Stocks Lower into Final Hour on Escalating Mid-East Tensions, Sector Rotation, Technical Selling, Tech/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 17.2 +3.8%
• DJIA Intraday % Swing .62 -14.3%
  
• Bloomberg Global Risk On/Risk Off Index 49.8 -3.0%

• Euro/Yen Carry Return Index 182.2 -.6%

• Emerging Markets Currency Volatility(VXY) 7.55 +.13%

• CBOE S&P 500 Implied Correlation Index 15.4 +7.9% 

• ISE Sentiment Index 136.0 +4.0
  

• Total Put/Call 1.04 +15.6%

• NYSE Arms 1.23 unch.
  
• NYSE Non-Block Money Flow +$126.3M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 52.9 +2.2%
  

• US Energy High-Yield OAS 283.3 +3.1%
• Bloomberg TRACE # Distressed Bonds Traded 246 +5
  

• European Financial Sector CDS Index 62.7 +.3%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 163.8 +.96%
  

• Italian/German 10Y Yld Spread 136.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 96.3 +.05%
  

• Emerging Market CDS Index 168.40 +.45%
  
• Israel Sovereign CDS 128.2 +.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.9 +.07%

• 2-Year SOFR Swap Spread -16.0 basis points -.75 basis point
  

• Treasury Repo 3M T-Bill Spread -5.0 basis points +.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -1.75 -.25 basis point
  
• MBS  5/10 Treasury Spread 142.0 unch.
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 687.0 +2.0 basis points
  
• Avg. Auto ABS OAS 61.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 39.0 +.01%
• 3-Month T-Bill Yield 5.28% -1.0 basis point
  

• China Iron Ore Spot 99.9 USD/Metric Tonne +.8%
• Dutch TTF Nat Gas(European benchmark) 34.4 euros/megawatt-hour +1.4%

• Citi US Economic Surprise Index -25.5 +3.8 points

• Citi Eurozone Economic Surprise Index -53.4 +2.3 points

• Citi Emerging Markets Economic Surprise Index -5.4 -1.9 points
• S&P 500 Current Quarter EPS Growth Rate YoY(238 of 500 reporting) +10.1% +3.8 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 262.94 +.09:  Growth Rate +15.1% unch., P/E 20.6 -.2
  
• S&P 500 Current Year Estimated Profit Margin 12.78% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(3 of 10 reporting) +19.8% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 336.53 +.39: Growth Rate +25.5% +.2 percentage point, P/E 32.1 -.7
  
• Bloomberg US Financial Conditions Index .77 -1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .77 +2.0 basis points
  
• US Yield Curve -21.5 basis points (2s/10s) unch.
  
• US Atlanta Fed 3Q GDPNow Forecast +2.83% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 60.9% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.73% unch.: CPI YoY +3.01% unch.
  
• 10-Year TIPS Spread 2.24 -1.0 basis point
  
• Highest target rate probability for Sept. 18th FOMC meeting: 87.7%(-.5 percentage point) chance of 5.0%-5.25%. Highest target rate probability for Nov. 7th meeting: 57.8%(+.3 percentage point) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -390 open in Japan 
• China A50 Futures: Indicating -58 open in China

• DAX Futures: Indicating +123 open in Germany

Portfolio:

• Higher:  On gains in my consumer discretionary/industrial/financial sector longs, emerging market shorts and index hedges
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some
  

• Market Exposure: 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.2%
  

Sector Underperformers:

• 1) Semis -2.6% 2) Alt Energy -2.2% 3) Computer Hardware -1.8%

Stocks Falling on Unusual Volume: 

• FMS, CR, GTY, WSO, XYL, RNST, DEO, PG, AGCO, GRPN, COHR, CLDX, CECO, ECL, GLW, BYON, LSCC, MRK, CRWD, MBIN, WWD, SERV, AMKR and SYM
  

Stocks With Unusual Put Option Activity:

• 1) SYM 2) JBLU 3) LUMN 4) TELL 5) TEVA
  

Stocks With Most Negative News Mentions:

• 1) QXO 2) MRK 3) CRWD 4) NVAX 5) GLW
  

Sector ETFs With Most Negative Money Flow:

• 1) XLV 2) XLI 3) SOXX 4) XLY 5) XLE

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%
  

Sector Outperformers:

• 1) Airlines +3.3% 2) Telecom +2.9% 3) Restaurants +1.7%

Stocks Rising on Unusual Volume:

