Bear Radar

Style Underperformer:

• Mid-Cap Value -.1%

Sector Underperformers:

• 1) HMOs -2.5% 2) Hospitals -2.1% 3) Oil Service -1.0%

Stocks Falling on Unusual Volume: 

• SNCR, SUPN, EVHC, PTLA, BBY, NUVA, CNC, AZO, UNIT, GOGO, AYI, EVH, MD, ATGE and COO

Stocks With Unusual Put Option Activity:

• 1) TMUS 2) BBBY 3) FINL 4) MET 5) MAT

Stocks With Most Negative News Mentions:

• 1) AYI 2) SUPN 3) NUVA 4) APRN 5) UA

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.3%

Sector Outperformers:

• 1) Gaming +2.2% 2) Banks +1.1% 3) Telecom +.9%

Stocks Rising on Unusual Volume:

• BOBE, VERI, QDEL, ASYS, HOFT, ZAGG, EFX, GDS, UBNT, MTOR, TMUS, KAI, COHR, KBWB, ADMS, VRNS, OLED, ACIA, SQM, VZ, AAOI, DQ, EPZM, NOC, REV, LUK and EROS

Stocks With Unusual Call Option Activity:

• 1) S 2) STAY 3) BBBY 4) AAOI 5) GLW

Stocks With Most Positive News Mentions:

• 1) COHR 2) KORS 3) QDEL 4) NTAP 5) USB

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +1.7% Above 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 48.7% of Issues Advancing, 46.6% Declining
• 125 New 52-Week Highs, 10 New Lows
• 44.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.1%
• Vix 9.9 -2.2%
• Total Put/Call .87 -4.4%
• TRIN/Arms 1.03 +14.2%

Tuesday Watch

Evening Headlines

Bloomberg:

• Weakest China Developers Threatened by $38 Billion in Bond Puts. Chinese property developers face a wall of local bonds that investors can force them to pay off next year ahead of schedule, just as rising interest rates raise the risk that more note holders may opt to do so. Investors have an option to offload 250 billion yuan ($38 billion) of such notes in 2018, according to Bloomberg data. To put some perspective on that amount, it’s five times all their regularly maturing onshore bond principal this year.

• Why Asian Central Banks Are Sidestepping the Fed—For Now.

• Stocks in Asia Rise; Yen Steady After Two-Day Loss. Japan’s equity benchmarks gained more than 1 percent, playing catch-up to a rally on Monday, when Tokyo was closed for a holiday. The S&P 500 Index held above 2,500 to notch a fresh record Monday, and the Dow Jones Industrial Average added to its all-time high. The yen inched higher though held on to most of the losses in the two previous sessions. Gold was little changed as demand for safe-haven assets waned the past two trading days, while oil was steady just under $50 a barrel. Japan’s Topix index added 1.1 percent as of 9:17 a.m. Tokyo time. The Kospi index fluctuated and Australia’s main gauge increased 0.3 percent. Hang Seng Index futures were little changed.

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

• Far From the Texas Coast, Hurricane Harvey Hits Oil Refiners. Three weeks after Hurricane Harvey ravaged the massive fuel-making industry along the Texas coast, the region’s recovery from storm damage is starting to disrupt plans for crucial maintenance at refineries thousands of miles away from the flood zones.

Wall Street Journal:

• The Fed, a Decade After the Crisis, Is About to Embark on the Great Unwinding. After a historic buildup of its bond portfolio to support the U.S. economy, the central bank plans to shrink its holdings, entering uncharted territory.

• Bitcoin’s Wild Ride Shows The Truth: It Is Probably Worth Zero. The digital currency’s value depends on it becoming digital gold—or on criminals.

• Russia and China Begin Joint War Games. Neighbors display partnership and Moscow adds another show of might as U.N. General Assembly convenes.

• Northrop Grumman(NOC) Move to Acquire Rocket Maker Reflects Military Space Race. Deal for Orbital ATK is largest in defense sector in two years.

• Senate Passes Defense Bill to Boost Military Spending. Vote was 89-8; Senate negotiators now have to hammer out compromise with House.

• A Question for Anyone Getting an MRI. Patients need to know if the doctor plans to use contrast, or gadolinium, because it may leave harmful metal deposits; a new FDA warning.

CNBC:

• Amazon(AMZN) Web Services will now charge by the second, its biggest pricing change in years. (video)

• After hours buzz: AMZN, INTC & more.

• Short-seller who exposed Valeant says 'it doesn't take a CFA' to recognize this next big fraud. (video)

• China government advisor warns on Trump: When countries close their doors, they 'will be harmed'. (video)

Zero Hedge:

• Hillary Clinton May Challenge Legitimacy Of Presidential Election. (video)

• More Equifax(EFX) Lies? Company Originally Hacked Five Months Earlier Than It Disclosed.

