Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%

Sector Underperformers:

• 1) Hospitals -4.2% 2) Computer Hardware -2.0% 3) Biotech -.6%

Stocks Falling on Unusual Volume: 

• TISI, PCRX, HSTM, LOGI, STX, WAB, CR, IPG, DPZ, SANM, AI, IONS, LECO, WAT, MMM, ABG, DVAX, HNI and TISI

Stocks With Unusual Put Option Activity:

• 1) ALLY 2) DPZ 3) HAIN 4) SIRI 5) EPI

Stocks With Most Negative News Mentions:

• 1) POWI 2) BCOM 3) SNAP 4) LULU 5) WBMD

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.3%

Sector Outperformers:

• 1) Steel +3.2% 2) Retail +2.6% 3) Restaurants +2.5%

Stocks Rising on Unusual Volume:

• COT, DWCH, RDHL, SYRS, DDS, SGMS, IVC, HIBB, WERN, FCX, GOOD, ASPS, KBWB, QBAK, RETA, MYOK, MGEE, MTLS, CAT, HAS, MC, FELE, RPM, PPBI, SFLY, ATI, HIFR, WWD, MCD, CDNS, SNI, HEES, BIG, DK, RMBS, CVLT and C

Stocks With Unusual Call Option Activity:

• 1) PX 2) RMBS 3) TXT 4) MMM 5) TER

Stocks With Most Positive News Mentions:

• 1) NEM 2) DSW 3) CAT 4) WERN 5) MCD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +20.3% Above 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 62.0% of Issues Advancing, 34.3% Declining
• 182 New 52-Week Highs, 8 New Lows
• 47.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 37.8%
• Vix 9.1 -3.3%
• Total Put/Call .80 -2.4%
• TRIN/Arms .46 -64.3%

Tuesday Watch

Evening Headlines

Bloomberg:

• Asian Stocks Face Mixed Start; Dollar Steady. Asian equities headed for a mixed start after an uninspiring American trading session that saw the dollar stabilize while stocks made little headway. Futures contracts signaled a lower open in Japan and Hong Kong stock markets, with Australia indicating small gains. Declines at Alphabet Inc. weighed on Nasdaq 100 Index futures after sales at Google’s parent fell short of the most-optimistic estimates. The euro held on to losses triggered by data showing the region’s economy cooling. Japan’s Topix index was little changed. Australia’s S&P/ASX 200 Index added 0.6 percent with volume down about 30 percent and South Korea’s Kospi index fell 0.1 percent.

• Barclays Oil Sale Triggers a Huge Number of Trades in Exotic Options. Barclays Plc sold the last part of its oil book to an unidentified buyer, triggering a surge in trading of exotic options written in the era of higher crude prices, according to people familiar with the matter. The sale was signaled by several large options trades at 9:35 a.m. in London in some of the world’s major oil markets including West Texas Intermediate crude, where 48 million barrels of contracts changed hands. That represents more than a quarter of the entire volume on an average trading day.

• Anadarko(APC) Cuts Drilling Plan as Oil Explorers Bow to Slump.

• Your Evening Briefing. (video)

• Foxconn Plans $7 Billion U.S. Investment. (video)

• Deals ‘on Pause’ as CEOs Wait for More Certainty, Baronoff Says. (video) Dealmaking activity has slowed in the past month as companies await regulatory certainty on U.S. policies from health care to taxation, according to one of Bank of America Corp.’s top deals bankers. “The last month or so I’ve seen people putting transactions on hold a bit, slowing down,” Steve Baronoff, the bank’s global chairman of mergers and acquisitions, said in an interview Monday on Bloomberg TV. “They’re not stopping their transactions but just putting them on pause -- let some of this uncertainty go through.”

• Carlyle Is Said to Target $15 Billion for U.S. Buyout Fund. (video)

Wall Street Journal: 

• Western Union Opens New Front in Cash-Transfer War: Gas Stations. Facing rising competition from financial-technology startups, it teams up with BP in Australia.

Fox News: 

• Democrats rebrand under new slogan – will their product sell? (video)

• Mueller probe: Meet the lawyers who gave $$ to Hillary, now investigating team Trump. (video)

CNBC:

• Installing microchips in employees is 'the right thing to do,' CEO says. (video)

• China reportedly boosts defense preparations along North Korean border.

• Shrinking dollar could boost the market and make these stocks big winners. (video)

• Alphabet(GOOGL) stock drops on concerns that revenue growth is going to cost more. (video)

• Nucor(NUE) CEO says the US is losing a 'trade war' in steel to 'predatory countries like China'. (video)

• Fresh off its success with Whole Foods, Jana takes new stakes in Pandora, Sunoco, others.

