Bull Radar

Style Outperformer:

• Large-Cap Value +.26%

Sector Outperformers:

• 1) Banks +.89% 2) Computer Services +.69% 3) HMOs +.33%
  

Stocks Rising on Unusual Volume:

• EBAY, HPQ, HRL, CMGE, SMTC, PLCE, SNPS, HMSY, GOGO, TKMR and AUXL

Stocks With Unusual Call Option Activity:

• 1) TER 2) HPQ 3) AMPE 4) DXM 5) EBAY
  

Stocks With Most Positive News Mentions:

• 1) HRL 2) HPQ 3) SNPS 4) EBAY 5) CACI
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg:

• Iran Speaks More Softly But Keeps Building Bigger Sticks. While Iran’s military has toned down its rhetoric about military capabilities and exercises, it continues a low-profile buildup of weapons in and near the Strait of Hormuz, according to a classified Pentagon assessment. “Iran’s military strategy is defensive” and designed to “deter an attack, survive an initial strike, retaliate against an aggressor and force a diplomatic solution” while avoiding major concessions, says the unclassified executive summary of a congressionally mandated Pentagon report submitted to lawmakers on July 7. 
• Retooled Hamas Bloodies Israel With Help From Hezbollah. Hoisting themselves from a tunnel underneath the Gaza border, the Hamas gunmen sprinted through desert brush to attack an Israeli military post and kill five soldiers, retreating with a bounty of captured machine-guns. The strike at Israel’s border with Gaza at Nahal Oz, recorded by a crew member and broadcast on the group’s television station, demonstrates how Hamas’s ragtag Al-Qassam Brigades militia has transformed itself into a disciplined force and inflicted greater damage on Israel’s vastly larger army than ever before. Sixty-four soldiers died, the most in a military conflict since the second Lebanon war in 2006, and more than six times the number of troops killed in Israel’s last ground war in Gaza in 2009.
• China Baby Boom Wagers Go Bust on Child Cost Burden. Nine months after stock-market wagers on a baby boom in China reached record levels, the bets have turned into some of the nation’s biggest losers as living costs deter couples from having more than one child.
• Ebola Sickens Economies of West Africa. Sandi Sesay’s boss promised him three months of pay when he told the driver to stop coming to work. The goal was to prevent any possible spread of Ebola at the Sierra Leone mine that employs him. Two weeks later, Sesay, 29, has yet to see any money from Dawnus Construction Ltd., a contractor at London Mining Plc (LOND)’s Marampa iron-ore deposit. 
• World’s Biggest Wealth Fund Slows Investment in Emerging Markets. Norway’s $880 billion sovereign wealth fund, the world’s largest, is slowing its expansion into emerging markets as it scales back a two-year mission to tap into the fastest growing markets.
• Asian Stocks Fall After HSBC China Manufacturing Drops. Asian stocks outside Japan fell for the first time in nine days after a private gauge of Chinese manufacturing dropped more than economists forecast. China Shenhua Energy Co., the nation’s biggest coal producer by market capitalization, declined 2.2 percent in Hong Kong. Gambling firm Tatts Group Ltd. slumped 5.3 percent in Sydney after profit missed estimates. Dainippon Screen Manufacturing Co. jumped 3.9 percent in Tokyo after Mitsubishi UFJ Morgan Stanley Securities Co. advised buying shares of the semiconductor-equipment maker. The MSCI Asia Pacific excluding Japan Index slid 0.7 percent to 509.25 as of 11:08 a.m. in Hong Kong, with five shares falling for each two that rose.

Wall Street Journal: 

• U.S. Tried to Rescue Slain Journalist. Obama Calls for Excising 'Cancer' from Middle East as Officials Reveal Failed Raid to Free Hostages. U.S. Special Operations forces mounted an unsuccessful mission inside Syria earlier this summer to try to rescue several Americans held by Islamic extremists, including the journalist who was beheaded this week, senior Obama administration officials said. President Barack Obama ordered the secret operation, the first of its kind by the U.S. inside Syrian territory since the start of the civil war, after the U.S. received intelligence the Americans were being held by the extremist group known as Islamic State at a...
  
• Investors Pour Into Vanguard, Eschewing Stock Pickers. Investors are pouring money into Vanguard Group, the epitome of the hands-off approach to investing, flocking to funds that track market indexes and aren't run by stock pickers or star managers. The inflow has pushed the mutual-fund giant to almost $3 trillion in assets under management for the first time. The surge is part of a sea change in the fund business in which investors are increasingly opting for products that track...
• So What Will You Do, Mr. President? Denunciations won't stop the men who killed James Foley. President Obama on Wednesday condemned the made-for-YouTube murder of American James Foley with as much passion as we've seen from the cool Commander in Chief.