• CVLT, HLIT, ROIC, NEO, PLOW, RGEN, HWM, FFIV, VRNS, COLL, NVCR, SFM, HSII, LGIH, SWK, CNO, HAYW, PYPL, PRA, TENB, CRBP, IT, EXP, PJT, CSTL, ENVA, BRX, SYY, ZBRA, CVI, AMN, PEGA, PSX, MOH, SAVA, UE, VSTO, KRG, SHYF, CNC, PECO, GPK, LW, AAL, IMAX, LUV, SHAK, NEOG, HTH, GH, NOV, HOLX, INDV, ATSG, COCO, STNG, DXCM and WST
  

Stocks With Unusual Call Option Activity:

• 1) LUMN 2) JBLU 3) TRU 4) LVS 5) PINS

Stocks With Most Positive News Mentions:

• 1) LUMN 2) SFM 3) JBLU 4) HLIT 5) FFIV
  

Sector ETFs With Most Positive Money Flow:

• 1) XLK 2) IGV 3) XLB 4) XHB 5) KRE
  

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:

• (MO)/1.34
• (ADP)/2.06
• (AN)/4.32
• (BA)/-1.90
• (BWA)/1.01
• (BG)/1.83
• (CNH)/.37
• (DD)/.85
• (GRMN)/1.45
• (GNRC)/1.20
• (GSK)/.98 
• (HES)/2.57
• (HUM)/5.86
• (JCI)/1.20
• (KHC)/.73
• (MAR)/2.47
• (NCLH)/.34
• (OSK)/3.01
• (PSN)/.69
• (SMG)/1.92
• (TT)/3.08
• (UTHR)/6.48
• (WING)/.83
  

After the Close: 

• (AFL)/1.60
• (ALB)/.43
• (ALL)/.28
• (APA)/.89
• (ARM)/.34
• (AVB)/2.71 
• (CHRW)/.95
• (CP)/1.01
• (CVNA)/-.05
• (CAKE)/1.00
• (EBAY)/1.13
• (GT)/.14
• (LRCX)/7.58
• (META)/4.72
• (MET)/2.10
• (MGM)/.60
• (MYRG)/1.13
• (PPC)/1.35
• (QCOM)/2.25
• (RGR)/.76
• (WDC)/1.18
• (BABA)/15.00
• (IR)/.78
• (MA)/3.51
• (RIG)/-.09
  

Economic Releases

8:15 am EST

• The ADP Employment Change for July is estimated at 150K versus 150K the prior week.
  

8:30 am EST

• The 2Q Employment Cost Index is estimated to rise +1.0% versus a +1.2% gain in 1Q. 

9:45 am EST

• The MNI Chicago PMI for July is estimated to fall to 45.0 versus 47.4 in June.

10:00 am EST

• Pending Home Sales MoM for June is estimated to rise +1.4% versus a -2.1% decline in May.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -832,140 barrels versus a -3,741,000 barrel decline the prior week. Gasoline inventories are estimated to fall by -1,177,710 barrels versus a -5,572,000 barrel decline the prior week. Distillate inventories are estimated to fall by -579,710 barrels versus a -2,753,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +.6% versus a -2.1% decline prior.
  

2:00 pm EST

• The FOMC is expected to leave the benchmark Fed Funds Rate at 5.25-5.5%.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The weekly MBA Mortgage Applications report, (DELL) business update and the (MCK) annual meeting 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 +1.6% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 13.6 +1.1
  
• 7 Sectors Declining, 4 Sectors Rising
• 52.6% of Issues Advancing, 44.5% Declining 
• TRIN/Arms 1.34 +8.9%
  
• Non-Block Money Flow +$92.9M
  
• 167 New 52-Week Highs, 13 New Lows
• 65.5% (-.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 58.0 unch.
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 50.3 -2.2%
• Bloomberg Cyclicals/Defensives Index 235.1 +.25%
  
• Russell 1000: Growth/Value 19,078.9 -1.8%
• CNN Fear & Greed Index 41.0 (FEAR) -3.0
  
• 1-Day Vix 16.4 +20.0%
  
• Vix 17.7 +6.4%
  
• Total Put/Call 1.04 +15.6%

Tuesday Watch

Evening Headlines

Bloomberg:

• Venezuela’s Machado Says Opposition Has Enough Proof of Fraud.
• Venezuela Erupts in Protests as Maduro Reclaims Office.
• Singapore’s Temasek to Invest $30 Billion in US Over Five Years.
• Asian Shares Fall as Slew of Rate Decisions Ahead. 
• Oil Steadies Near Seven-Week Low With Demand Concerns Mounting.
• Nvidia Releases Software, Services to Boost Rapid Adoption of AI.
• US IPO Market to Slow After Lineage, With Quiet Summer Ahead.
• Five Things You Need to Know to Start Your Day: Asia.

