Stocks Closing Higher on Oil Pullback, Earnings Optimism, Short-Covering, Consumer Discretionary/Retail 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) 17.4 -10.0%
• DJIA Intraday % Swing .76% -36.9%
  
• Bloomberg Global Risk On/Risk Off Index 70.7 +1.9%

• Euro/Yen Carry Return Index 168.2 +.48%

• Emerging Markets Currency Volatility(VXY) 8.49 -.36%

• CBOE S&P 500 Implied Correlation Index 24.3 -9.9% 

• ISE Sentiment Index 108.0 -2.0 points
  

• Total Put/Call .96 -9.4%

• NYSE Arms .49 -41.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 75.2 -1.6%
  

• US Energy High-Yield OAS 357.29 -.04%
• Bloomberg TRACE # Distressed Bonds Traded 364 +8
  

• European Financial Sector CDS Index 96.85 -1.39% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 298.62 -.77%
  

• Italian/German 10Y Yld Spread 198.0 basis points -6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 126.9 +.88%
  

• Emerging Market CDS Index 233.49 -1.60%
• Israel Sovereign CDS 129.5 +4.7%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.78 -.14%

• 2-Year SOFR Swap Spread -12.0 basis points -.75 basis point
  

• TED Spread 18.0 basis points +.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -27.5 +.75 basis point
  
• MBS  5/10 Treasury Spread 187.0 +2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 913.0 +1.0 basis point
  
• Avg. Auto ABS OAS 86.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.3 +.06%
• 3-Month T-Bill Yield 5.48% unch.
  

• China Iron Ore Spot 116.9 USD/Metric Tonne  -.26%
• Dutch TTF Nat Gas(European benchmark) 48.5 euros/megawatt-hour -10.2%

• Citi US Economic Surprise Index 51.8 +.6 point

• Citi Eurozone Economic Surprise Index -41.8 +.7 point

• Citi Emerging Markets Economic Surprise Index 19.1 -.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(32 of 500 reporting) +12.3% -2.0 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.54 -.44:  Growth Rate +9.1% -.1 percentage point, P/E 18.3 +.2
  
• S&P 500 Current Year Estimated Profit Margin 12.25% +7.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 267.28 +.18: Growth Rate +57.7% -.1 percentage point, P/E 28.7 +.2
  
• Bloomberg US Financial Conditions Index .13 +13.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.26 -19.0 basis points
  
• US Yield Curve -39.5 basis points (2s/10s) +3.5 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +5.15% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.70% unch.: CPI YoY +3.42% unch.
  
• 10-Year TIPS Spread 2.38 +3.0 basis points
  
• Highest target rate probability for Dec. 13th FOMC meeting: 67.2%(-2.5 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 64.4%(-5.2 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +311 open in Japan 
• China A50 Futures: Indicating +44 open in China

• DAX Futures: Indicating +116 open in Germany

Portfolio:

• Slightly Lower:  On losses in my index hedges and emerging market shorts
  

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

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth +1.0%
  

Sector Underperformers:

• 1) Electric Vehicles -.6% 2) Software -.1% 3) Oil Service +.3%

Stocks Falling on Unusual Volume: 

• NXT, ARRY, BNTX, MRNA, EH, ONTO, RCM, GOF, SAVA, VSTO and MANU
  

Stocks With Unusual Put Option Activity:

• 1) MANU 2) JETS 3) PNT 4) VSTO 5) LULU
  

Stocks With Most Negative News Mentions:

• 1) MANU 2) NVAX 3) MRNA 4) BNTX 5) EVA
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.5%
  

Sector Outperformers:

• 1) Telecom +3.1% 2) Networking +2.5% 3) Retail +2.4%

Stocks Rising on Unusual Volume:

• RARE, RVMD, SGH, OSTK, BE, HLF, VRNS, BDC, PFE, SCHW, NWSA and ELV
  

Stocks With Unusual Call Option Activity:

• 1) MAR 2) PNT 3) APO 4) AMAM 5) MANU

Stocks With Most Positive News Mentions:

• 1) INDI 2) ETWO 3) SNAP 4) ALHC 5) MARA
  

Charts:

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

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (ACI)/.56
• (BAC)/.83
• (BK)/1.15
• (GS)/5.42
• (JNJ)/2.52
• (LMT)/6.67
• (PLD)/1.26
  

After the Close: 

• (IBKR)/1.51
• (JBHT)/1.83
• (OMC)/1.85
• (PNFP)/1.70
• (UAL)/3.38
• (WTFC)/2.41
  

Economic Releases  

8:30 am EST:

• Retail Sales Advance MoM for Sept. is estimated to rise +.3% versus a +.6% gain in Aug.
• Retail Sales Ex Autos MoM for Sept. is estimated to rise +.2% versus a +.6% gain in Aug.
• Retail Sales Ex Autos and Gas for Sept. is estimated to rise +.1% versus a +.2% gain in Aug.
• NY Fed Services Business Activity Index for Oct.
  

9:15 am EST

• Industrial Production MoM for Sept. is estimated unch. versus a +.4% gain in Aug.
• Capacity Utilization for Sept. is estimated to fall to 79.6% versus 79.7% in Aug.
• Manufacturing Production for Sept. is estimated unch. versus a +.1% gain in Aug.

10:00 am EST

• Business Inventories for Aug. is estimated to rise +.3% versus unch. in Sept.
• The NAHB Housing Market Index for Oct. is estimated to fall to 44 versus 45 in Sept.

4:00 pm EST

• Net Long-Term TIC Flows for Aug.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Bowman speaking, RBA minutes and the US weekly retail sales reports could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running -11.9% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.4 +.7
  
• 0 Sectors Declining, 11 Sectors Rising
• 74.5% of Issues Advancing, 23.0% Declining
• 28 New 52-Week Highs, 64 New Lows
• 34.4%(+5.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.0 +8
  
• Bloomberg Global Risk-On/Risk-Off Index 70.7 +2.0%
  
• Russell 1000: Growth/Value 18,126.7 -.02%
  
• 1-Day Vix 12.1 -42.5%
  
• Vix 17.5 -9.6%
  
• Total Put/Call .94 -11.3%
• TRIN/Arms .77 -7.2%
  

Monday Watch

Today's Headlines

Bloomberg:

• US Pushes Bid to Avert Wider Israel War After Iran Warning.
• US Warned Iran in Back-Channel Talks on War, Sullivan Says. 
• China’s Economy Is in Search of More Stable Footing. 
• US Will Tighten Curbs on China’s Access to Advanced Chip Tech.
• Israel Hopes It Will Avoid Rating Cut on War, At Least for Now.
• Australia Plans to Require Crypto Exchanges to Obtain Licenses to Curb Risks.
• Asia Central Banks Get Creative on Currencies to Defend Reserves.
• Global Markets Brace for More Volatility Amid Israel Conflict. 
  
• War Adds Risks to Indebted, Expensive and Fractured World.
• Haven Assets in Focus With Gaza Offensive Looming: Markets Wrap.
• Oil Steadies as Israel-Hamas War Leaves Global Market On Edge.
• Big Tech’s Profit Machine Is Propping Up S&P 500 Earnings. 
• Lithium Giant Albemarle Abandons $4.2 Billion Liontown Deal.
• Time Is Running Out for the ‘Year of the Bond’ as Losses Mount.

Zero Hedge:

• "Anxiety And Paralysis Dominate Conversations": Goldman Prime's Top Report On Trader Flows And Positioning.
• Egypt Mulls Allowing Refugees Entry As Over 600,000 Gazans Move South; FBI Warns Of Hamas Attacks On US Soil.
• Experts "Quite Worried" About High Turnover Among Election Workers.
• Victor Davis Hanson's Annotated Guide To American Middle East Madness.
• Anti-Gunners About To Meltdown After Elon Musk Says 'Armed Citizens Vital For Democracy's Defense'.
• How About Hunter? Justice Department Adds FARA Charge To Menendez Prosecution.
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• Earmarks Are Back: House Republicans "Opened The Bar" For The Spendaholics.
• Chicago Giving Migrants $9,000 In Rental Assistance.
  