CNBC:

• Still awash with cash, world economies take turn for the worse. China's economy is slowing. The euro zone's is a flat line. Japan's sank in the second quarter. Britain has wage deflation. The U.S. economy is ticking over at best. In a world preoccupied by geopolitical crises - from Ukraine, Iraq and Gaza to the Ebola outbreak in West Africa - the global economy has taken something of a back seat. But there are increasing signs it is in trouble despite being awash with cash from record low interest rates.

Zero Hedge:

• Alternative Measures Suggest Weaker Economy. (graph)
• Half Of All Americans Live With Someone Dependent On Government Benefits. (graph)
• Jackson Hole: 'Tremendous' Downside Risks If Yellen Doesn't Go Full-Dovish.
• Goldman(GS) Warns Additional Chinese Stimulus Risks Global Financial Stability.
• "The Financial System Is Vulnerable," NYFed Asks "Could The Dollar Lose Its Reserve Status?".
• Despite Collapsing Economy, Japanese PMI Surges To 5-Month High; China PMI Tumbles, Misses By Most On Record. (graph)

Reuters:

• FBI warns healthcare firms they are targeted by hackers. The FBI has warned that healthcare industry companies are being targeted by hackers, publicizing the issue following an attack on U.S. hospital group Community Health Systems Inc that resulted in the theft of millions of patient records. 
• Hewlett-Packard(HPQ) posts surprise revenue gain after PC sales jump. Hewlett-Packard Co posted a surprise increase in quarterly revenue after sales from its personal computer division climbed 12 percent, but a flat to declining performance from its other units underscored the company's uphill battle to revive growth. Shares of the company dipped 0.8 percent to $34.84 after-hours.

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

Shanghai Securities News:

• China 2H Fiscal Spending May Grow About 5.7% Y/Y. China's fiscal spending growth in 2H may slow by 10.1 ppt from 1H, according to a joint report produced by the NDRC's State Information Center, China Development Bank and the Shanghai Securities News published today. 2H fiscal revenue growth may continue to slow due to relatively large downward pressure on the economy.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 102.0 +1.5 basis points.

• Asia Pacific Sovereign CDS Index 69.75 +.5 basis point.

• FTSE-100 futures +.11%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures  -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DLTR)/.64
• (HRL)/.48
• (SHLD)/-2.58
• (PLCE)/-.45
• (ROST)/1.08
• (GPS)/.69
• (TUES)-.05
• (INTU)/.07
• (CRM)/.12
• (TFM)/.35
• (GME)/.18

Economic Releases 
8:30 am EST

• Initial Jobless Claims are estimated to fall to 303K versus 311K the prior week.
• Continuing Claims are estimated to fall to 2520K versus 2544K prior.

9:45 am EST

• Preliminary Markit US Manufacturing PMI for August is estimated to fall to 55.7 versus 55.8 in July.

10:00 am EST

• Philly Fed for August is estimated to fall to 19.5 versus 23.9 in July.
• Existing Home Sales for July are estimated to fall to 5.02M versus 5.04M in June.
• Leading Index for July is estimated to rise +.6% versus a +.3% gain in June.

Upcoming Splits

• (EPD) 2-for-1

Other Potential Market Movers

• The UK Retail Sales report, Eurozone PMI, Jackson Hole Fed Conference, Bloomberg Economic Expectations Index for August, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial 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 Slightly Higher into Final Hour on Central Bank Hopes, Yen Weakness, Buyout Speculation, Retail/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 11.70 -4.18%

• Euro/Yen Carry Return Index 143.63 +.36%

• Emerging Markets Currency Volatility(VXY) 6.70 +.45%

• S&P 500 Implied Correlation 48.83 -1.05%

• ISE Sentiment Index 102.0 -26.09%

• Total Put/Call .88 -2.22%

• NYSE Arms .48 -39.50% 

Credit Investor Angst:

• North American Investment Grade CDS Index 57.28 -.36%

• European Financial Sector CDS Index 63.72 -1.0%

• Western Europe Sovereign Debt CDS Index 32.01 -.03%
• Asia Pacific Sovereign Debt CDS Index 69.59 +.64%

• Emerging Market CDS Index 273.07 +2.42%

• China Blended Corporate Spread Index 314.06 +.54%
• 2-Year Swap Spread 21.75 -1.25 basis points

• TED Spread 21.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -14.25 unch.

Economic Gauges:

• 3-Month T-Bill Yield .03% +1.0 basis point

• Yield Curve 196.0 -1.0 basis point

• China Import Iron Ore Spot $92.30/Metric Tonne -.75%

• Citi US Economic Surprise Index -1.80 unch.

• Citi Emerging Markets Economic Surprise Index -11.90 +.4 point

• 10-Year TIPS Spread 2.18 unch.

