Thursday Watch

Night Trading 

• Asian equity indices are -1.0% to unch. on average. 
• Asia Ex-Japan Investment Grade CDS Index 71.0 +1.25 basis points. 
• China Sovereign CDS 36.25 +.25 basis point.
• China Iron Ore Spot 91.80 USD/Metric Tonne +.3%. 
• Crude Oil 89.20/bbl. +1.0%. 
• Gold 4,130.8 USD/t oz. -.24%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.04 -.03%.
• Bloomberg Emerging Markets Currency Index 33.65 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 138.1 -.5%.
• US 10-Year Yield 5.29% +1.0 basis point.
• Japan 30-Year Yield 4.19% -3.0 basis point.
• Volatility Index(VIX) futures 17.7 +.3%.
• Euro Stoxx 50 futures +.13%. 
• S&P 500 futures -.06%.
• NASDAQ 100 futures -.04%.

Morning Preview Links

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

Stocks Modestly Lower into Final Hour on European Sovereign Debt Angst, Mideast War-Induced Inflation Fears, Technical Selling, Alt Energy/Financial Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 58.4 +1.0% 
• BofA Private Credit Proxy Index 67.2 -.8% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .43 -2.0 basis points
• BofA Global Financial Stress Indicator -.03 -5.0 basis points
• European Financial Sector CDS Index 71.2 +3.8% 
• Emerging Market CDS Index 158.3 +.9% 
• Israel Sovereign CDS 59.8 +.7% 
• Bloomberg Global Trade Policy Uncertainty Index 1.0 unch.
• US Morning Consult Daily Consume Sentiment Index 85.9 -1.5

• Citi US Economic Surprise Index 36.4 -.3

• Citi Eurozone Economic Surprise Index 55.4 +2.2

• Citi Emerging Markets Economic Surprise Index 20.9 -2.5
• S&P 500 Current Quarter EPS Growth Rate YoY(17 of 500 reporting) +172.6% -5.3 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 407.93 +.40:  Growth Rate +24.3% +.1 percentage point, P/E 19.1 -.1
• S&P 500 Current Year Estimated Profit Margin 16.35% +4.0 basis points
• 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 1,084.53 +1.19: Growth Rate +61.5% +.2 percentage point, P/E 18.0 -.1
• Bloomberg US Financial Conditions Index 1.23 +3.0 basis points
• US Yield Curve 51.25 basis points (2s/10s) +3.5 basis points
• Bloomberg Industrial Metal Index 175.5 unch.
• Dutch TTF Nat Gas(European benchmark) 79.0 euros/megawatt-hour +4.3%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 8.7% -.2 percentage point
• US Atlanta Fed GDPNow Q3 Forecast +3.7% unch.
• US 10-Year T-Note Yield 5.28% +2.0 basis points
• 1-Year TIPS Spread 2.75 +3.0 basis points

• Highest target rate probability for Dec. 9th FOMC meeting: 69.2% (+.8 percentage point) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 50.1%(+3.5 percentage points) chance of 4.0%-4.25%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -145 open in Japan 
• China A50 Futures: Indicating -235 open in China
• KOSPI 200 Futures: Indicating +2 open in South Korea 

• DAX Futures: Indicating +173 open in Germany

Portfolio:

• Slight Higher: On gains in my biotech sector longs, index hedges and emerging market shorts
• Disclosed Trades: None
• Market Exposure: 75% net long

Bear Radar

Style Underperformer:

• Mid-Cap Growth -1.2%

Sector Underperformers:

• 1) Construction -3.9% 2) Alt Energy -3.3% 3) Homebuilding -2.8%

Stocks Falling on Unusual Volume: 

• LEVI, CBL, BBVA, TD, NEOG, FICO, APAM, TXG, PRG, HSBC, DB, WHR, SDGR, ARLO, NN, DNA, TWST, FMS, QXO, UUUU, WS, ALMR and HESM

Stocks With Unusual Put Option Activity:

• 1) RUN 2) BBD 3) PCVX 4) MTUM 5) UMC

Stocks With Most Negative News Mentions:

• 1) INV 2) FLNC 3) BULL 4) BETR 5) FTK

Sector ETFs With Most Negative Money Flow:

• 1) XLF 2) VOX 3) KRE 4) XLV 5) IYW

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.2%

Sector Outperformers:

• 1) Pharma +2.0% 2) Healthcare Providers +1.6% 3) Biotech +.8%

Stocks Rising on Unusual Volume:

• XRPN, BSP, PENG, AVBP, SCTX, PRE, NWE, BKH, PGNY, PSIX, BKV, GKOS, NRG, KVYO, SPOT, MIRM, VST, SMMT, KARD, TGLS, TLX and APOG

Stocks With Unusual Call Option Activity:

• 1) RUN 2) PENG 3) MGNI 4) DCH 5) HTZ 

Stocks With Most Positive News Mentions:

• 1) PENG 2) SPAI 3) JVA 4) JSDA 5) BKV

Sector ETFs With Most Positive Money Flow:

• 1) XLC 2) XLU 3) XLK 4) CIBR 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:

• (HELE)/.50
• (PEP)/.29

After the Close: 

• None of note

Economic Releases 

8:30 am EST

• Initial Jobless Claims for last week is estimated to rise to 200K versus 197K the prior week.
• Continuing Claims is estimated to fall to 1700K versus 1701K prior. 

10:00 am EST

• Wholesale Trade Sales MoM for Aug. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Waller speaking, 30Y T-Bond auction, Atlanta Fed GDPNow Q3 update, Fed's weekly balance sheet report, weekly EIA natural gas inventory report and the (MMED) annual meeting 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 -2.6% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.2 -3.5
• 4 Sectors Rising, 7 Sectors Declining
• 22.7% of Issues Advancing, 75.6% Declining 
• TRIN/Arms .84 -15.2%
• Non-Block Money Flow -$198.0M
  
• 16 New 52-Week Highs, 292 New Lows
• 38.8% (-5.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.9 -5.2

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 8.0% unch.
• Strait of Hormuz traffic returns to normal by October 31st 2.0% unch.
• Iran agrees to end enrichment of uranium by Dec. 31st 13.0% unch.
• Israel withdraws from Lebanon by December 31st 7.0% +4.0 percentage points
• US Invades Iran before 2027 16.0% +2.0 percentage points
• US announces end of Iranian blockade by October 31st 19.0% -3.0 percentage points

Other

• Bloomberg Global Risk-On/Risk-Off Index 138.0 -.7%
• Global Monitor Iran Instability Index 60.0 unch.
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 30.0% unch.
• US High-Yield Tech Sector OAS Index 445.0 +4.0 basis points
• Bloomberg Cyclicals/Defensives Index 271.5 -.6%
• Morgan Stanley Growth vs Value Index 153.7 -.2%
• CNN Fear & Greed Index 44.0 (FEAR) -4.0
• 1-Day Vix 8.5 -2.0%
• Vix 15.2 +1.3%
• Total Put/Call .84 +6.3%