• 'Chapter 22' Bankruptcy Filings Increasingly 'En Vogue' For Struggling Retail Sector.

• Trump Approves Puerto Rico Emergency Declaration As Maria Strengthens Into "Potentially Catastrophic" Cat-5 Hurricane.

• "I Don't Have Anything To Start Over" - Harvey Victims Pray For Relief As 1000s Remain Stuck In Shelters.

• Toys "R" Us To File Bankruptcy Any Minute; Bonds Crash.

• China Treasury Holdings Rise For 6th Month, But The Streak May Soon Be Ending.

• Obama Goes Full Clinton Foundation With Series Of $400,000 Wall Street Speeches.

• It's Up To McCain: Republicans' Last Ditch Push To Repeal Obamacare Gains Momentum.

• Tech Tumble Spooks Stocks (Briefly) As VIX Curve Steepens To 7-Month Highs. (graph)

Business Insider:

• Nvidia's(NVDA) artificial intelligence is breaking into the industrial sector.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 71.75 -1.0 basis point. 

• Asia Pacific Sovereign CDS Index 18.25 unch.

• Bloomberg Emerging Markets Currency Index 74.56 +.03%.

• S&P 500 futures +.03%.

• NASDAQ 100 futures +.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (APOG)/.85

• (AZO)/15.12

• (AIR)/.31

• (ADBE)/1.01

• (BBBY/.95

• (CPRT)/.31

• (FDX)/3.11

Economic Releases 
8:30 am EST

• Housing Starts for August are estimated to rise to 1174K versus 1155K in July.

• Building Permits for August are estimated to fall to 1220K versus 1223K in July.

• The Current Account Deficit for 2Q is estimated at -$116.0B versus -$116.8B in 1Q.

• The Import Price Index MoM for August is estimated to rise +.4% versus a +.1% gain in July.

• The Export Price Index MoM for August is estimated to rise +.2% versus a +.4% gain in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German ZEW Index, weekly US retail sales reports, (BIG) analyst conference and the (BBY) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by financial and industrial shares in the region. I expect US stocks to open mixed 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 Economic Optimism, Yen Weakness, Technical Buying, Financial/Defense Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 10.33 +1.57%

• Euro/Yen Carry Return Index 138.80 +.51%

• Emerging Markets Currency Volatility(VXY) 7.63 -.65%

• S&P 500 Implied Correlation 24.50 +3.95%

• ISE Sentiment Index 86.0 +19.4%
  

• Total Put/Call .91 -15.0%

• NYSE Arms 1.1 -8.21%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.20 -.06%
  

• America Energy Sector High-Yield CDS Index 423.0 +1.37%

• European Financial Sector CDS Index 47.55 -1.96%

• Western Europe Sovereign Debt CDS Index 4.69 -5.26%

• Asia Pacific Sovereign Debt CDS Index 18.22 -.44%

• Emerging Market CDS Index 170.84 +.99%
  

• iBoxx Offshore RMB China Corporate High Yield Index 141.75 +.02%

• 2-Year Swap Spread 26.0 +.75 basis point

• TED Spread 29.50 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -24.5 -1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.5 -.34%
• 3-Month T-Bill Yield 1.02% -1.0 basis point
  

• Yield Curve 84.0 +2.0 basis points

• China Import Iron Ore Spot $71.76/Metric Tonne -.51%

• Citi US Economic Surprise Index -22.60 -3.6 points

• Citi Eurozone Economic Surprise Index 18.20 -.2 point

• Citi Emerging Markets Economic Surprise Index 14.40 -1.4 basis points

• 10-Year TIPS Spread 1.88 +2.0 basis points
  
• 15.6% chance of Fed rate hike at Nov. 1 meeting, 56.0% chance at Dec. 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +86 open in Japan 
• China A50 Futures: Indicating +62 open in China

• DAX Futures: Indicating -17 open in Germany

Portfolio: 

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

• Disclosed Trades: None of note

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.2%

Sector Underperformers:

• 1) Gold & Silver -1.9% 2) Hospitals -1.9% 3) Airlines -1.1%

Stocks Falling on Unusual Volume: 

• UBNT, BEAT, SMCI, CRTO, TDOC, AAN, CLDR, TEVA, TER and ABEO

Stocks With Unusual Put Option Activity:

• 1) UBNT 2) RAD 3) HAS 4) BBBY 5) FSLR

Stocks With Most Negative News Mentions:

• 1) UBNT 2) SMCI 3) FINL 4) TDOC 5) SCG

Charts:

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