Wednesday Watch

Night Trading 

• Asian equity indices are -.25% to +.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 69.75 -1.25 basis points. 
• China Sovereign CDS 36.0 +.75 basis point.
• China Iron Ore Spot 91.30 USD/Metric Tonne -.3%. 
• Crude Oil 90.36/bbl. +1.0%. 
• Gold 4,180.5 USD/t oz. -.17%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.05 -.1%.
• Bloomberg Emerging Markets Currency Index 33.71 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 139.0 -.03%.
• US 10-Year Yield 5.30% +2.0 basis points.
• Japan 30-Year Yield 4.22% -3.0 basis point.
• Volatility Index(VIX) futures 17.7 +.1%.
• Euro Stoxx 50 futures -.5%. 
• S&P 500 futures +.1%.
• NASDAQ 100 futures unch.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer discretionary and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 75% net long heading into the day.

Stocks Rising into Final Hour on Lower Long-Term Rates, Declining Global Sovereign Debt Angst, Technical Buying, Alt Energy/Construction Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 57.8 -2.2% 
• BofA Private Credit Proxy Index 67.9 -.4% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .45 +3.0 basis points
• BofA Global Financial Stress Indicator .02 -4.0 basis points
• European Financial Sector CDS Index 68.6 -4.4% 
• Emerging Market CDS Index 157.0 -2.7% 
• Israel Sovereign CDS 59.3 -6.5% 
• Bloomberg Global Trade Policy Uncertainty Index 1.0 -.1
• US Morning Consult Daily Consume Sentiment Index 87.4 +2.2

• Citi US Economic Surprise Index 36.7 -.3

• Citi Eurozone Economic Surprise Index 53.2 -15.3

• Citi Emerging Markets Economic Surprise Index 23.4 -.8
• S&P 500 Current Quarter EPS Growth Rate YoY(16 of 500 reporting) +177.9% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 407.53 +.30:  Growth Rate +24.2% +.1 percentage point, P/E 19.2 +.1
• S&P 500 Current Year Estimated Profit Margin 16.31% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(1 of 10 reporting) +1,013.1% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,083.34 +1.15: Growth Rate +61.3% +.1 percentage point, P/E 18.1 +.2
• Bloomberg US Financial Conditions Index 1.20 +3.0 basis points
• US Yield Curve 47.75 basis points (2s/10s) -.75 basis point
• Bloomberg Industrial Metal Index 175.5 +.13%
• Dutch TTF Nat Gas(European benchmark) 76.4 euros/megawatt-hour +4.0%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 8.9% +.9 percentage point
• US Atlanta Fed GDPNow Q3 Forecast +3.7% unch.
• US 10-Year T-Note Yield 5.26% -4.0 basis points
• 1-Year TIPS Spread 2.71 -4.0 basis points

• Highest target rate probability for Dec. 9th FOMC meeting: 70.2% (+2.0 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 48.2%(+2.6 percentage points) chance of 4.0%-4.25%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +280 open in Japan 
• China A50 Futures: Indicating -159 open in China
• KOSPI 200 Futures: Indicating -1 open in South Korea 

• DAX Futures: Indicating +80 open in Germany

Portfolio:

• Higher: On gains in my energy/tech/consumer discretionary/industrial sector longs
• Disclosed Trades: None
• Market Exposure: 100% net long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.7%

Sector Underperformers:

• 1) Biotech -2.0% 2) Medical Equipment -1.1% 3) Oil Service -1.0%

Stocks Falling on Unusual Volume: 

• MMED, OZK, MESO, TRMD, SPHR, DMRA, LQDA, MMYT, CCXI, AZTA, NTRA, KARD, WDC, CBL, STX, MIAX, GRAL, PCVX, SDGR, NVAX, TEM, ALMR, SYRE, NEO, TXG, TWST, DNA, AVBP and XRPN

Stocks With Unusual Put Option Activity:

• 1) BRUN 2) NVAX 3) FCEL 4) TLN 5) MMED

Stocks With Most Negative News Mentions:

• 1) STX 2) WDC 3) AARD 4) YSS 5) AVXL

Sector ETFs With Most Negative Money Flow:

• 1) DRAM 2) XLU 3) ALAI 4) MSTY 5) SHLD

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.0%

Sector Outperformers:

• 1) Nuclear +6.3% 2) Networking +3.2% 3) Space +2.8%

Stocks Rising on Unusual Volume:

• OPCH, FCEL, APOG, EROC, CTVA, CEG, TLN, CIEN, INIO, VST, STDN, SECZ, XE, UEC, LEU, BRUN, NBIS, NXRT, PICS, ALAB, BWXT, OKLO, EN, ASTS, NRG, NNE, GDS, FTAI, CCJ, AAOI, NXT, NOK, PL, NTSK, CRWV, MRVL, RDW, FRVO, DIOD, UUUU, XP, FRSH, AVGO, MNPR, NCLH, SCTX, MNPR, LEN, TSEM, BEP, PEG, KTOS, MOD, STNE, ZS, RKLB and ONON

Stocks With Unusual Call Option Activity:

• 1) HTZ 2) MMED 3) INSM 4) URA 5) PENG 

Stocks With Most Positive News Mentions:

• 1) APOG 2) MRVL 3) LW 4) CEG 5) CSCO

Sector ETFs With Most Positive Money Flow:

• 1) XLK 2) XLF 3) SMH 4) XLI 5) XLE

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:

• None of note

After the Close: 

• (APLD)/-.30
• (LEVI)/.36

Economic Releases 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +1,718,000 barrels versus a +922,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,106,830 barrels versus a -1,684,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,620,000 barrels versus a -2,251,000 barrel decline prior. Finally, Refinery Utilization is estimated to fall -.25% versus a -1.5% decline prior.

2:00 pm EST

• The Sept. 16 FOMC Meeting Minutes. 

3:00 pm EST

• Consumer Credit for Aug. is estimated to fall to $15.0B versus $18.062B in July. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The 10Y 10-Note auction, NY Fed Inflation Expectations Index, TD Cowen Nuclear Roundtable Conference and the weekly MBA Mortgage Applications report could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• Volume Running -6.6% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 15.7 +6.8
• 10 Sectors Rising, 1 Sector Declining
• 63.8% of Issues Advancing, 33.8% Declining 
• TRIN/Arms 1.08 +44.0%
• Non-Block Money Flow +$12.7M
  
• 45 New 52-Week Highs, 107 New Lows
• 41.1% (+1.9%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.1 +4.7

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 8.0% unch.
• Strait of Hormuz traffic returns to normal by October 31st 2.0% -1.0 percentage point
• Iran agrees to end enrichment of uranium by Dec. 31st 13.0% unch.
• Israel withdraws from Lebanon by December 31st 3.0% -15.0 percentage points
• US Invades Iran before 2027 14.0% -2.0 percentage points
• US announces end of Iranian blockade by October 31st 22.0% -2.0 percentage points

Other

• Bloomberg Global Risk-On/Risk-Off Index 139.1 +.5%
• Global Monitor Iran Instability Index 60.0 -10.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 30.0% +5.0 percentage points
• US High-Yield Tech Sector OAS Index 444.0 -16.0 basis points
• Bloomberg Cyclicals/Defensives Index 273.7 -.6%
• Morgan Stanley Growth vs Value Index 154.3 +.5%
• CNN Fear & Greed Index 48.0 (FEAR) +4.0
• 1-Day Vix 7.8 -13.3%
• Vix 15.1 -3.0%
• Total Put/Call .74 -10.8%