Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Gaming +1.1% 2) Papers +1.0% 3) Oil Service +.5%

Stocks Rising on Unusual Volume:

• EXEL, SOHU, JP, LCI, THR, FPRX, HIIQ, ASYS, MTZ, AIMT, NVCR, IONS, SSYS, BEDU, NVO, AAAP, ESNT, IDT, CBPO, RARX, DVA, VRTX, HLF, PKX and WYNN

Stocks With Unusual Call Option Activity:

• 1) EXEL 2) HOG 3) RTN 4) CMCSA 5) DE

Stocks With Most Positive News Mentions:

• 1) BLUE 2) WYNN 3) MU 4) GRPN 5) NVDA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.3% Below 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 47.8% of Issues Advancing, 48.7% Declining
• 158 New 52-Week Highs, 14 New Lows
• 47.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.6%
• Vix 9.9 +3.0%
• Total Put/Call 1.14 +34.1%
• TRIN/Arms 1.0 -11.5%

Monday Watch

Today's Headlines

Bloomberg:

• Tillerson Pledges Diplomacy With North Korea 'Until the First Bomb Drops'. Secretary of State Rex Tillerson says President Donald Trump wants him to push forward on diplomacy with North Korea “until the first bomb drops.” Until? Tillerson’s comments on CNN’s “State of the Union” program on Sunday apparently weren’t meant literally as a timeline for war, as he preceded that quote by saying, “He has made it clear to me to continue my diplomatic efforts,” and that those efforts “will continue until the first bomb drops.”

• China's Zhou Warns Corporate Debt Too High, Urges Fiscal Reform. People’s Bank of China Governor Zhou Xiaochuan warned that Chinese companies have taken on too much debt, and argued for less financial leverage as well as fiscal reforms to constrain local government borrowing. “The main problem is that the corporate debt is too high,” Zhou said Sunday during a panel discussion at a Group of 30 seminar in Washington held in conjunction with the International Monetary Fund and World Bank annual meetings. While debt servicing costs remain low, “we need to pay further effort to deleveraging and strengthen policy for financial stability,” Zhou said. He appeared alongside policy makers including Federal Reserve Chair Janet Yellen and Bank of Japan Governor Haruhiko Kuroda.

• China Plots What’s Next as Influence on Global Markets Grows.

• Bond Traders Face Inflation Gamble That Will Last a Generation. If you’re a bond trader and agree with the Federal Reserve that low inflation is only transitory, then the Treasury has quite a deal for you. The U.S. will offer $5 billion of 30-year Treasury Inflation Protected Securities on Thursday, the third and final opportunity to buy them at auction this year. For those concerned that accelerating price growth will erode fixed-income returns, they’re a must-have hedge. The problem is that the latest inflation readings disappointed yet again. The core consumer price index rose 1.7 percent in September from a year earlier, missing estimates for 1.8 percent growth, according to the data released Oct. 13. That sent the 30-year breakeven rate, a market gauge of inflation expectations, down from its highest close since May, to about 1.93 percentage points.

• What Global Finance Chiefs Are Saying About the Economy. (video)

• Stocks in Asia Advance as U.S. Inflation Slows. (video) Stocks in Asia advanced with bonds after inflation data in the U.S. added to evidence that global growth is continuing steadily with limited price pressures in the American economy. Equity indexes climbed in Japan, Australia and South Korea with a gauge of Asian stocks trading at the highest level since 2007. Friday’s data bolstered the view that U.S. inflation below the Federal Reserve’s target may be structural rather than transitory, prompting traders to slightly reduce the odds of another interest-rate increase in December. China’s producer prices jumped more than expected last month and consumer prices also increased in one of the remaining data points ahead of the start of the Party Congress later this week. The MSCI Asia Pacific Index rose 0.4 percent to touch its highest level since November 2007.

• Five Things You Need to Know to Start Your Day. (video)

• Gary Cohn Calls Clearinghouses 'a New Systemic Problem'.