Zerohedge:  

• Mississippi Law Allowing Ballots To Be Received After Election Day Lawful: Judge.
• The War On Raw Milk.
• The Media Betrays The American Experiment.
• These Are The Fastest Growing Housing Markets In The US.
• Worst US Cities To Live (2022).
• Putin Vows 'Mirror Measures' After US Plans Long-Range Missiles For Germany.
• Nebraska Supreme Court Rules In Favor Of Bill Restricting Abortion, Gender-Altering Procedures.
• Elizabeth Warren Says Kamala Harris To Grant Citizenship To Illegal Immigrants.
• Trump To Sit For Voluntary Interview With FBI On Assassination Investigation.
• "This Case Is Going To Fail": Lawyer For Andrew Left Says He'd "Never" Accept Plea Deal.
• US stocks were mixed as participants lacked conviction ahead of major risk events - Newsquawk Asia-Pac Market Open.
• Entering The Busiest Earnings Week, These Are The Stocks With Highest Hedge Fund Positioning.
• President Biden – A Single Point Of Failure For America.
• Stocks mixed and bonds flatten ahead of key risk events - Newsquawk US Market Wrap.
• Did We Just Witness The Suicide Of Wokery?
• Crude, Crypto, & Small-Caps Clubbed Like A Baby Seal As Chaotic Week Looms.

Wall Street Journal:

• Venezuelans Protest Government’s Claim of Election Victory.
• Investors on Alert for Fed Signals of September Rate Cut.
• Kamala Harris Does a Fracking Flip-Flop. She switches to win Pennsylvania, but does she disavow Biden policy to squeeze fossil fuels by regulation?
• Kamala Harris’s Gift to Hamas. She relieves pressure on the terror group to agree to release Israeli hostages. 
• Post-Covid Factory Boom Is Running Out of Steam.
• More People Are Driving on Cannabis. Law Enforcement Is Racing to Learn Who is High.

CNBC.com:

• Apple says its AI models were trained on Google’s custom chips.
• Delta hires David Boies to seek damages from CrowdStrike, Microsoft after outage.

MarketWatch.com: 

• U.S. stocks could face elevated downside risk in coming months, BofA strategists say.
• Here’s why Microsoft’s earnings come with so much pressure.
• AI is all over the Paris Olympics, but Google Gemini ad sparks backlash.  
• Traders may be jumping the gun once again by betting on aggressive Fed rate cuts.

Fox News:

• Trump reacts to opening ceremony of 2024 Paris Olympics in exclusive interview on FOX News.
• Possible top Harris VP contender withdraws from consideration.
• Harris under fire as past comments about Border Patrol agents come back to haunt her.

TheGatewayPundit.com:

• “He is! Dead on Arrival!” WHOA! Joe Biden Issues Thinly Veiled Threat to House Speaker Mike Johnson Over SCOTUS Battle (VIDEO).
• Democratic VP Front-Runner Started a Spy Technology Company Partially Funded by China.
• EPIC: Venezuelans Topple Statues of Late Socialist Dictator Hugo Chavez Following Rigged Elections (VIDEO).
• Tax Hypocrisy: Nearly 6,000 IRS Employees and Contractors Owe $50 Million in Back Taxes, Treasury Audit Reveals.
• Jamal Trulove Tells How He Was Framed with Murder and Kamala Harris Sat in Back of the Courtroom and Laughed (VIDEO).
• INSIDE JOB: Secret Service Would Not Allow Communications with Local Police Until AFTER Trump was Shot – Police Spotted Suspect 90 Minutes Before Shooting.
• Speaker Mike Johnson Sparks Uproar After Revealing the Seven Republicans Who Will Serve on Task Force Investigating Trump Assassination Attempt.
• ‘White Women For Kamala’ Zoom Call is a Cringe Fest of White Guilt and Racial Segregation (VIDEO).
• You Can’t Make This Up: Secretary Blinken Condemns Election Fraud in Venezuela While Turning a Blind Eye to the 2020 Election Fraud in the U.S.

The Epoch Times:

• Local Government Debt Is Dragging China Down.
• Inflation News From China Tells a Sorry Tale.

