Stocks Surging into Afternoon on Diminishing Fed Taper Fears, Lower Long-Term Rates, Oil Gain, Commodity/Consumer Discretionary Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.3 -13.4%
• Bloomberg Global Risk On/Risk Off Index 2,844.0 +178.0 points

• Euro/Yen Carry Return Index 133.68 +.14%

• Emerging Markets Currency Volatility(VXY) 8.7 unch.

• S&P 500 Implied Correlation 49.0 -3.4%

• ISE Sentiment Index 146.0  +47.0 points
  

• Total Put/Call .82 -3.5%

• NYSE Arms .77 -48.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 46.58 -3.7%
  

• US Energy High-Yield OAS 422.54 -1.8%

• European Financial Sector CDS Index 52.3 -1.4%

• Italian/German 10Y Yld Spread 106.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 70.91 -.83%
  

• Emerging Market CDS Index 153.4 -3.88%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 38.49 +.09%

• 2-Year Swap Spread 8.75 unch.

• TED Spread 7.75 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 -.25 basis point
  
• MBS  5/10 Treasury Spread  72.0 -2.0 basis points
  
• IHS Markit CMBX BBB- 6 72.5 -.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.04 +.56%
• 3-Month T-Bill Yield .05% unch.
  

• Yield Curve 101.0 +1.0 basis point
  

• China Iron Ore Spot 163.85 USD/Metric Tonne +6.1%

• Citi US Economic Surprise Index -49.5 -.1 point

• Citi Eurozone Economic Surprise Index -14.7 -1.5 points
  

• Citi Emerging Markets Economic Surprise Index 28.5 -1.5 points

• 10-Year TIPS Spread 2.38 +3.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 98.2% chance of no change at Dec. 15th meeting

US Covid-19:

• 330 new infections/100K people(last 7 days total) +5/100K people
• 62% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +200 open in Japan 
• China A50 Futures: Indicating +48 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 100% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Growth +1.0%

Sector Underperformers:

• 1) Pharma -.1% 2) Medical Equipment +.5% 3) Computer Hardware +.5%

Stocks Falling on Unusual Volume: 

• ATSG, DELL, BIG, OLLI, PTON, DOMO, VMW, AGFY, HIBB and SAVA
  

Stocks With Unusual Put Option Activity:

• 1) WDAY 2) SPRT 3) LQD 4) PBF 5) DELL
  

Stocks With Most Negative News Mentions:

• 1) APLT 2) VMW 3) PTON 4) APLT 5) OLLI
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.9%

Sector Outperformers:

• 1) Oil Service +5.7% 2) Gold & Silver +3.9% 3) Energy +3.6%

Stocks Rising on Unusual Volume:

• SPRT, BILL, PBF, QTRX, JOBY, CUBI, PRAX, WDAY, COHU, MARA, ICPT, TGTX, MRSN, PAYA, CARA, EHTH, BMRN, FIGS, HP, DIN, ARCH, COUP, CANO, ANF, PCOR, ATEN, ACLS, DYN, ZION, JWN, PLTR, HEAR, ATI, KRON, ARNA, FRPT, MTTR and MTW
  

Stocks With Unusual Call Option Activity:

• 1) WDAY 2) HP 3) BBIG 4) CEMI 5) CRK

Stocks With Most Positive News Mentions:

• 1) WDAY 2) BILL 3) SPRT 4) NURO 5) CUBI
  

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -16.5% Below 100-Day Average 
• 11 Sectors Rising, 0 Sectors Declining
• 80.5% of Issues Advancing, 16.1% Declining
• 108 New 52-Week Highs, 18 New Lows
• 67.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.6%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,845.0 +179.0 points
• Russell 1000: Growth/Value 17,627 unch.
  
• Vix 16.5 -12.2%
• Total Put/Call .84 -1.2%
• TRIN/Arms .65 -56.1%

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 71.0 -.25 basis point.

• China Sovereign CDS 34.75 +.25 basis point.
  

• Bloomberg Emerging Markets Currency Index 59.69 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 2,584.0 -82.0 points.
• Volatility Index(VIX) futures 20.0 -.9%.
• FTSE 100 futures +.11%.

• S&P 500 futures +.20%.

• NASDAQ 100 futures +.27%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BIG)/1.12
• (HIBB)/1.38
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• The Advance Goods Trade Balance for July is estimated at -$90.9B versus -$91.2B in June.
• Wholesale Inventories MoM for July is estimated to rise +1.0% versus a +1.1% gain in June.
• Retail Inventories MoM for July is estimated to rise +.2% versus a +.3% gain in June.
• Personal Income for July is estimated to rise +.2% versus a +.3% gain in June.
• Personal Spending for July is estimated to rise +.4% versus a +1.0% gain in June.
• The PCE Core MoM for July is estimated to rise +.3% versus a +.4% gain in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking at Jackson Hole 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 mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Slightly Lower Mid-Day on Afghanistan Pullout Debacle, Fed Taper Worries, Oil Decline, Consumer Discretionary/Transport Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 18.1 +8.0%
• Bloomberg Global Risk On/Risk Off Index 2,706.0 -161.0 points

• Euro/Yen Carry Return Index 133.58 -.05%

• Emerging Markets Currency Volatility(VXY) 8.8 unch.

• S&P 500 Implied Correlation 49.8 +4.3%

• ISE Sentiment Index 108.0  -24.0 points
  

• Total Put/Call .81 +2.5%

• NYSE Arms .93 +10.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 48.14 +.44%
  

• US Energy High-Yield OAS 431.25 -.21%

• European Financial Sector CDS Index 53.06 +.8%

• Italian/German 10Y Yld Spread 108.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 71.28 -.72%
  

• Emerging Market CDS Index 158.84 +.18%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 38.55 +.12%

• 2-Year Swap Spread 8.75 +.75 basis points

• TED Spread 7.75 -1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.0 -.25 basis point
  
• MBS  5/10 Treasury Spread  72.0 -2.0 basis points
  
• IHS Markit CMBX BBB- 6 72.5 -.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.74 -.15%
• 3-Month T-Bill Yield .05% unch.
  

• Yield Curve 109.0 +4.0 basis points
  

• China Iron Ore Spot 153.80 USD/Metric Tonne -.3%

• Citi US Economic Surprise Index -49.4 -1.4 points

• Citi Eurozone Economic Surprise Index -13.2 +.1 point
  

• Citi Emerging Markets Economic Surprise Index 30.0 -1.4 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:

• 325 new infections/100K people(last 7 days total) +4/100K people
• 61% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +18 open in Japan 
• China A50 Futures: Indicating +61 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long