In Line With Fed’s Goal by End of Year.

Wall Street Journal:

• Businesses Load Up on Credit, Raising Spending Hopes.
• President Biden’s Lawless Eviction Ban.
• Covid-19 Vaccine Mandates Split Corporate America.
• Beirut Port Explosion Fuels Lebanon’s Collapse: ‘May God Save the Country’
• Eradication of Covid Is a Dangerous and Expensive Fantasy.
• Green New Deal, Part I.

Fox News:

• DeSantis earns praise across social media for his fiery response to COVID criticism from White House.
• CNN execs didn't just approve of Cuomo advising embattled bro — they pushed it.
• Vaccinated 'breakthrough' patients in cluster break silence on what happened.

NY Post: 

• US companies riddled with members of Chinese Communist Party: Devine. Boeing(BA), Qualcomm(QCOM) and Pfizer(PFE) are just three US companies that have employed dozens of CCP members in their Chinese facilities, the database reveals. 
  

CNBC.com: 

• Cramer urges investors to take profits in Robinhood as it becomes a meme stock.
• Roku stock sinks after reporting tight hardware margins, dramatic fall in streaming viewership.
• Etsy stock plunges as weak guidance suggests pandemic e-commerce boom is stalling.
• Americans are sharply divided over vaccine mandates, CNBC survey shows.
• Stocks making biggest moves after hours: Etsy, Electronic Arts, Roku & more.

Zero Hedge:

• "They Can't Arrest Us All" - Sen. Rand Paul Urges Americans To "Resist" Pelosi & The Petty Tyrants. 
• Investors Parse President Xi's Speeches For Clues About China's Next Target.
• Tenant Stampede Results In Largest-Ever Surge In Rents.
• China's "Social Credit" System Has Arrived In America.
• 'For $1/Day'... Double-Blind Ivermectin Study Reveals COVID Patients Recover More Quickly, Are Less Infectious.
• Watch: Judge Orders Bailiff To Remove Maskless Top Dallas Official From Meeting.
• Boston Mayor Indicates Opposition To Vaccine Passports, Comparing Them To Slave Papers.
• China Suspends Travel, Ramps Up Testing As Delta Outbreak Hits Wuhan.
• Meet Your New Feudal Overlords.
• White House Ready To Lift Ban On Foreign Travel But Only For The Vaccinated.
• DoubleLine Round Table: Commodities, Futures And Stocks.
• Cuomo Defies NY Democratic Chairman, Refuses To Resign.
• Uber Plunges On Huge EBITDA Miss.
• Senator Introduces Legislation To Mandate Voter ID For States That Mandate Vaccine Passports.
• Twitter Suspends Journalist Who Repeated CDC Fact On Vaccines.
• Stocks Slump, Bonds Pump'n'Dump, Crypto Jumps On Jobs & Jawboning.

Newsmax:

• Rep. Mike McCaul: COVID 'Worst Cover-Up in Human History'.
• Former Military Leaders Say: 'Deceitful' China 'Cheating the System'.
  

TheGatewayPundit.com:

• CodeMonkeyZ Speaks with Gateway Pundit: “What I Put Out on the Dominion Evidence is Roughly 1% of What We Are Holding”.
• McConnell and the ‘Republicans’ in the Senate Continue to Be Outmaneuvered by Democrats and Then They All Laugh About It.
• McAllen Constructs Emergency Shelters For Illegals Released by Border Patrol: ‘Alarming Number of Illegals Released Into US Are NOT Tested For Covid’.
• DeSantis Destroys Biden: Why Don’t You Do Your Job and Secure the Border? Until You Do That, I Don’t Want to Hear a Blip About Covid (VIDEO).
• Latest Poll: 90% of Voters Concerned About Election Cheating — 74% Support Voter ID.

The Epoch Times:

• CRT Shares the Same Ideology as China’s Cultural Revolution, Chinese American Warns.

Covid-19(Data, Maps, Graphs):

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

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 89.0 -.25 basis point.

• China Sovereign CDS 39.0 +.25 basis point.
  