• Trump: Senate Republicans 'have not done their job' on ending 'Obamacare nightmare'. (video)

• Why some see even more gains ahead for three industrial giants. (video)

Zero Hedge:

• Former CIA Director Calls For A Coup If Trump Fires Mueller.

• Can Financials Lead With A Flattening Yield Curve?

• "We Are Tired Of Being Killed" Venezuelan Opposition Vows Violent Response To Maduro Power Grab. 

• Peak Shale: Anadarko Just Became The First US Oil Producer To Slash CapEx.

• Snopes.com Implodes, Resorts To GoFundMe.

• "Was It Luck?" I Don't Know, Maybe": Is A 34-Year-Old Och-Ziff Trader Worth $280 Million?

• Politics Of The Next 4 Years: Part 1 (Rise Of The "Dirtbag Left").

• Peak Shale: Anadarko Just Became The First US Oil Producer To Slash CapEx.

• Even Schwab(SCHW) Is Warning Retail Clients Of "Danger Signs Rising". (graph)

• Nasdaq Rebounds To Record Highs As T-Bill Turmoil Continues. (graph)

Business Insider:

• Goldman Sachs(GS) warns global oil demand could peak as early as 2024.

• Even the Fed has one particular corner of the real estate market on its worry list.

Telegraph:

• US and EU on collision course over Russia pipeline sanctions.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 84.75 unch. 

• Asia Pacific Sovereign CDS Index 21.0 unch.

• Bloomberg Emerging Markets Currency Index 73.62 -.05%.

• S&P 500 futures -.01%.

• NASDAQ 100 futures -.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MMM)/2.59

• (AKS)/.12

• (BIIB)/4.37

• (CAT)/1.26

• (DPZ)/1.23

• (DD)/1.28

• (LLY)/1.05

• (FCX)/.20

• (GM)/1.72

• (HCA)/1.80

• (JBLU)/.56

• (KMB)/1.49

• (MCD)/1.62

• (NEM)/.26

• (PCAR)/.99

• (PHM)/.45

• (DGX)/1.42

• (STX)/.998

• (TROW)/1.29

• (UTX)/1.77

• (AMD)/.00

• (AKAM)/.60

• (AMGN)/3.11

• (T)/.74

• (CMG)/2.19

• (CB)/2.49

• (ESRX)/1.71

• (IRBT)/-.23

• (JNPR)/.54

• (RHI)/.66

• (TXN)/.99

• (X)/.43

• (WYNN)/1.19

Economic Releases  
9:00 am EST

• The FHFA House Price Index MoM for May is estimated to rise +.5% versus a +.7% gain in April.

• The S&P CoreLogic CS 20-City MoM for May is estimated to rise +.3% versus a +.28% gain in April.

10:00 am EST

• The Conference Board Consumer Confidence Index for July is estimated to fall to 116.5 versus 118.9 in June.

• The Richmond Fed Manufacturing Index for July is estimated at 7.0 versus 7.0 in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German IFO Business Climate report, Australia CPI report, $26B 2Y T-note auction, US weekly retail sales reports and the (C) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Slightly Higher into Final Hour on Earnings Outlook Optimism, Oil Gain, Technical Buying, Financial/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 9.54 +1.92%

• Euro/Yen Carry Return Index 134.96 -.25%

• Emerging Markets Currency Volatility(VXY) 7.57 +.8%

• S&P 500 Implied Correlation 29.0 +4.77%

• ISE Sentiment Index 111.0 +85.0%
  

• Total Put/Call .79 +6.76%

• NYSE Arms 1.12 -22.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.47 -.76%
  

• America Energy Sector High-Yield CDS Index 449.0 +1.81%

• European Financial Sector CDS Index 50.44 +2.09%

• Western Europe Sovereign Debt CDS Index 5.35 +40.0%

• Asia Pacific Sovereign Debt CDS Index 20.88 +.05%

• Emerging Market CDS Index 193.95 +.58%
  

• iBoxx Offshore RMB China Corporate High Yield Index 140.45 +.09%

• 2-Year Swap Spread 23.50 -.5 basis point

• TED Spread 14.5 -1.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -28.0 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.67 -.19%
• 3-Month T-Bill Yield 1.17% +1.0 basis point
  

