Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 96.5 +.25 basis point.

• China Sovereign CDS 65.25 +.25 basis point.
  
• China Iron Ore Spot 100.1 USD/Metric Tonne +1.0%

• Bloomberg Emerging Markets Currency Index 39.0 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 51.3 +2.7%.
• Volatility Index(VIX) futures 16.4 -.8%.
• Euro Stoxx 50 futures unch.

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.55%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by healthcare and financial 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 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%