Wall Street Journal:

• Your Next Home Could Run on Batteries. A combination of solar power and the rise of residential energy storage paves the way for a new kind of cable cutting.

• Pentagon Turns to High-Speed Traders to Fortify Markets Against Cyberattack. Experts attend brainstorming sessions to identify how hackers might wreak havoc.

• Central Bankers Cling to Stimulus Amid Weak Inflation. Officials at Washington conference say low wages and consumer prices make it tough to remove measures quickly, despite global economic upturn.

• Health Care Back on Congress’s Front Burner. Trump’s move to stop subsidy payments ratchets up pressure for a bipartisan deal.

Fox News:

• Trump slams 'failing' New York Times reporter for ignoring successes on trade, climate. (video)

• Chelsea Clinton avoids questions about Harvey Weinstein's donations to Clinton Foundation.

CNBC: 

• China's producer price index crushes expectations.

• NAFTA talks set to be extended as time runs out, Reuters sources say.

• Yellen sounds upbeat on economy, signaling likely rate hike.

• Haley says US will stay in Iran nuclear deal 'right now'.

• Sen. Susan Collins, who helped to sink Obamacare repeal, is a likely 'yes' vote to advance tax reform.

• Leuthold's Jim Paulsen explains why stocks are being saved by constant rotation. (video)

Zero Hedge: 

• In Historic Result, 31-Year-Old Wins Austrian Elections, Worst Result For Establishment Party Since Hitler Rule.

• Casualties Reported After Iraqi Troops Enter Oil Rich Kurdish City Of Kirkuk; Oil Spikes.

• Trumpfusion? 'Record Low Approval Ratings But Record High Consumer Confidence' Explained. (graph)

• "China's Big Reshuffle": A Preview Of The Year's Biggest Political Event, China's 19th Party Congress.

• With Just Hours Until Spain's Ultimatum Runs Out, Catalonia Proposes Its Own Central Bank.

• China's Mortgage Debt Bubble Raises Spectre Of 2007 US Crisis.

• How Socialism Ruined Venezuela.

• Mike Rowe: It's Time To Make Hard Work Cool Again.

• The Endgame Of Financialization: Stealth Nationalization.

• Forget Catalonia, Flanders Is The Real Test Case Of EU Separatism!

• Trump And McConnell Make A "Truce Of Necessity" To Save Tax Reform.

• Wildfires Force More Evacuations As Death Toll Climbs To 40; Nearly 6,000 Buildings Destroyed.

Business Insider:

• At least 189 dead from powerful bomb blast in Somalia's capital in deadliest single attack ever.

• Puerto Rico stands 'on the brink of a massive liquidity crisis that will intensify'.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 77.5 unch.

• Asia Pacific Sovereign CDS Index 16.0 unch.

• Bloomberg Emerging Markets Currency Index 73.87 -.03%.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.21%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (SCHW)/.41

• (BMI)/.35

• (BRO)/.49

• (CE)/1.92

• (IEX)/1.06

• (NFLX)/.32

• (SONC)/.43

Economic Releases 
8:30 am EST

• Empire Manufacturing for October is estimated to fall to 20.0 versus 24.4 in September.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Kahkari speaking, Japan Industrial Production report and the China Inflation Data report 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 higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters. 
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as tax reform hopes, oil strength and earnings optimism offset geopolitical concerns, profit-taking and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:

• China Credit Growth Exceeds Estimates Despite Debt Curb Vow. China’s broadest gauge of new credit exceeded projections, signaling that the funding taps remain open even as the government pushes to curb excessive borrowing.
• PBOC Governor Zhou Says China’s 6.9% Growth ‘May Continue’. Economic indicators show "stabilized and stronger growth" and the momentum of a 6.9 percent expansion in the first six months of 2017 "may continue in the second half," People’s Bank of China Governor Zhou Xiaochuan said. Imports and exports increased rapidly, fiscal income grew, and prices have been steady, Zhou said, according to a statement the central bank released Saturday after he attended meetings of global finance chiefs this week in Washington. The effects of a campaign to rein in leverage are showing, and China will monitor and prevent shadow banking and real estate risk, he said.
• Draghi Says ECB Is Confident About Reaching Inflation Goal. With the European Central Bank’s next policy update less than two weeks away, the institution’s chief is expressing both confidence and patience about achieving its inflation goal. “We are confident that as the conditions will continue to improve, the inflation rate will gradually converge in a self-sustained manner, as we’ve defined many times, and in a durable way to our objective,” ECB President Mario Draghi told reporters in Washington on Saturday. “But together with our confidence we should also be patient because it’s going to take time.”
• IMF Panel Says ‘No Room for Complacency’ on Global Growth. The IMF’s steering committee warned that global growth is at risk of faltering in coming years given uncomfortably low inflation and rising geopolitical risks, injecting a cautious note into an otherwise improving economic outlook. “The recovery is not yet complete, with inflation below target in most advanced economies, and potential growth remains weak in many countries,” the International Monetary and Financial Committee said in a communique released Saturday in Washington. “Near-term risks are broadly balanced, but there is no room for complacency because medium-term economic risks are tilted to the downside and geopolitical tensions are rising.”
• Saudis Consider Delaying Foreign Part of Aramco IPO. Saudi Arabia is considering delaying the international portion of the giant initial public offering of its state oil company until at least 2019, according to people familiar with the situation, who said a domestic share sale in Riyadh could still happen next year.
• Policy Makers Are Comfortable With Asset Prices But Bankers Are Cautious.
• U.S. Proposes Gutting Nafta Legal-Dispute Tribunals. U.S. Nafta negotiators are proposing to essentially do away with the independent tribunals that oversee the trading and investment relationship, either by eliminating them altogether or substantially scaling back their roles, people familiar with negotiations say. The U.S. has proposed its changes for two types of independent dispute settlement rules under the North American Free Trade Agreement -- so-called investor-state rules as well as provisions to settle state-to-state disputes at an independent panel.

Wall Street Journal:

• Trump’s Moves Ratchet Up Pressure on Congress. President adds health care, Iran policy to an already long to-do list for lawmakers.
• China Takes On Its New Tycoons. Fearing the rise of Russia-style oligarchs, Xi Jinping looks to remind China’s wealthy class of entrepreneurs who is really in charge.
• New California Fires Spread, Triggering Further Evacuations. Officials gain control over some other blazes, allowing residents to return to their homes.
• PayPal’s(PYPL) Market Value Eclipses AmEx, Nears Morgan Stanley, Goldman. Mobile-payments company’s shares surge as market capitalization climbs to about $83 billion.
• Major Health Insurers Anticipated End of Subsidies. Payments ‘will be discontinued immediately,’ but companies may have difficulty pulling plans from health exchanges.

Barron's:

• Had bullish commentary on (JD) and (D).

Fox News:

• Arizona restaurant closes following backlash from its pro-Trump Facebook post.

CNBC:

• Russia is prepared for $40 oil, finance minister says.
• ECB’s Draghi: Commercial real estate valuations stretched, but no signs of bubbles in stocks or bonds.
• Euro zone wages are rising more slowly than the ECB had hoped, Draghi says.
• IMF global economic forecast welcomes growth, warns of low inflation.
• China confirms will amend party constitution, likely to include Xi's theories.
• Jamie Dimon says if you're 'stupid' enough to buy bitcoin, you'll pay the price one day. (video)
• An obscure report next week could prove a boon for stocks. (video)
• Stock should keep going higher even with earnings headwinds. (video)
• New Guam threat as North Korea still weighs powerful hydrogen test over Pacific. (video)

Zero Hedge:

• Vegas Massacre Timeline Shifts Again - "This Is A Very Dynamic Event".
• FBI 'Hand-In-Hand' With Vegas PD, Begin Damage Control: "There Is No Conspiracy... Nobody Is Attempt to Hide Anything".
• Satellite Footage Shows North Korea Preparing Ballistic Missile Launch Ahead Of US Naval Drills.
• This Is What Americans Heard During The Mysterious Cuban Sonic Attacks, And Why Experts Don't Buy It. 
• Harvey Weinstein Expelled From Motion Picture Academy.
• The NYTimes Asks Reporters To Stop Being Partisan On Social Media.
• The Less We Believe Them About Las Vegas, The More They Want Our Guns.
• Pay-TV Companies Tank As Subscriber Losses Surge To Record Highs In 2017.
• Judicial Watch: FBI Finds More Docs On Clinton-Lynch Tarmac Meeting; Needs 6 Weeks To Turn Them Over.
• Meet 6 College Professors Who Promote Violence.
• "Enough To Kill 5 Million People": Authorities Make One Of Biggest Fentanyl Busts In History.
• Weinstein Company Exploring Sale Or Shutdown.
• Weekend Reading: $7 Trillion To Manipulate Prices.
• Record High Stocks, Record Low VIX But Bitcoin, Bonds, & Bullion Bid. (graph)

Business Insider:

• Scores of Tesla(TSLA) employees fired just as the Model 3 ramp-up gets underway.

Weekly Scoreboard*

S&P 500 2,555.89 +.22%

The Weekly Wrap by Briefing.com.

 
Indices

• DJIA 22,888.04 +.46%

• NASDAQ 6,611.82 +.28%

• Russell 2000 1,504.84 -.42%

• S&P 500 High Beta 40.16 +.31%

• Goldman 50 Most Shorted 137.39 -1.79%

• Wilshire 5000 26,517.63 +.04%

• Russell 1000 Growth 1,283.40 +.64%

• Russell 1000 Value 1,178.13 -.23%

• S&P 500 Consumer Staples 562.91 +1.62%

• Vanda Cyclicals-Defensives 1.3665 -1.20%
  

• NYSE Technology 1,625.60 +.49%

• Transports 9,954.48 +.76%

• Utilities 738.29 +.79%

• Bloomberg European Bank/Financial Services 100.55 -1.66%

• MSCI Emerging Markets 46.39 +2.12%

• HFRX Equity Hedge 1,247.54 +.20%

• HFRX Equity Market Neutral 1,011.14 -.14%

Sentiment/Internals

• NYSE Cumulative A/D Line 308,249 +.33%

• Bloomberg New Highs-Lows Index 724 -220

• Bloomberg Crude Oil % Bulls 53.33 +42.21%

• CFTC Oil Net Speculative Position 444,316 -2.16%

• CFTC Oil Total Open Interest 2,471,226 +2.49%

• Total Put/Call .85 unch.

• OEX Put/Call 1.52 -1.94%

• ISE Sentiment 128.0 +43.68%

• NYSE Arms .81 +3.85%

• Volatility(VIX) 9.67 +5.0%

• S&P 500 Implied Correlation 15.97 -10.62%

• G7 Currency Volatility (VXY) 7.70 -1.66%

• Emerging Markets Currency Volatility (EM-VXY) 8.09 +2.53%

• Smart Money Flow Index 19,920.68 +.17%

• ICI Money Mkt Mutual Fund Assets $2.741 Trillion +.01%

• ICI US Equity Weekly Net New Cash Flow -$9.792 Billion

• AAII % Bulls 39.8 +11.7%

• AAII % Bears 26.9 -18.0%

Futures Spot Prices

• CRB Index 184.36 +.98%

• Crude Oil 51.03 +4.47%

• Reformulated Gasoline 160.99 +3.92%

• Natural Gas 3.01 +5.06%

• Heating Oil 178.67 +3.13%

• Gold 1,304.0.20 +1.9%

• Bloomberg Base Metals Index 205.55 +2.14%

• Copper 313.0 +3.64%

• US No. 1 Heavy Melt Scrap Steel 288.33 USD/Metric Tonne unch.