Around X:

• @elonmusk

• Major election fraud by Maduro. (pic)
  

• @SprinterFamily

• Los Angeles, California. A RoboCop-style setting on the streets of the largest city in the richest state in the United States. The very state whose GDP is greater than that of Russia. (video)
  

• @StillGray

• Maduro learned from the best. (pic)

• @nicksortor
  

• Why were the police CLEARING Trump supporters from the area of the AGR building in Butler, PA? And why did they keep Trump on stage KNOWING there was an imminent threat? EVERYBODY in the area knew for SEVERAL MINUTES. This video is extremely telling. (video)
• #BREAKING: Leaked text messages reveal Trump Rally counter snipers were aware of sh**ter Thomas Crooks up to 90 MINUTES before the sh**ting. This just gets more and more infuriating. The sniper even sent a text along with photos saying “I did see him with a range finder looking towards stage. FYI.” YET THEY CONTINUED TO ALLOW HIM TO GET INTO POSITION AND FIRE? How did literally EVERYTHING coincidentally go wrong all at the same time?

• @ImMeme0

• Maduro is deploying his armed forces against the Venezuelan people. He disregards their will and is prepared to use violence to cling to power. (video)

• @BehizyTweets

• BREAKING: Thousands of pissed of Venezuelans are on their way to Miraflores Palace, the presidential residence of Socialist Dictator Nicolás Maduro. The people aren't standing for one of the worst instances of election fraud in human history. (video)
  

• @realLizUSA
  

• “Kamala Harris is so popular that 68 people showed up to her rally this week in Philadelphia.” But I’m sure it’s neck and neck in PA! (video)
  

• @EndWokeness
  

• This is crazy. Social media influencers are being PAID to support Kamala Harris. (video)

• @CollinRugg

• BREAKING: Virginia Attorney General Jason Miyares announces his office is looking into allegations of fraudulent donations to ActBlue, a Democrat political action committee. The announcement comes after alarming allegations of fraud surfaced online. One example was unveiled by @NoVA_Campaigns where a 79-year-old woman had allegedly made 22,619 donations to Democrats for $839,466. The woman, Kerry Alberti, lives in the Virginia suburbs and rents an apartment for less than $2000 a month. "Utter fraud (ID theft) via ActBlue," the account said. "My office is aware of these allegations and rest assured, we are looking into it," Miyares announced.

• @libsoftiktok

• Meet Imane Khelif, a boxer who was banned from the Women's World Box Championships in 2023 because he is a man. However, Khelif is being allowed to compete in women's Olympic boxing in Paris. Just another reason to boycott the Olympics. (pic)

• @WallStreetApes

• The FBI Has Been Caught “Cookin The Books” On Crime Statistics. Prominent Democrats have been all over the media saying crime rates are down, turns out it’s a lie. “The Washington Examiner did some digging and discovered the FBI has been cooking the books.” (video)
  

• @DogRightGirl

• RIP MSNBC. They will never recover from this…….. (video)

• @ChuckCallesto
  

• JUST IN: Images emerging from Venezuela seem to point to an imminent civil war.. Citizens have been captured on Video taking over military vehicles.. DEVELOPING.. (video)
  

• @ClownWorld_

• BREAKING: Meta/Facebook is now labeling the photo of President Trump immediately following the assassination attempt as "altered" and is preventing it from being seen on their platforms. (pic)

• @wideawake_media

• "Be prepared, it's coming." Remember when CNN technical director Charlie Chester, in a secret Project Veritas recording from April 2021, divulged that as soon as the public are no longer scared of "Covid", "climate change" will take centre stage as the new imaginary boogeyman to terrify everyone into submission with? (video)

• @nataliegwinters

• Smartmatic voting machines are used in US elections. Venezuela also uses the company to run its elections. Smartmatic even include praise from the Director of Venezuela's National Electoral Council in its promotional material. Nothing to see here. (pic)

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 1,012,894 Reports(+1,222 from prior report) Through June 28th, 2024.

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

• Asia Ex-Japan Investment Grade CDS Index 96.25 -.25 basis point.

• China Sovereign CDS 65.0 +1.0 basis point.
  
• China Iron Ore Spot 101.2 USD/Metric Tonne -.7%

• Bloomberg Emerging Markets Currency Index 39.0 +.02%.
• Bloomberg Global Risk-On/Risk Off Index 51.9 +1.1%.
• Volatility Index(VIX) futures 16.1 +.6%.
• Euro Stoxx 50 futures unch.

• S&P 500 futures -.29%.

• NASDAQ 100 futures -.42%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.