Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 92.75 unch.

• China Sovereign CDS 59.75 +1.0 basis point.
  
• China Iron Ore Spot 96.7 USD/Metric Tonne +1.3%

• Bloomberg Emerging Markets Currency Index 39.08 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 53.3 +2.6%.
• Volatility Index(VIX) futures 16.1 +.4%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.04%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the day.

Stocks Slightly Lower into Final Hour on Rising China Economic Concerns, Yen Strength, Technical Selling, Energy/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average
  

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 15.8 +8.1%
• DJIA Intraday % Swing .32 -44.5%
  
• Bloomberg Global Risk On/Risk Off Index 52.8 -1.4%

• Euro/Yen Carry Return Index 178.3 -.45%

• Emerging Markets Currency Volatility(VXY) 8.54 +.23%

• CBOE S&P 500 Implied Correlation Index 14.0 +4.4% 

• ISE Sentiment Index 155.0 +1.0
  

• Total Put/Call .82 +10.8%

• NYSE Arms 1.20 +71.4%
  
• NYSE Non-Block Money Flow -$159.3M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 51.2 +.88%
  

• US Energy High-Yield OAS 301.3 +2.4%
• Bloomberg TRACE # Distressed Bonds Traded 268 +13
  

• European Financial Sector CDS Index 61.6 +1.6%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 165.1 +.44%
  

• Italian/German 10Y Yld Spread 138.0 basis points +.75 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 92.5 -2.1%
  

• Emerging Market CDS Index 163.1 +1.5%
  
• Israel Sovereign CDS 142.1 -.82%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.1 -.04%

• 2-Year SOFR Swap Spread -20.5 basis points unch.
  

• Treasury Repo 3M T-Bill Spread -14.25 basis points -3.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -1.75 unch.
  
• MBS  5/10 Treasury Spread 140.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 696.0 +1.0 basis point
  
• Avg. Auto ABS OAS 66.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 39.1 -.3%
• 3-Month T-Bill Yield 5.17% -3.0 basis points
  

• China Iron Ore Spot 96.3 USD/Metric Tonne +.9%
• Dutch TTF Nat Gas(European benchmark) 38.0 euros/megawatt-hour -4.7%

• Citi US Economic Surprise Index -40.5 -1.3 points

• Citi Eurozone Economic Surprise Index -60.3 -.8

• Citi Emerging Markets Economic Surprise Index -11.8 -.7 point
• S&P 500 Current Quarter EPS Growth Rate YoY(467 of 500 reporting) +8.4% -.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 264.14 -.02:  Growth Rate +15.7% unch., P/E 21.2 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.65% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +26.3% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 343.54 +.26: Growth Rate +28.1% +.1 percentage point, P/E 33.3 +.4
  
• Bloomberg US Financial Conditions Index .89 +1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .76 -5.0 basis points
  
• US Yield Curve -18.25 basis points (2s/10s) +2.25 basis points
  
• US Atlanta Fed 3Q GDPNow Forecast +1.99% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 68.0% -.6 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.64% unch.: CPI YoY +2.59% -1.0 basis point
  
• 10-Year TIPS Spread 2.07 unch.
  
• Highest target rate probability for Nov. 7th FOMC meeting: 53.8%(-7.5 percentage points) chance of 4.75%-5.0%. Highest target rate probability for Dec. 18th meeting: 44.5%(+1.4 percentage points) chance of 4.25%-4.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -310 open in Japan 
• China A50 Futures: Indicating -42 open in China

• DAX Futures: Indicating +63 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -1.3%
  

Sector Underperformers:

• 1) Oil Service -2.7% 2) Alt Energy -2.2% 3) Energy -2.2%

Stocks Falling on Unusual Volume: 

• SDRL, FUTU, BA, ASPN, CIB, EL, ALAB, JD, COIN, HRTG, VKTX, ASTS and VIPS
  

Stocks With Unusual Put Option Activity:

• 1) ASHR 2) IBB 3) TCOM 4) KSS 5) FXI
  

Stocks With Most Negative News Mentions:

• 1) VIPS 2) MAXN 3) ABCL 4) PSX 5) BA
  

Sector ETFs With Most Negative Money Flow:

• 1) XLI 2) XLU 3) XLK 4) SOXX 5) XME

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.2%
  

Sector Outperformers:

• 1) Networking +1.2% 2) Gold & Silver +.8% 3) Pharma +.7%

Stocks Rising on Unusual Volume:

• FN, HA, AS, PANW, WBTN, TEM, LITE, DRI, GOOS, QXO and PYPL
  

Stocks With Unusual Call Option Activity:

• 1) LUNR 2) WB 3) UTHR 4) PANW 5) RDDT

Stocks With Most Positive News Mentions:

• 1) FN 2) HA 3) AS 4) PANW 5) WBUY
  

Sector ETFs With Most Positive Money Flow:

• 1) XLE 2) XLF 3) XLV 4) OIH 5) XRT
  

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:

• (ADI)/1.51
• (DY)/2.26
• (M)/.30
• (TGT)/2.18
• (TJX)/.92
  

After the Close: 

• (A)/1.26
• (SNOW)/.16
• (SQM)/.96
• (SNPS)/3.28
• (URBN)/1.00
• (WOLF)/-.85
• (ZM)/1.21
• (GES)/.44
  

Economic Releases

10:00 am EST

• BLS preliminary annual payrolls benchmark revisison.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,855,000 barrels versus a +1,357,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,315,000 barrels versus a -2,894,000 barrel decline the prior week. Distillate inventories are estimated to fall by -443,330 barrels versus a -1,673,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.17% versus a +1.0% gain prior.
  

2:00 pm EST

• July 31 FOMC Meeting Minutes.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The 20Y T-Bond auction, weekly MBA Mortgage Applications report, (ORLY() analyst day and the Wells Fargo Fintech/information/Business Services Forum 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 -19.4% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 17.4 +2.5
  
• 6 Sectors Declining, 5 Sectors Rising
• 32.4% of Issues Advancing, 64.9% Declining 
• TRIN/Arms 1.21 +72.9%
  
• Non-Block Money Flow -$130.9M
  
• 123 New 52-Week Highs, 12 New Lows
• 57.4% (-2.9%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 61.0 -2.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 53.0 -1.2%
• Bloomberg Cyclicals/Defensives Index 226.9 -.4%
  
• Russell 1000: Growth/Value 20,102.1 +.28%
• CNN Fear & Greed Index 46.0 (NEUTRAL) +6.0
  
• 1-Day Vix 10.1 +7.1%
  
• Vix 15.3 +4.3%
  
• Total Put/Call .78 +5.4%