Stocks Rising into Final Hour on Diminished Mid-East Regional War Fears, Lower Long-Term Rates, Earnings Outlook Optimism, Tech/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.9 -.2%
• DJIA Intraday % Swing .53% +36.0%
  
• Bloomberg Global Risk On/Risk Off Index 64.7 -1.3%

• Euro/Yen Carry Return Index 171.8 +.06%

• Emerging Markets Currency Volatility(VXY) 7.82 -.9%

• CBOE S&P 500 Implied Correlation Index 24.4 -.7% 

• ISE Sentiment Index 123.0 +32.0
  

• Total Put/Call .97 -11.8%

• NYSE Arms 1.12 -22.2% 
• NYSE Non-Block Money Flow -$60.3M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 70.0 -1.7%
  

• US Energy High-Yield OAS 340.7 +3.6%
• Bloomberg TRACE # Distressed Bonds Traded 367 -11
  

• European Financial Sector CDS Index 89.47 -1.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 265.6 +1.3%
  

• Italian/German 10Y Yld Spread 189.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 118.8 -3.2%
  

• Emerging Market CDS Index 211.42 -.88%
• Israel Sovereign CDS 125.1 -4.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.8 -.08%

• 2-Year SOFR Swap Spread -15.75 basis points -1.5 basis points
  

• TED Spread 21.0 basis points -4.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -21.5 -1.25 basis points
  
• MBS  5/10 Treasury Spread 168.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 908.0 +1.0 basis point
  
• Avg. Auto ABS OAS 98.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.67 -.17%
• 3-Month T-Bill Yield 5.42% unch.
  

• China Iron Ore Spot 121.8 USD/Metric Tonne -1.1%
• Dutch TTF Nat Gas(European benchmark) 46.1 euros/megawatt-hour +2.7%

• Citi US Economic Surprise Index 50.6 +.1 point

• Citi Eurozone Economic Surprise Index -45.3 -1.9 points

• Citi Emerging Markets Economic Surprise Index 20.9 -2.1 points
• S&P 500 Current Quarter EPS Growth Rate YoY(424 of 500 reporting) +2.5% -.5 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.76 -.66:  Growth Rate +8.3% -.4 percentage point, P/E 18.3 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.13% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +38.4% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 274.71 +.82: Growth Rate +62.1% +.5 percentage point, P/E 28.4 +.5
  
• Bloomberg US Financial Conditions Index .05 -3.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .83 +79.0 basis points
  
• US Yield Curve -34.75 basis points (2s/10s) -7.25 basis points
  
• US Atlanta Fed 3Q GDPNow Forecast +2.09% +.85 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.63% unch.: CPI YoY +3.28% unch.
  
• 10-Year TIPS Spread 2.39 -2.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 84.6%(+1.7 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 65.1%(-.5 percentage point) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +229 open in Japan 
• China A50 Futures: Indicating +15 open in China

• DAX Futures: Indicating +70 open in Germany

Portfolio:

• Slightly Higher:  On gains in my tech/transport sector longs
  

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

• Market Exposure: Moved to 100% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -.8%
  

Sector Underperformers:

• 1) Oil Service -3.3% 2) Gold & Silver -2.4% 3) Energy -2.2%

Stocks Falling on Unusual Volume: 

• CI, DHT, EMR, CNHI, TDW, ALPN, APD, SANM, STRL, EH, SWAV, ICUI, ZNTL, AMRC and ATSG
  

Stocks With Unusual Put Option Activity:

• 1) EH 2) COTY 3) RILY 4) DDOG 5) SABR
  

Stocks With Most Negative News Mentions:

• 1) APD 2) SANM 3) AMRC 4) VTYX 5) OLO
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.1%
  

Sector Outperformers:

• 1) Internet +2.3% 2) Software +1.9% 3) Homebuilding +1.3%

Stocks Rising on Unusual Volume:

• TMDX, DDOG, VERV, AYX, TASK, SGRY, PRAA, JELD, ELAN, MDB, BMRN, PLNT, IMXI, DOCN, NEO, SNOW, HALO, SKWD, GEN, BSY, CECO, CCCS, BCO, EXPE, ESTC, CBT, GFS, ATEC, HCP, KKR, CXW, VNOM, HUBS, SKT, PAYC, KBR, DT, TWLO, CWAN, TPG, ACMR, SQ and APPN
  

Stocks With Unusual Call Option Activity:

• 1) DDOG 2) CFLT 3) HIMS 4) CELH 5) TRIP

Stocks With Most Positive News Mentions:

• 1) DDOG 2) TMDX 3) ROVR 4) TRIP 5) MDB
  

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:

• (DDD)/-.08
• (BIIB)/3.97
• (CRL)/2.36
• (LITE)/.27
• (MIDD)/2.33
• (ODP)/1.57
• (RL)/1.93
• (RBLX)/-.49
• (SPTN)/.59
• (STWD)/.49
• (TEVA)/.61
• (UAA)/.20
• (VSH)/.56
• (WRBY)/.01
• (WBD)/-.11
• (KLG)/.26
  

After the Close: 

• (AFRM)/-.65
• (BIRD)/-.21
• (ARM)/.26
• (BGS)/.23
• (BYND)/-.89
• (DUOL)/-.07
• (FICO)/5.29
• (HP)/.72
• (HUBS)/1.24
• (CART)/-.78 
• (JAZZ)/4.93
• (LYFT)/.15
• (MGM)/.52
• (PAAS)/.07
• (TTWO)/1.03
• (TWLO)/.37
• (DIS)/.71
• (ZD)/1.53
• (ZIP)/.11
• (EBIX)/.14
  

Economic Releases

10:00 am EST

• Wholesale Trade Sales MoM for Sept. is estimated to rise +.9% versus a +1.8% gain in Aug.
  

10:30 pm EST

• Energy Dept. delaying oil report for a week.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking, Fed's Cook speaking, Fed's Williams speaking, Fed's Barr speaking, Fed's Jefferson speaking, Atlanta Fed GDPNow 4Q update, weekly MBA Mortgage Applications report, 10Y T-Note auction, Baird Industrial Conference, UBS BioPharma Conference, (MRNA) investor day, (ADBE) investor meeting, (SYK) investor day, (ADP) annual meeting, (ROK) investor day and the Stifel Midwest Growth Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -.6% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.2 unch.
  
• 4 Sectors Declining, 7 Sectors Rising
• 46.1% of Issues Advancing, 51.4% Declining 
• TRIN/Arms 1.07 -25.7% 
• Non-Block Money Flow -$30.2M
  
• 21 New 52-Week Highs, 37 New Lows
• 35.3%(+.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 55.0 -1.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 65.1 -.6%
  
• Russell 1000: Growth/Value 18,460.8 +1.4%
  
• 1-Day Vix 8.8 -18.3%
  
• Vix 14.8 -.8%
  
• Total Put/Call 1.03 -6.4%

Tuesday Watch

Night Trading 

• Asian equity indices are -.75% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 121.5 -2.5 basis points.

• China Sovereign CDS 70.0 -2.5 basis points.
  
• China Iron Ore Spot 123.2 USD/Metric Tonne -.5%.

• Bloomberg Emerging Markets Currency Index 41.5 -.06%.
• Bloomberg Global Risk-On/Risk Off Index 68.0 +3.7%
  
• Bloomberg US Financial Conditions Index .06 -3.0 basis points.
  
• Volatility Index(VIX) futures 16.5 +.5%.
• Euro Stoxx 50 futures -.17%.

• S&P 500 futures -.22%.

• NASDAQ 100 futures -.19%.  

Morning Preview Links

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