• China Iron Ore Spot 62.53 USD/Ton +.47%

• Lumber 425.0 +2.91%

• UBS-Bloomberg Agriculture 1,036.77 +1.17%

Economy

• Atlanta Fed GDPNow Forecast +2.7 +20.0 basis points

• ECRI Weekly Leading Economic Index Growth Rate 1.2% +50.0 basis points
  

• Philly Fed ADS Real-Time Business Conditions Index -.4439 +8.19% 

• US Economic Policy Uncertainty Index 95.83 +3.32%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 141.66 +.16%

• Citi US Economic Surprise Index 3.9 +.6 point

• Citi Eurozone Economic Surprise Index 55.7 +9.9 points

• Citi Emerging Markets Economic Surprise Index 22.30 +4.4 points

• Fed Fund Futures imply 85.5% chance of no change, 14.5% chance of 25 basis point hike on 11/1

• US Dollar Index 93.06 -.89%

• MSCI Emerging Markets Currency Index 1,633.56 +.71%

• Euro/Yen Carry Return Index 137.92 +.29%

• Yield Curve 78.0 -8.0 basis points
  

• 10-Year US Treasury Yield 2.27% -9.0 basis points

• Federal Reserve's Balance Sheet $4.420 Trillion -.02%

• U.S. Sovereign Debt Credit Default Swap 24.78 unch.

• Illinois Municipal Debt Credit Default Swap 338.13 -.05%

• Western Europe Sovereign Debt Credit Default Swap Index 5.09 -6.08%

• Asia Pacific Sovereign Debt Credit Default Swap Index 16.09 -2.0%
  

• Emerging Markets Sovereign Debt CDS Index 38.31 -3.21%
  

• Israel Sovereign Debt Credit Default Swap 51.0 +8.78%

• South Korea Sovereign Debt Credit Default Swap 69.56 -.2%

• Russia Sovereign Debt Credit Default Swap 130.74 +.02%

• iBoxx Offshore RMB China Corporate High Yield Index 142.30 +.31%

• 10-Year TIPS Spread 1.86% -1.0 basis point

• TED Spread 29.25 +.5 basis point

• 2-Year Swap Spread 25.75 -1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -41.0 -1.25 basis points

• N. America Investment Grade Credit Default Swap Index 54.67 +1.52%

• America Energy Sector High-Yield Credit Default Swap Index 396.0 -1.28%

• European Financial Sector Credit Default Swap Index 58.69 -2.11%
  

• Emerging Markets Credit Default Swap Index 177.53 -.65%
  

• CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 155.0 unch.
  

• M1 Money Supply $3.540 Trillion +.01%

• Commercial Paper Outstanding 1,063.80 -.5%

• 4-Week Moving Average of Jobless Claims 257,500 -11,250

• Continuing Claims Unemployment Rate 1.3% -10.0 basis points
  

• Average 30-Year Mortgage Rate 3.91% +6.0 basis points

• Weekly Mortgage Applications 405.20 -2.13%

• Bloomberg Consumer Comfort 49.50 -.4 point

• Weekly Retail Sales +3.2% -90.0 basis pointss

• Nationwide Gas $2.48/gallon -.o3/gallon

• Baltic Dry Index 1,458.0 +3.77%

• China (Export) Containerized Freight Index 772.65 -3.81%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 27.50 +10.0%

• Rail Freight Carloads 285,490 -.49%

Best Performing Style

•  Large-Cap Growth +.7%

Worst Performing Style

•  Small-Cap Growth -.7%

Leading Sectors

• Tobacco +4.1%

• Semis +2.5%

• Robotics +2.1%

• Paper +2.0%

• Steel +2.0%

Lagging Sectors

• Construction -1.4% 

• Banks -1.6%

• Gaming -2.9%

• Coal -3.1%

• Retail -3.4%

Weekly High-Volume Stock Gainers (7)

• ANAB, MTEM, OME, HLF, DERM, OMF and NMIH

Weekly High-Volume Stock Losers (13)

• FLXN, HELE, COST, CZR, AXDX, YEXT, JNPR, PTGX, CUDA, ULTA, KTWO, HAWK and NSTG

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change