Bull Radar

Style Outperformer:

• Small-Cap Growth +.59%

Sector Outperformers:

• 1) Airlines +2.17% 2) Biotech +1.78% 3) Homebuilding +1.08%
  

Stocks Rising on Unusual Volume:

• PBYI, TLM, INO, ISRG, LEJU, BIIB, HA, RHI, LAD and RES

Stocks With Unusual Call Option Activity:

• 1) END 2) XLNX 3) JNPR 4) BRCM 5) WMB
  

Stocks With Most Positive News Mentions:

• 1) BIIB 2) AAPL 3) PEP 4) LNKD 5) DOW
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg:

• Rebel Stronghold Holds Breath as Shellfire Escalates in Donetsk. The grass is being trimmed, the flowers tended and the potholes on roads filled. Jazz plays out from a café, and a few people are out enjoying the sunshine. Yet puncturing the scene of a European summer is the distant boom, boom, boom of artillery fire and emptiness. This is Donetsk, nicknamed the Ukrainian city of a million roses and now the headquarters of a pro-Russia group wanting to break up the country. With separatists blamed by the U.S. for shooting down a Malaysia Airlines plane last week and killing almost 300 people, the semblance of normality masks a foreboding among residents as to the fate of their city with Ukrainian forces fighting militants in the suburbs.
• Pressure for Cease-Fire Builds on Hamas. Diplomats stepped up pressure on Hamas to accept a cease-fire in Gaza and end a conflict that has killed more than 600 people, as global airlines suspended flights to Tel Aviv because of rocket fire. U.S. Secretary of State John Kerry, who’s in Cairo to promote the Egyptian plan for a truce, said Hamas has “a fundamental choice to make.” Palestinian President Mahmoud Abbas said late yesterday that Hamas agreed to a proposed cease-fire to be followed by five days of talks, even though it rejected the Egyptian initiative last week while Israel accepted it. There was no immediate response from Hamas to the Palestinian Authority leader’s remarks.

• Asian Stocks Gain as Rupiah Climbs With Zinc; Crude Drops. Asian stocks rose, with the regional index extending gains from a six-year high, after U.S. inflation data eased concern over the outlook for Federal Reserve interest-rate increases. Indonesia’s rupiah climbed and zinc rose a third day, while crude oil fell. The MSCI Asia Pacific Index added 0.2 percent by 10:08 a.m. in Tokyo, rising a third day and set to hold its highest close since June 2008.

• Obamacare Subsidy Loss May Boost Premiums, Chase Insurers. A future court ruling that Americans in 36 states can no longer get U.S. subsidies for Obamacare’s insurance plans would boost premiums by 76 percent, allowing many to flee the program and chasing away insurers. It’s a worst-case scenario that could affect almost 5 million people who use subsidies now, and millions more who haven’t yet enrolled. Under the health law, anyone whose premiums exceed 8 percent of their income is exempt from the law’s mandate that all Americans be covered. That may leave only the sickest and most desperate on the rolls, raising coverage costs for insurers. 

• Wall Street Cut From Guest List for Jackson Hole Fed Meeting. Wall Street (SPX) doesn’t lead to Jackson Hole this year. As the Federal Reserve Bank of Kansas City prepares to host next month’s annual gathering of central bankers in Wyoming, seasoned Fed watchers from the financial markets, including the chief U.S. economists of the biggest American banks, aren’t being invited, according to past participants.

Wall Street Journal:

• Iraqi Leader Maliki Loses Backing of Shiite Figure and Iran for New Term. Iraqi Prime Minister Nouri al-Maliki is losing political support for his bid for a third term from core backers, including the country's Shiite religious establishment and ally Iran, say Iraqi officials. The shift, officials said, is prompting members of the premier's own alliance to reconsider their support and dimming the prospect of his stay in power. In recent days, high-level delegations of Iranian military officials and diplomats held a flurry of meetings in Baghdad and the Shiite religious capital Najaf, where they were told that Mr. Maliki, a Shiite, has lost the confidence of all but his most loyal inner circle, Iraqi officials with knowledge of the meetings said. 