• Israel-Hamas War Latest: Israeli Troops Amass At Border As Iran Warns It Will Intervene If Ground Offensive Launched
• The Sword Of Damocles: An Economic Worst-Case Scenario For The Israeli-Palestine War
• Court Rules No Evidence Georgia's Voting Law Discriminates Against Black Voters.
• New Zealand Ousts Leftist Lockdown Loons After Conservative Wins Election.
• Climate Activists Seek To Save The Planet By Cutting-Down & Burying Trees.
• George Soros Once Blasted US, Israel For Not Embracing Hamas.
• A Difficult Week On Many Fronts.
• Watch: Tensions Mount As London Streets Flooded With Pro-Palestinian Protesters.
• Morgan Stanley On The Middle East War: "There's No Obvious Path From Here".
• 5 Signs That Gold Will Increasingly Flow To The East.
• COVID-19 Vaccines 'May Trigger' Rheumatic Inflammatory Diseases: Study.
• It's All About Provoking Your Reaction.
• Michael Hartnett's Favorite Trades Into 2024: "Bonds, Bullion And Breadth".
• Switching Jobs No Longer Pays Off Like It Used To.
• TME Weekend: House-to-house.
• Don't Mess With Texas: Senate Passes Bill Allowing Local, State Police To Arrest Illegal Immigrants.
• "We Can't Force The Human Body To Accept Foreign Genetic Code'' Dr. McCullough On mRNA Technology.
• US Confirms 2nd Carrier Group En Route To "Deter Hostile Actions Against Israel".
• 'No Regrets': Former CIA Director Repeats Debunked Russian Disinfo Claims About Hunter's Laptop.
• Culture And Military Suicide: A Willful Blindspot.
• Bob Menendez Is A Symptom.
• Rent Control Is A Disaster - Don't Let It Spread Across The Nation.
• Leftist Media Call Trump-Supporters "Far-Right"... For What?
• Watch: Baseless Gender Ideology Cartoon Now Part Of 4th Grade Curriculum In Wisconsin  
• Military Agrees To Pay $1.8 Million To Settle Lawsuits From COVID Vaccine Mandate.

 Wall Street Journal:

• Israel Prepares Gaza Invasion as Clashes Intensify in North.
• Dozens of Countries Scramble to Identify More Than 150 Citizens Held Hostage in Gaza.
• Closed Borders, Strikes, Siege: Why Escaping Gaza Is So Hard.
• Don’t Hire My Anti-Semitic Law Students. Would your clients want an attorney who condones hatred and monstrous crimes?
• The Marxian Roots of Campus Anti-Semitism. The left can’t behold Israel’s prosperity without concluding that the Jews have stolen their wealth from their neighbors.
• Automakers Have Big Hopes for EVs; Buyers Aren’t Cooperating.
• A Recession Is No Longer the Consensus.
• It Is Time to Rethink Your Media Subscriptions.
• Want a Discount? Pay in Cash.
• These Companies Are Being Squeezed by Higher Rates.
• Open AI’s Altman, Arnold Schwarzenegger to Headline WSJ Tech Live Conference.
• Poles Are Voting in What Could Be Europe’s Biggest Election This Year.
• Trading Stocks Loses Its Thrill: ‘I Would Get Burned’.
• America’s ‘Gold Standard’ GPS Risks Falling Behind Rival Systems.

CNBC:

• U.S. oil is back, and ExxonMobil’s $60 billion deal isn’t even the biggest signal.
• Biden 2024 campaign, allies raise $71 million in latest quarterly haul.

Reuters:

• Global markets brace for fallout as Middle East tensions rise.
• UAW says had to escalate action on Ford.
• Exclusive-US aims to block AI chip export workarounds to China - US official.

MarketWatch.com:

• Israel-Gaza conflict threatens to reawaken U.S. inflation, investors worry.
• Oil prices in spotlight as Iran warns of escalation of Israel-Hamas war.
• Small-cap index books historic second ‘death cross’ in a year. Is a turnaround coming?

NewsMax:

• 29 US Citizens Dead, 15 Missing After Hamas Attack.
• Report: Iran Threatens Direct Intervention If Israel Invades Gaza.
• China Slams Israel, Puts Support Behind Palestinians.  
• GOP Pick Jim Jordan as Nominee; House Speaker Vote Set Monday. 
• US Officials: War Could Widen Beyond Israel and Hamas.
• American Death Toll in Israel Reaches 30.

 Fox News:

• Iran vows potential revenge to Israel after Biden admin says no 'evidence' of Tehran involved in Hamas attack
• Iran terror chief allegedly engineered slaughter of Israelis.
• Public school teacher calls Hamas massacre 'successful military campaign'.
• GOP flips Louisiana governor seat in first major contest ahead of 2024 elections.