Overseas Futures:

• Nikkei Futures: Indicating +89 open in Japan

• DAX Futures: Indicating +14 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/retail sector longs

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Today's Headlines

Bloomberg: 

• Ukraine Fight With Rebels Intensifies as Deaths Mount. Ukraine’s armed forces said they continue to push back separatists in fighting in the country’s east, as the death toll from the conflict, already more than 2,000, mounted further. Ukraine’s National Guard captured the city of Ilovaysk, leading rebels to counter-attack with tanks and artillery, the force said today on its website. Nine Ukrainian servicemen died and 22 were wounded in the past 24 hours, military spokesman Andriy Lysenko said in Kiev. He later told reporters that government troops control a “significant” part of Luhansk, one of the main separatist strongholds. Thirty-four civilians were killed and 29 hurt in Donetsk, the other redoubt, in the past 24 hours, the regional administration said.

• Germany to Arm Kurds as Europe Shocked Into Helping Iraq. Chancellor Angela Merkel’s government cleared the way for Germany to supply Iraqis with weapons to fight Islamic State militants, dropping a post-World War II taboo on arms shipments to conflict areas. Germany’s reversal of its postwar arms doctrine reflects the revulsion felt across Europe at the brutal advance by Islamist fighters in Iraq. It also shows governments’ determination to halt the violence perpetrated by Islamic State from spilling back into Europe’s heartland.

• Argentina’s Bonds Decline on Plan to Offer Local-Law Swap. Argentina’s bonds sank the most in two weeks after the government said it plans to pay foreign-currency notes locally to sidestep a U.S. court ruling that blocked payments and caused its second default in 13 years.

• European Stocks Are Little Changed as Carlsberg Declines. European stocks were little changed, following the biggest two-day gain since April, as investors awaited central-bank cues on the interest-rate outlook. Carlsberg A/S dropped 3.6 percent after the brewer cut its full-year earnings forecast. Balfour Beatty Plc tumbled 6.7 percent after Carillion Plc stopped pursuing a merger with the British builder. Heineken NV (HEIA) jumped the most since October 2008 after reporting profit for the first half of the year that exceeded analysts’ estimates. The Stoxx Europe 600 Index slipped less than 0.1 percent to 335.3 at the close of trading in London, paring losses of as much as 0.4 percent.

Wall Street Journal:

• Fed Minutes: Rate-Hike Debate Heating Up. Officials Opt to Await More Evidence of Policy Success Before Changing Timing of Increases.

CNBC:

• Fed minutes: Some want 'relatively prompt' rate hike, most say more data needed. (video)

• Investors basically have no fear about volatility.

• BofA(BAC) reaches $17 billion settlement over sale of mortgage-backed securities.

ZeroHedge: 

• GMO: "There Is No Safe Place To Hide".

• Car Repos Soar 70% As Auto Subprime Bubble Pops; "It's Contained" Promises Fed.

• Gaza Truce Talks Over; Hamas Warns World To "Halt All International Flights To Israel".

• Russian Convoy Crosses Border, Enters Ukraine Customs.

• Why The Casino Is Dangerous: There Is Nothing Below.

• It's Official: For Caterpillar, The "Great Recovery" Is Now Worse Than The "Great Recession". (graph)

• Ten Killed From "Ebola-Like Symptoms" In Africa's Second Largest Country.

Business Insider:

• North Korea Just Moved Some Of Its Most Advanced Weaponry To The Chinese Border In A Sign Of Rising Tensions.

• Two Charts Showing The Rapid Rise Of ISIS.

• ISIS Is Now Directly Threatening To Attack American And European Targets.

• Russia's Food Ban Shows Just How Far It Has Plunged Into Camouflaged Autocracy.

The Guardian:

• Qatar Financing IS Jihadists, Says German Minister. GERMANY’s development aid minister, Gerd Mueller, on Wednesday accused Qatar of financing the jihadist group Islamic State (IS) operating in Syria and Iraq. "A story like this always has a history," he said in an interview with public broadcaster ZDF. "Who is financing these troops? Hint: Qatar."

Bear Radar

Style Underperformer:

• Small-Cap Growth -.65%

Sector Underperformers:

• 1) Software -.52% 2) Computer Hardware -.51% 3) Education -.50%

Stocks Falling on Unusual Volume:

• HTZ, PER, TEDU, NOAH, LZB, IDXX, YOKU, SLXP, CRH, TASR, RAVN, ROSE, RBC, BAS, JMEI, TTC, ASGN, HYGS, LGP, CAKE, SXC, THI, SJM, PRSC, CAVM and CHKR

Stocks With Unusual Put Option Activity:

• 1) HTZ 2) FOLD 3) XRT 4) FXY 5) LOW
  

Stocks With Most Negative News Mentions:

• 1) WFC 2) MCD 3) BAC 4) EBAY 5) CA
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume