Bull Radar

Style Outperformer:

• Large-Cap Growth +1.1%

Sector Outperformers:

• 1) Biotech +1.7% 2) Semis +1.5% 3) Internet +1.5%

Stocks Rising on Unusual Volume:

• KIRK, DSW, SGBK, CAL, FL, FARM, SHPG, BOBE, ZAYO, AEO, FCX, TOT, PINC, JNCE, HTHT, DXCM, RACE, M, FNGN, MPWR, CRM, BPMC, PODD, COO, EDU, ATI and NTRA

Stocks With Unusual Call Option Activity:

• 1) SMH 2) NWL 3) AMBA 4) XLV 5) AA

Stocks With Most Positive News Mentions:

• 1) DSW 2) RT 3) ZAYO 4) VMW 5) BABA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -17.7% Below 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 68.5% of Issues Advancing, 27.7% Declining
• 44 New 52-Week Highs, 30 New Lows
• 36.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 30.9%
• Vix 11.8 -10.8%
• Total Put/Call .96 -2.0%
• TRIN/Arms .86 -22.5%

Tuesday Watch

Evening Headlines

Bloomberg:

• HSBC Currency Conspiracy May Have Involved 11 Others, U.S. Says. A foreign exchange front-running scheme at HSBC Holdings Plc may have involved at least 11 bank employees beyond the two executives who have been charged with crimes, a prosecutor said.

• Supplying Lithium for the Electric Revolution Is Getting Harder. Hidden within the salt flats high in the Andes mountains of South America are vast deposits of the lithium that Elon Musk may need for his electric-car revolution. But extracting the mineral from brine ponds created by Orocobre Ltd. has proved more difficult than expected. Bad weather and pump glitches meant production at the Olaroz facility in northern Argentina was 21 percent below Orocobre’s initial target in the year through June. While things are getting back on track, Chief Executive Officer Richard Seville says the company “either underestimated the complexity or overestimated our capability.”

• Asian Stocks Open Mixed After Thin U.S. Trading. (video) Asian stocks were mixed at the open after a lackluster U.S. session, as the yen snapped four days of gains. Bridgewater Associates’ Ray Dalio said he was reducing risk. Equity benchmarks fluctuated in Japan, and advanced in Australia and South Korea after the S&P 500 Index halted a two-day slide. Trading was about 15 percent below the 30-day average for the S&P 500 on a day highlighted by the first total solar eclipse to sweep the U.S. from coast to coast in 99 years. Oil bounced, while gold pulled back after nudging closer to $1,300 an ounce. Japan’s Topix index was down 0.1 percent, while the Kospi index gained 0.5 percent. Australia’s main gauge was up 0.2 percent. The MSCI Asia Pacific Index was down less than 0.1 percent.

• Five Things You Need to Know to Start Your Day.

Wall Street Journal:

• Trump Ups the Ante in Afghanistan Fight. President, heeding advisers, will add more troops and increase pressure on Pakistan.

• Booming Metals Rally Signals Optimism on Global Growth. Investors pile into industrial metals, pushing prices of copper, aluminum and zinc to multiyear high.

• U.S. Steps Up Actions on Chinese Firms Aiding North Korea. Federal prosecutors ready moves aimed at stemming funds that finance regime’s weapons program.

MarketWatch.com:

• ‘Bull market check list remains intact’ despite pullback, Morgan Stanley says.

Fox News:

• Trump approves sending 4,000 more troops to Afghanistan, senior official says. (video)

CNBC:

• There is one big silver lining that comes with Trump's troubles: Tax cut odds may be going UP. (video)

Zero Hedge:

• US Commanders To Issue "Rare Warning" To N.Korea As Kim Threatens "Merciless Revenge".

• Federal Judge Orders IRS To Release Names Of Specific Employees That Targeted Tea Party Groups.

• House Price Bubbles 2.0 In Pictures.

• US Workers' Wage Expectations Unexpectedly Collapse.

• 63 Shot, 8 Dead In Chicago's 2nd Most Violent Weekend Of 2017.

• Darkness Falls On Small Caps As Gold Eclipses Stocks Year-To-Date. (graph)

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 83.75 unch. 

• Asia Pacific Sovereign CDS Index 21.5 unch.

• Bloomberg Emerging Markets Currency Index 73.93 +.02%.

• S&P 500 futures +.19%.

• NASDAQ 100 futures +.35%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AMWD)/1.37

• (DSW)/.29

• (JASO)/.02

• (MDT)/1.08

• (TOL)/.68

• (CREE)/.04

• (INTU)/.17

• (LZB)/.29

• (CRM)/.32

Economic Releases 
9:00 am EST

• The FHFA House Price Index MoM for June is estimated to rise +.5% versus a +.4% gain in May.

• The 2Q House Price Purchase Index.

10:00 am EST

• The Richmond Fed Manufacturing Index for August is estimated to fall to 10.0 versus 14.0 in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German ZEW Index and the weekly US retail sales reports could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 75% net long heading into the day.

Stocks Slightly Lower into Final Hour on Yen Strength, Oil Decline, Technical Selling, Retail/Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.63 -4.4%

• Euro/Yen Carry Return Index 134.07 +.09%

• Emerging Markets Currency Volatility(VXY) 7.28 -.95%

• S&P 500 Implied Correlation 41.54 -2.78%

• ISE Sentiment Index 97.0 +32.88%
  

• Total Put/Call 1.01 -8.18%

• NYSE Arms 1.25 -.05%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.34 -.19%
  

• America Energy Sector High-Yield CDS Index 459.0 +.21%

• European Financial Sector CDS Index 55.77 -.30%

• Western Europe Sovereign Debt CDS Index 5.61 +.63%

• Asia Pacific Sovereign Debt CDS Index 21.46 +.02%

• Emerging Market CDS Index 191.54 +.50%
  

• iBoxx Offshore RMB China Corporate High Yield Index 141.28 +.09%

• 2-Year Swap Spread 26.0 -.5 basis point

• TED Spread 31.5 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -26.50 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.91 +.15%
• 3-Month T-Bill Yield .98% -2.0 basis points
  

• Yield Curve 88.0 -1.0 basis point

• China Import Iron Ore Spot $79.93/Metric Tonne +2.55%

• Citi US Economic Surprise Index -27.60 +1.8 points

• Citi Eurozone Economic Surprise Index 8.60 -1.3 points

• Citi Emerging Markets Economic Surprise Index 19.50 +1.2 basis points

• 10-Year TIPS Spread 1.76 -1.0 basis point
  
• 15.6% chance of Fed rate hike at Nov. 1 meeting, 39.1% chance at Dec. 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -95 open in Japan 
• China A50 Futures: Indicating +23 open in China

• DAX Futures: Indicating -19 open in Germany

Portfolio: 

• Slightly Lower: On losses in my tech/retail sector longs 

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• China’s Steel Production Outpaces U.S., World. (video)

• Your Evening Briefing.

• OPEC Supply Seen Plunging Most in Five Months by Tanker Tracker.

• McConnell and Mnuchin Predict Congress Will Raise the Debt Ceiling.

• Mnuchin Keeps the Economic Agenda Ticking as He Defends Trump. (video)

• S&P 500 Could Rally 15 Percent If It Stays Above This Level. Get ready to buy the dip. Despite having one of the biggest drops of the year last week on trouble in the White House, U.S. stocks are still holding above a key technical level known as the 200-day moving average. Analysts at Bank of America Corp. say that if the S&P 500 Index can stay above this level, we could close out the year 15 percent higher than Friday’s close. Analyst Stephen Suttmeier laid out three scenarios for the index for the rest of the year.

• Wal-Mart(WMT) Extends Online Grocery Home Delivery to Dallas and Orlando. Wal-Mart Stores Inc. has brought its online grocery delivery service to two more cities, extending a program that could attract new customers as it battles Amazon.com Inc. and brick-and-mortar rivals. The world’s biggest retailer is expanding the service to Orlando and Dallas in a partnership with Uber Technologies Inc., whose drivers will make the home deliveries. The service already exists in Denver, San Jose, Phoenix and Tampa.

Wall Street Journal:

• China’s Great Wall Motor Expresses Interest in Buying Fiat Chrysler’s Jeep. Fiat says it hasn’t been approached; interest follows several years of merger talk by CEO Marchionne.

MarketWatch.com:

• Stock prices look attractive now — compared to bonds.

• European stocks end lower, but Fiat Chrysler and Maersk shine.

Fox News:

• Search underway for 10 sailors after USS John S. McCain collision near Singapore; ship has significant damage. (video)

• Driver in Barcelona terror attack shot dead, Spanish police say. (video)

CNBC:

• Ray Dalio: US most divided socially and economically since 1937.

• The man who ran the largest tech fund during dot-com bubble turns bullish on FANG stocks. Here's why. (video)

• There are 7 ‘sins’ the retail industry keeps committing and it's killing the stocks.

• Maersk agrees to sell oil unit to Total in $7.45 bln deal. (video)

Zero Hedge:

• One Statistics Professor Was Just Banned By Google: Here Is His Story.

• Big Oil Nervous As Venezuela's Maduro Seizes More Power.

• Watch Live: Today's Once-In-A-Century Solar Eclipse.

• Ethereum Soars Near Record High As Hard Fork Sparks Buying Fever. (graph)

• Barcelona Truck Attack Driver Arrested As Police Kill "Suspicious Person" Wearing Explosive Vest In Separate Operation.

• Steve Bannon Plots Fox News Competitor As He "Goes To War" With Globalists, Report.

Business Insider:

• Gundlach fires back at report saying investors are fleeing his biggest fund.

Bear Radar

Style Underperformer:

• Small-Cap Growth Unch.

Sector Underperformers:

• 1) Alt Energy -.8% 2) Semis -.8% 3) Oil Service +.8%

Stocks Falling on Unusual Volume: 

• FL, JKS, FINL, AEO, SNA and CSIQ

Stocks With Unusual Put Option Activity:

• 1) SBUX 2) AMLP 3) AEO 4) AABA 5) RSX

Stocks With Most Negative News Mentions:

• 1) FINL 2) FL 3) SNAP 4) CSIQ 5) ULTA

Charts:

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