TheGatewayPundit.com:

• House Minority Leader Hakeem Jeffries Says GOP RINOs Are Working Deal with Democrats to Stop Jordan – Concede Power Back to Democrats.
• Epstein Victim Who Testified Against Ghislaine Maxwell Mysteriously Dies. 
• EXCLUSIVE INTERVIEW: “I Will Never Surrender!” – Kari Lake Discusses Her 2024 Senate Race, Presidential Election, Lawless Southern Border – Says They Rigged Her Election to “Keep an Outsider Like Me Out” (VIDEO).
• CNN’s Jake Tapper Grills NatSec Advisor Jake Sullivan: “It Doesn’t Seem Like Saving the Hostages Are a Priority Right Now” (VIDEO). 
• Iran Directly Threatens US Over Israel-Hamas War: “If the scope of the war expands, heavy losses will befall America as well”.
• WWIII Watch: US Dispatches Second Carrier Group to Eastern Mediterranean Sea.
• BREAKING: FBI Director Christopher Wray Issues Grave Warning of Imminent Terror Attacks on American Soil Amid Israel-Hamas Conflict (VIDEO).
• Final Texts of Israeli American Family of Six Murdered by Hamas-“They’re Here. They’re Burning Us. We’re Suffocating,”.
• Congress to Investigate if the Billions in US Weapons Joe Biden Gifted the Taliban and Ukraine Were Used by Hamas.
• Mother of Daughter Killed by Hamas Has Dire Warning for Americans,
• 68% to 89% of Palestinians Support Terror Attacks on Israel in PCPO Poll – Democrats Want to Bring One Million to the US.
• Bill Maher Calls Out the Hypocrisy of Leftists Supporting Hamas: ‘The Israelis Have Always Had the Moral High Ground’ (VIDEO).
• Walgreen Pharmacists Planning to Stage Nationwide Walkout.
• Biden Wishes George Floyd a Happy 50th Birthday as His Approval Among Black Voters is Down 17 Points Since His First Year of Presidency.
• Heartbreaking: Irish Father Shares Relief His 8-Year-Old Daughter Was Killed by Hamas Rather Than Being Kidnapped by Monsters ‘Death was a Blessing’.

The Epoch Times:

• China Blockade of Taiwan Likely.
• How Communist China Is the Ultimate Beneficiary of the Israel-Hamas War.

Twitter:

• @unhealthytruth - A Jeffrey Epstein victim who testified against Maxwell has died and her family wants answers.
• @OliLondonTV - Being LGBTQI+ in Palestine means: 1) Up to 10 years in Prison for being Gay 2) Physical violence including beheadings, assault & torture 3) No civil laws protecting LGBT from discrimination or harassment 4) LGBT groups are banned from holding any events or parades.
• @TPostMillennial - Trump slams US universities for 'open hatred against Israel and America'. "Not only is this antisemitic, it is also anti-American."
• @stillgray - Why is 13% of America on adderall? That’s insane. Just seems like overprescription. (graph)
• @unusual_whales - JUST IN: Democratic Senator Thomas Carper profited on his shorts on the US Economy. He has been one of the best traders in office for 40 years. So much so, that he became a multimillionaire many times over on a modest federal salary. Seriously, take a look:
• @WallStreetSilv - Trudeau regime puts Canadian detective on trial for investigating link between infant deaths and mRNA vaccines.
• @JohnBasham - OPINION: @HouseGOP Members, Vote For @Jim_Jordan For Speaker Of The House, Or WE WILL PRIMARY CHALLENGE YOU In 2024! Its That Simple...
• @sentdefender - A Senior Israeli Official has announced that Intelligence has been received which indicates Iran is attempting to move “Strategic Weapons” into Syria in order to Open another Front against Israel.
• @matttttt1897 - The USS Dwight D. Eisenhower carrier strike group departs for the Mediterranean with 8,000 sailors, 4 ships, and 70+ aircraft.
• @MattWallace888 - URGENT UPDATE: The Syrian Military Appears To Be Preparing A Large Offensive in Response To Israel’s Bombing of Aleppo Airport.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 987,217 Reports(+1,799 from prior week) Through September 22nd, 2023.

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Night Trading

• Asian indices are -1.25% to -.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 126.75 +1.0 basis point.
  
• China Sovereign CDS 84.0 +.75 basis point.
• China Iron Ore Spot 114.9 USD/Metric Tonne +.5%.
  
• Bloomberg Emerging Markets Currency Index 41.2 unch.
• Bloomberg Global Risk-On/Risk Off Index 70.6 +1.8%.
• Bloomberg US Financial Conditions Index .00 +1.0 basis point. 
  
• Volatility Index(VIX) futures 19.4 -2.9%. 
• Euro Stoxx 50 futures +.19%.
• S&P 500 futures +.30%.
• NASDAQ 100 futures +.36%.

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the week.