• Yield Curve 89.0 -1.0 basis point

• China Import Iron Ore Spot $67.86/Metric Tonne +1.07%

• Citi US Economic Surprise Index -47.40 +5.2 points

• Citi Eurozone Economic Surprise Index 13.30 -13.1 points

• Citi Emerging Markets Economic Surprise Index 15.10 +3.7 points

• 10-Year TIPS Spread 1.78 +1.0 basis point
  
• 20.8% chance of Fed rate hike at Sept. 20 meeting, 24.1% chance at Nov. 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -5 open in Japan 
• China A50 Futures: Indicating -5 open in China

• DAX Futures: Indicating +35 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• Zombie Companies Littering Europe May Tie the ECB's Hands for Years. Watch out for the zombies. The plethora of companies propped up by the European Central Bank will limit policy makers’ ability to withdraw monetary stimulus that’s been supporting the continent’s bond market since the financial crisis, according to strategists at Bank of America Corp. About 9 percent of Europe’s biggest companies could be classified as the walking dead, companies that risk collapse if the support dries up, according to the analysts. After the crash of Lehman Brothers sent global markets into a tailspin, a decade of easy-money policies gave breathing room for nations to get their balance sheets in check and allowed for a spirited revival in corporate profits. But as central bankers look to pull back stimulus for fear of overheating, the potentially grim outlook for vulnerable companies may give them pause, according to Bank of America.

• Euro Area Economy Grows at Slowest Pace in Six Months. Growth in the euro-region economy started the third quarter at the weakest pace in six months as manufacturing cooled. A composite Purchasing Managers’ Index fell to 55.8 in July from 56.3 in June, IHS Markit said on Monday. The figures indicate that gross domestic product is expanding at a 0.6 percent quarterly pace, compared with 0.7 percent in the second three months of the year.

• European Real Estate Is Entering Bubble Territory, Fidelity Says. Inexperienced, yield-hungry French retail investors are pouring money into real estate funds, pushing up prices for the best European commercial properties to unsustainable levels, according to Fidelity International Ltd.

• European Stocks Fall With Carmakers as Busy Earnings Week Begins. (video) The Stoxx Europe 600 Index fell 0.2 percent at the close. Equities fell as much as 0.6 percent after data showed the euro-area economy in July grew at the slowest pace in six months.

• Tarullo Says Weak Inflation Clouding Fed's Rate-Hike Outlook. (video) Former Federal Reserve Governor Daniel Tarullo said weak inflation could weigh on the central bank’s discussions about whether to raise interest rates again, with only little risk that prices will surge out of control. “People are thinking about what’s going on with inflation,” Tarullo, who stepped down from the Fed on April 5, told Bloomberg Television’s David Westin on Monday. “We don’t know whether in the next couple of meetings those concerns will be strong enough that the Fed will hold off from another rate increase or not.” 

• Protection Against a Dollar Plunge Is the Costliest Since 2009. (video) With the Federal Reserve expected to hold interest rates steady Wednesday, traders in the $5.1-trillion-a-day currency market are paying an added premium for the first time since October 2009 on options to protect against an extreme decline in the dollar against the euro over a six-month tenor. One measure, known as a 10-delta risk reversal, is an indication of trader bias in the options market, which currently reflects expectations that any move in the euro would be dramatic.

MarketWatch.com:

• Oil prices advance as Saudis pledge to cut exports; Nigeria agrees to output cap. September West Texas Intermediate crude CLU7, +1.16% rose by 42 cents, or 0.9%, to $46.19 a barrel on the New York Mercantile Exchange.

Fox News:

• Mueller probe: Meet the lawyers who gave $$ to Hillary, now investigating team Trump. (video)

CNBC:

• Here are Goldman’s favorite stocks for the rest of 2017. (video)

• Data showing Republicans could lose House majority puts pressure on Trump, GOP for tax reform. (video)

• Amazon(AMZN) is the next 'FANG' stock set to explode, say analysts.

Zero Hedge:

• FBI Seized Crushed Hard Drives From Home Of Wasserman-Schultz' IT Aide.

• US Spy Plane Forced To Take "Evasive Action" After Chinese Interceptor Flies Within 90 Meters.

• Democrats Desperately Attempt To Regain Relevance With Midwest Voters Via New Populist Agenda.

• These Are The 10 Most Crowded Long And Short Trades According To UBS.

• "Worse Than People Can Imagine" - Deutsche Bank To Shift $350 Billion Of Assets From London To Frankfurt.

• Existing Home Sales Slump In June - Weakest Summer Selling Season Since 2011. (graph)

• Manufacturing Rebound Sends US PMI To 6-Month High (As European PMI Hits 6-Month Low). (graph)