Stocks Rising into Final Hour on Lower Long-Term Rates, Earnings Outlook Optimism, China Stimulus Hopes, Telecom/Medical Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average
  

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 18.1 -5.1%
• DJIA Intraday % Swing .65 +64.0%
  
• Bloomberg Global Risk On/Risk Off Index 60.8 +3.1%

• Euro/Yen Carry Return Index 179.9 -.16%

• Emerging Markets Currency Volatility(VXY) 9.6 +.6%

• CBOE S&P 500 Implied Correlation Index 15.4 -.3% 

• ISE Sentiment Index 152.0 -2.0 points
  

• Total Put/Call .79 -20.2%

• NYSE Arms .99 -3.9%
  
• NYSE Non-Block Money Flow +$134.8M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 51.2 -.8%
  

• US Energy High-Yield OAS 323.7 +.1%
• Bloomberg TRACE # Distressed Bonds Traded 199 -12
  

• European Financial Sector CDS Index 61.9 -.8%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 157.9 -.46%
  

• Italian/German 10Y Yld Spread 118.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 71.2 -.7%
  

• Emerging Market CDS Index 162.1 -.07%
  
• Israel Sovereign CDS 149.3 -.03%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.22 -.04%

• 2-Year SOFR Swap Spread -19.5 basis points +.25 basis point
  

• 3M T-Bill Treasury Repo Spread -21.0 basis points -.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +.5 basis point
  
• MBS  5/10 Treasury Spread 143.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 701.0 unch.
  
• Avg. Auto ABS OAS 61.0 -2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 38.5 +.06%
• 3-Month T-Bill Yield 4.63% -1.0 basis point
  

• China Iron Ore Spot 101.4 USD/Metric Tonne -.3%
• Dutch TTF Nat Gas(European benchmark) 39.2 euros/megawatt-hour -1.1%

• Citi US Economic Surprise Index 14.8 -.1 point
  

• Citi Eurozone Economic Surprise Index -17.9 +1.2 points

• Citi Emerging Markets Economic Surprise Index -2.8 +4.4 points
• S&P 500 Current Quarter EPS Growth Rate YoY(72 of 500 reporting) +6.7% +.5 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 267.56 +.21:  Growth Rate +14.7% +.1 percentage point, P/E 21.9 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.65% +2.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(1 of 10 reporting) +40.2% n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 368.05 +.20: Growth Rate +29.3% +.1 percentage point, P/E 32.2 +.1
  
• Bloomberg US Financial Conditions Index .88 +9.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .82 -6.0 basis points
  
• US Yield Curve 11.75 basis point (2s/10s) +1.0 basis point
  
• US Atlanta Fed 3Q GDPNow Forecast +3.43% +1.0 basis point
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 50.1 +.1 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.62% unch.: CPI YoY +2.57% unch.
  
• 10-Year TIPS Spread 2.31 +1.0 basis point
  
• Highest target rate probability for Dec. 18th FOMC meeting: 75.1%(+3.4 percentage points) chance of 4.25%-4.5%. Highest target rate probability for Jan. 29th meeting: 56.2%(+5.6 percentage points) chance of 4.0%-4.25%. (current target rate is 4.75-5.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +273 open in Japan 
• China A50 Futures: Indicating +74 open in China

• DAX Futures: Indicating +125 open in Germany

Portfolio:

• Higher:  On gains in my tech/industrial/biotech/consumer discretionary/utility sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -.1%
  

Sector Underperformers:

• 1) Oil Service -2.3% 2) Regional Banks -1.0% 3) Disk Drives -.6%

Stocks Falling on Unusual Volume: 

• ADM, IRDM, OZK, INDB, BG, CVS, WFRD, ZETA, WAL, FN and CLMT
  

Stocks With Unusual Put Option Activity:

• 1) ZETA 2) ACI 3) OKLO 4) LAC 5) TAL
  

Stocks With Most Negative News Mentions:

• 1) MGPI 2) BNTX 3) ORGS 4) CVS 5) SPIR
  

Sector ETFs With Most Negative Money Flow:

• 1) KRE 2) XLE 3) XHB 4) XLB 5) XLC

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.8%
  

Sector Outperformers:

• 1) Gold & Silver +4.7% 2) Airlines +2.8% 3) Medical Equipment +2.8%

Stocks Rising on Unusual Volume:

• OKLO, LEU, GATO, TDS, NNE, HUT, LXEO, MSTR, LW, NFLX, ISRG, BEKE, ZIM, CLSK, GCT, PAAS, SA, PCT, MUX, SILV, KSPI, SNCY, DCTH, RDDT, ALKT, DRD, COIN, ALV, DESP, CELH, ELVN, AEM, WPM, ZLAB, BILI, CCK, AGI, MARA, DNTH, KGC, FUTU, WNS, EGO, CMA, MDU, IOVA, BX, SLG, PSLV, AU, MGA, GTLB, LEA, GKOS, XPEV and ACI
  

Stocks With Unusual Call Option Activity:

• 1) ALHC 2) BNO 3) ISRG 4) JBLU 5) NFLX

Stocks With Most Positive News Mentions:

• 1) LEU 2) AURA 3) ISRG 4) NFLX 5) LW
  

Sector ETFs With Most Positive Money Flow:

• 1) XLF 2) AIRR 3) OIH 4) SOXX 5) XLI
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open:

• None of note
  

After the Close: 

• (CATY)/.95
• (AGNC)/2.20
• (ARE)/2.37
• (BOKF)/1.98
• (CADE)/.64
• (HSTM)/.13
• (HXL)/.46
• (NUE)/1.50
• (SAP)/1.32
• (WTFC)/2.49
• (ZION)/1.18
  

Economic Releases

10:00 am EST

• The Leading Index for Sept. is estimated to fall -.3% versus a -.2% decline in Aug.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Kashkari speaking, Fed's Logan speaking, Fed's Schmid speaking, IMF meetings and the (JEF) investor meeting could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -2.9% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.7 -3.8
  
• 2 Sectors Declining, 9 Sectors Rising
• 52.4% of Issues Advancing, 45.0% Declining 
• TRIN/Arms 1.09 +4.9%
  
• Non-Block Money Flow +$115.5M
  
• 141 New 52-Week Highs, 10 New Lows
• 61.4% (-.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 71.0 unch.
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 60.6 +2.8%
• Bloomberg Cyclicals/Defensives Index 231.8 -.05%
  
• Russell 1000: Growth/Value 19,801.3 +.47%
• CNN Fear & Greed Index 73.0 (GREED) unch.
  
• 1-Day Vix 8.1 -27.3%
  
• Vix 18.2 -4.6%
  
• Total Put/Call .85 -14.1%

Friday Watch

Night Trading 

• Asian equity indices are -.5% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 71.75 -.5 basis point.

• China Sovereign CDS 63.25 +.25 basis point.
  
• China Iron Ore Spot 100.4 USD/Metric Tonne +.8%

• Bloomberg Emerging Markets Currency Index 38.4 -.07%.
• Bloomberg Global Risk-On/Risk Off Index 60.8 +3.1%.
• Volatility Index(VIX) futures 18.8 +.19%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures +.06%.

• NASDAQ 100 futures +.14%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology 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 100% net long heading into the day.