• U.S. Officials Lay Out Case Against Russians. Washington Seeks to Counter Russian Claims About MH17 Crash. U.S. intelligence officials presented reporters with their most detailed case yet Tuesday that Russian-backed Ukrainian separatists shot down a Malaysia Airlines jetliner last week, in a bid to counter what American officials see as Russian efforts to muddy the waters with claims of Ukrainian culpability. The officials relied on photographs, social media, and voiceprint analysis of Ukrainian communications intercepts to make their... 

• Appeals Courts Issue Conflicting Rulings on Health-Law Subsidies. Subsidies Seen as Crucial to Implementation of Affordable Care Act.

CNBC: 

• Apple(AAPL) earnings: $1.28 a share, vs. expected EPS of $1.23.

• Global terrorism deaths soar.

• Microsoft(MSFT) earnings: 58 cents a share, vs. expected EPS of 60 cents.

Zero Hedge:

• NY Fed Slams Deutsche Bank (And Its €55 Trillion In Derivatives): Accuses It Of "Significant Operational Risk".

• Turkish PM Cuts Ties With US, Mulls De-Dollarization With Russia.

• The Baltic Dry Index Collapses To 18-Month Lows; Worst July Since 1986. (graph)

• "Authenticity Is As Rare As A Unicorn In Today's Politically-Motivated Markets".

• After Bubble Pops, Saudi Arabia Opens Stock Market To Foreign "Greater Fool" Investors. (graph)

• Poroshenko Demands Ukraine Separatists Be Declared "Terrorists" Under International Law.

Business Insider:

• Bill Ackman Just Finished 'The Most Important Presentation' Of His Career And The Market Is Laughing At Him.

• Investors Taking On Junk Bonds Could Be In For A Nasty Surprise.

• Four Important Charts From Apple's Earnings.

Reuters:

• Intuitive Surgical(ISRG) shows improvement despite profit decline.

Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99

China Securities Journal:

• China Should Allow Defaults to Re-Evaluate Risks. China should allow some companies to default, and encourage financial institutions and investors to re-evaluate the risks of investing in local government debt and the property market, reporter Zhang Chaohui says in a front-page commentary. Funds will move back to industries with low risks from sectors with overcapacity after the market recognizes investment risks. Local governments may face bigger payment pressure in 2H on slower economic growth and cooling of land sales and property market, the commentary said.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are unch. to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 103.0 -.5 basis point.

• Asia Pacific Sovereign CDS Index 71.50 -1.0 basis point.

• FTSE-100 futures -.19%.

• S&P 500 futures -.01%.

• NASDAQ 100 futures  -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SPG)/2.13

• (DOW)/.72

• (PX)/1.59

• (BA)/1.98

• (BIIB)/2.83

• (GD)/1.77

• (NOC)/2.22

• (DAL)/1.03

• (OC)/.45

• (R)/1.39

• (KNX)/.27

• (GRA)/1.15

• (APD)/1.45

• (WHR)/2.91

• (PEP)/1.23

• (EMC).43

• (NSC)/1.74

• (FCX)/.53

• (QCOM)/1.21

• (CRUS)/.30

• (FFIV)/1.35

• (GILD)/1.79

• (CAKE)/.61

• (RJF)/.76

• (T)/.63

• (ILMN)/.50

• (FB)/.32

• (TSCO)/.95

• (AVB)/1.66

• (FLS)/.92

• (TEX)/.81

• (ETH)/.40

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,422,220 barrels versus a -7,525,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,133,330 barrels versus a +171,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,844,440 barrels versus a +2,528,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall -.1% versus a +2.2% gain the prior week.

Upcoming Splits

• None of note

Other Potential Market Movers

• The HSBC China Manufacturing PMI and the weekly MBA mortgage applications report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and real estate shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Higher into Final Hour on Earnings Optimism, Less European/Emerging Markets Debt Agnst, Short-Covering, Gaming/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.04 -6.01%

• Euro/Yen Carry Return Index 142.65 -.35%

• Emerging Markets Currency Volatility(VXY) 5.86 -.51%

• S&P 500 Implied Correlation 51.75 -.71%

• ISE Sentiment Index 154.0 +63.8%

• Total Put/Call .91 +1.11%

• NYSE Arms 1.05 +16.26% 

Credit Investor Angst:

• North American Investment Grade CDS Index 58.54 -1.60%

• European Financial Sector CDS Index 67.48 -4.69%

• Western Europe Sovereign Debt CDS Index 34.87 -1.66%

• Asia Pacific Sovereign Debt CDS Index 71.45 -1.41%

• Emerging Market CDS Index 241.0 -1.50%

• China Blended Corporate Spread Index 306.45 +.10%

• 2-Year Swap Spread 20.0 unch.

• TED Spread 21.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -8.75 +1.25 basis points

Economic Gauges:

• 3-Month T-Bill Yield .02% unch.

• Yield Curve 199.0 +1.0 basis point

• China Import Iron Ore Spot $95.40/Metric Tonne -.62%

• Citi US Economic Surprise Index -23.40 -5.4 points

• Citi Emerging Markets Economic Surprise Index -4.30 +.5 point

• 10-Year TIPS Spread 2.22 unch.

Overseas Futures:

• Nikkei Futures: Indicating +43 open in Japan

• DAX Futures: Indicating -9 open in Germany

Portfolio: 

• Higher: On gains in my tech/biotech/medical sector longs

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.38%

Sector Outperformers:

• 1) Gaming +1.82% 2) Networking +1.68% 3) Homebuilding +1.58%
  

Stocks Rising on Unusual Volume:

• CROX, HLF, CIT, PII, CMG, WWD, SANM, LEJU, STLD, ARMH, HLX, CNC, WAT, INVN and APA

Stocks With Unusual Call Option Activity:

• 1) GPOR 2) TIBX 3) HLF 4) CMG 5) A
  

Stocks With Most Positive News Mentions:

• 1) CMG 2) APA 3) LMT 4) CMCSA 5) SANM
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg:

• Malaysia Air Search Chaos Evokes Korean-Air Crash Cover-Up. The seizing of flight recorders from the downed Malaysian Airlines (MAS) jet by Russia-backed Ukrainian rebels has parallels with the Soviet response to the destruction of another civil airliner more than three decades ago. After Sukhoi Su-15 interceptors used air-to-air missiles to shoot down Korean Air Lines (003490) Flight 007 when the Boeing Co. (BA) 747 strayed into Soviet airspace in 1983, a security clampdown was immediately imposed at the crash site off Sakhalin Island, with the jet’s so-called black boxes spirited away from the scene. 

• Bank of Japan Majority Won’t Be Swayed by Kuroda Ideology. More than a year after securing support at the Bank of Japan for unprecedented monetary stimulus, Governor Haruhiko Kuroda has yet to persuade most board members that they have the power to achieve their inflation target. A majority of the nine members disagree with Kuroda’s view that flooding the economy with cash is sufficient to get stable 2 percent gains in consumer prices, according to people familiar with their thinking. Most conclude it cannot be done without government steps to raise Japan’s growth potential, they said, asking not to be named because the discussions are private. 

• Dubai Haven Status Frays as CDS Follow Iraq Higher: Arab Credit. Dubai is losing the trust of debt investors faster than any nation in the Middle East except Iraq as regional turmoil threatens its haven status. The cost of insuring the emirate’s bonds against non-repayment using credit-default swaps climbed to 165 basis points on July 20, the highest level since May 5, according to prices compiled by CMA. Swaps gained 30 basis points since June 9, compared with an increase of 93 basis points for Iraq, where militants from Islamic State, an al-Qaeda offshoot formerly known as ISIL, have taken control of parts of the country.

• Asia Stocks Gain With Oil Near 3-Week High; Soybeans Fall. Asian stocks rose as Japanese markets resumed after a holiday. Crude oil held near a three-week high and Indonesian rupiah forwards gained, while soybean futures extended declines into a fourth day. The MSCI Asia Pacific Index added 0.2 percent by 10:01 a.m. in Tokyo, rising a second day. Japan’s Topix index, which slid 0.8 percent when it last traded July 18, rose 0.5 percent.

Wall Street Journal: 

• Bodies From Malaysia Airlines Flight Begin Long Trip to Netherlands. Pro-Russian Rebels Agree to Hand Over Flight Data Recorders to Malaysian and Dutch Officials.

• U.S. Calls for Immediate Truce in Gaza as Death Toll Mounts. Palestinian Deaths Reach 571.

• Small-Cap Stocks Run Into Big Trouble. Small-company shares' summer swoon deepened Monday, underscoring investor concern about valuations. The Russell 2000 index of smaller companies, typically those with market values below $1 billion, dropped 0.4% Monday, outpacing a 0.3% decline in the Dow Jones Industrial Average and a 0.2% slide in the S&P 500. Monday's drop comes as...

• Hamas's Civilian Death Strategy. Gazans shelter terrorists and their weapons in their homes, right beside sofas and dirty diapers.

MarketWatch.com:

• Treasury yield curve again flattest in five years. 10-year yield hits lowest point since end of May.

• Johnson & Johnson(JNJ) sets $5 billion share buyback.

CNBC:

• Chipotle(CMG) tops Street forecasts; stock jumps. Fast-casual chain Chipotle Mexican Grill's net income and revenue easily beat Wall Street's expectations on Monday. 

• Which ‘swans’ are on markets’ radar this summer? (video)

Zero Hedge: 

• How RenTec Made More Than $34 Billion In Profits Since 1998: "Fictional Derivatives".

• France Defies US, British Demands To Kill Mistral Sale To Putin... For Now.

• Saxobank: "Be Warned" Of Delayed Market Reaction To "Escalation Of Global Turmoil". (graph)

• Netflix Meets EPS, Beats On International Subs, Guides To Lower Q3 EPS And Domestic Subs. (graph)

• With ISIS Now Controlling 35% Of Syria And Most Of Its Oil Fields, Iraq Issues An Ultimatum To The US.

• The New Scariest Chart In America. (graph)

• Spot The China Liquidity Crisis. (graph)

• Citi: "Asset Markets Are Ill-Prepared For Any Risk-Negative Shock".

Business Insider: 

• Why Putin's Officers Are Directly Responsible For Shooting Down MH17.

• China's Total Debt Surges To 251% Of GDP. (graph)

• BLACKROCK(BLK): 'Investors Should Buckle Up For More Volatility Ahead'.

Reuters:

• Texas Instruments(TXN) expects higher quarterly revenue, says markets OK. Texas Instruments Inc said it expects higher third-quarter revenue following recently improved demand for chips used in cars, industrial equipment and communications gear. 

• Rent-A-Center(RCII) sees weak demand, cuts forecast. Rent-to-own home furniture retailer Rent-A-Center Inc cut its full-year forecast for revenue and profit, saying it expected demand to remain weak, sending its shares down as much as 2 percent in extended trade. 

• Hedge fund exit requests drop to six-month low in July.

Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99

Telegraph: 

• French economy 'catastrophic’, says business federation. President of France’s equivalent of the CBI calls for an end to the 75pc tax rate and 35-hour working week.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 104.0 +2.0 basis points.

• Asia Pacific Sovereign CDS Index 72.50 unch.

• FTSE-100 futures +.24%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures  +.11%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (RF).21

• (LXK)/.93

• (LMT)/2.66

• (GCI)/.64

• (KMB)/1.50

• (STT)/1.26

• (CIT)/.84

• (DD)/1.17

• (VZ)/.90

• (TRV)/2.07

• (UTX)/1.70

• (CMCSA)/.72

• (HOG)/1.46

• (IR)/1.09

• (MO)/.66

• (KO)/.63

• (AMTD)/.34

• (MCD)/1.44

• (BTU)/-.29

• (MSFT)/.60

• (ISRG)/2.82

• (XLNX)/.61

• (JNPR)/.38

• (LLTC)/.56

• (VMW)/.79

• (AAPL)/1.23

• (BRCM)/.61

• (EA)/-.04

• (SCCO)/.43

• (HTZ)/.45

Economic Releases
8:30 am EST

• The CPI for June is estimated to rise +.3% versus a +.4% gain in May.

• The CPI Ex Food & Energy for June is estimated to rise +.2% versus a +.3% in May.

9:00 am EST

• The FHFA House Price Index for May is estimated to rise +.2% versus unch. in April.

10:00 am EST

• The Richmond Fed Manufacturing Index for July is estimated at 5.0 versus 3.0 in June.

• Existing Home Sales for June are estimated to rise to 4.99M versus 4.89M in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Euro Area Govt Debt report, Senate Corp Tax Hearing and the US weekly retail sales reports could impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and real estate shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.