• Bloomberg Emerging Markets Currency Index 60.05 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 2,639.0 +72.0 points.
• Volatility Index(VIX) futures 21.7 -.5%.
• FTSE 100 futures +.08%.

• S&P 500 futures +.20%.

• NASDAQ 100 futures +.17%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (APTV)/.64
• (BDX)/2.44
• (CAH)/1.20
• (CARS)/.41
• (CHH)/.91
• (CI)/4.97
• (DDOG)/.03
• (DUK)/1.11
• (ITRI)/.48
• (K)/1.03
• (MRNA)/5.86
• (PZZA)/.72
• (PH)/4.34
• (PENN)/.89
• (PWR)/1.04
• (REGN)/17.71 
• (THS)/.26
• (VIAC)/.99
• (W)/1.17
• (YETI)/.56
• (ZTS)/1.09
  

After the Close:

• (AIG)/1.20
• (AMN)/1.46
• (BGS)/.48
• (BYND)/-.23
• (BRKS)/.69
• (CVNA)/-.40
• (CGNX)/.42
• (ED)/.62
• (DBX)/.33
• (LOCO)/.26
• (FEYE)/.09
• (ILMN)/1.36
• (LTHM)/.02
• (MTW)/.09
• (MTZ)/1.23
• (MNST)/.67
• (NVAX)/-3.25
• (QDEL)/1.19
• (RDFN)/-.33
• (SHAK)/-.08
• (SFM)/.45
• (STMP)/1.84
• (OLED)/.88
• (SPCE)/-.32
• (YELP)/.34
• (ZG)/.23
  

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for July.
  

8:30 am EST

• The Trade Deficit for June is estimated to widen to -$74.1B versus -$71.2B in May.
• Initial Jobless Claims for last week are estimated to fall to 383K versus 400K the prior week. 
• Continuing Claims are estimated to fall to 3255K versus 3269K prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Waller speaking, BofE rate decision, Eurozone Factory Orders report, weekly Langer Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Slightly Lower into Final Hour on Less Dovish Fed Commentary, Virus Mandate/Shutdown Worries, Earnings Jitters, Commodity/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 17.7 -1.9%
• Bloomberg Global Risk On/Risk Off Index 2,591.0 -17.0 points

• Euro/Yen Carry Return Index 133.82 +.16%

• Emerging Markets Currency Volatility(VXY) 8.7 +.6%

• S&P 500 Implied Correlation 50.3 +.7%

• ISE Sentiment Index 140.0  +9.0 points
  

• Total Put/Call .77 +1.3%

• NYSE Arms 1.7 +114.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.96 +.40%
  

• US Energy High-Yield OAS 440.32 +.51%

• European Financial Sector CDS Index 53.94 -.31%

• Italian/German 10Y Yld Spread 105.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 90.1 -.292%
  

• Emerging Market CDS Index 163.25 +.83%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 38.20 +.29%

• 2-Year Swap Spread 8.0 -.75 basis point

• TED Spread 7.75 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +1.0 basis point
  
• MBS  5/10 Treasury Spread  74.25 +1.5 basis points
  
• IHS Markit CMBX BBB- 6 73.5 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.05 -.15%
• 3-Month T-Bill Yield .05% +1.0 basis point
  

• Yield Curve 101.0 unch.
  

• China Iron Ore Spot 174.25 USD/Metric Tonne -2.6%

• Citi US Economic Surprise Index -2.8 +8.9 points

• Citi Eurozone Economic Surprise Index 30.8 -6.3 points
  

• Citi Emerging Markets Economic Surprise Index 37.7 -2.3 points

• 10-Year TIPS Spread 2.35 unch.
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

US Covid-19:

• 192 new infections/100K people(last 7 days total) +10/100K people
• 36% of Jan. 7th, 2021 peak(highest daily avg. new infections) +2.0 percentage points
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +6 open in Japan 
• China A50 Futures: Indicating -210 open in China

• DAX Futures: Indicating -3 open in Germany

Portfolio:

• Slightly Lower: On losses in my medical/consumer discretionary/industrial sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long