Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 78.50 -.5 basis point. 

• Asia Pacific Sovereign CDS Index 16.0 unch.

• Bloomberg Emerging Markets Currency Index 72.65 -.02%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ADI)/1.36
• (BURL)/.66
• (CPB)/.97
• (CHS)/.12
• (CBRL)/1.85
• (DLTR)/.90
• (DSW)/.53
• (DSX)/-.19
• (EV)/.70
• (JEC)/.82
• (LOW)/1.03
• (MDT)/1.03
• (PDCO)/.54
• (SIG)/.16
• (CPRT)/.27
• (GME)/.43
• (GES)/.12
• (HPE)/.28
• (HPQ)/.44
• (CRM)/.37

Economic Releases 

8:30 am EST

• The Chicago Fed National Activity Index for October is estimated to rise to .2 versus .17 in September.

10:00 am EST

• Existing Home Sales for October is estimated to rise to 5.4M versus 5.39M in September.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Retail Trade report, weekly US retail sales report and the PAAS analyst meeting could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by industrial and technology 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 Higher into Final Hour on Economic Optimism, Buyout Speculation, Yen Weakness, Financial/Tech 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) 10.66 -6.74%

• Euro/Yen Carry Return Index 137.77 -.04%

• Emerging Markets Currency Volatility(VXY) 7.96 +.51%

• S&P 500 Implied Correlation 16.28 unch.

• ISE Sentiment Index 111.0 +13.3%
  

• Total Put/Call .87 +10.13%

• NYSE Arms 1.16 +11.43%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.77 -.79%
  

• America Energy Sector High-Yield CDS Index 378.0 -.5%

• European Financial Sector CDS Index 50.41 -1.24%

• Western Europe Sovereign Debt CDS Index 3.96 +1.02%

• Asia Pacific Sovereign Debt CDS Index 15.95 +.5%

• Emerging Market CDS Index 186.86 unch.
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.42 +.06%

• 2-Year Swap Spread 16.75 +.25 basis point

• TED Spread 17.75 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -49.50 +1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.67 -.32%
• 3-Month T-Bill Yield 1.26% -1.0 basis point
  

• Yield Curve 61.75 -.75 basis point

• China Import Iron Ore Spot $63.47/Metric Tonne +1.37%

• Citi US Economic Surprise Index 58.30 +2.3 points

• Citi Eurozone Economic Surprise Index 55.0 -3.9 basis points

• Citi Emerging Markets Economic Surprise Index 14.20 -.3 point

• 10-Year TIPS Spread 1.88 unch.
  
• 100.0% chance of Fed rate hike at Jan. 31 meeting, 100.0% chance at March 21 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +239 open in Japan 
• China A50 Futures: Indicating -4 open in China

• DAX Futures: Indicating -3 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.1%

Sector Underperformers:

• 1) Gold & Silver -.8% 2) Biotech -.7% 3) Airlines -.7%

Stocks Falling on Unusual Volume: 

• ECH, LTM, BSAC, NTES, USLV, OMI, GPK, SQM, LGND and BIVV

Stocks With Unusual Put Option Activity:

• 1) MON 2) PSEC 3) PAH 4) QEP 5) DLTR

Stocks With Most Negative News Mentions:

• 1) PRTA 2) LGND 3) LYV 4) GAIN 5) CAH

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.4%

Sector Outperformers:

• 1) Gaming +1.5% 2) Semis +1.4% 3) Disk Drives +1.3%

Stocks Rising on Unusual Volume:

• CAVM, MRVL, IVR, XNET, TLND, DCIX, DY, DQ, AWI, TCMD, AXTI, SQ, DAIO, ANF, CRCM, CRSP, TRNC, GNK, TRP, URGN, MTRX, SCVL, GKOS, SPSC, XOMA, DY, OSTK, HIBB, FIZZ, ESIO, AXDX, SC, IVR, ETM, SQ, SGMS, DPLO and SCVL

Stocks With Unusual Call Option Activity:

• 1) URBN 2) ITB 3) CME 4) ADI 5) CAKE

Stocks With Most Positive News Mentions:

• 1) ANF 2) HIBB 3) FIZZ 4) DLPH 5) HPE

Charts:

• ETFs Rising on Unusual Volume

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.1% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 47.6% of Issues Advancing, 47.6% Declining
• 87 New 52-Week Highs, 14 New Lows
• 59.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.3%
• Vix 11.1 -2.9%
• Total Put/Call .84 +6.3%
• TRIN/Arms 1.45 +39.8%

Monday Watch

Today's Headlines

Bloomberg:

• Japan’s Best Export Performance Since 2008 Crisis Rolls On. Improving global demand has fueled strong growth in Japan’s exports throughout the year, with new smartphones creating demand for parts and machinery in recent months. In the nine months through September, Japan exported 57 trillion yen worth of goods, the most over that period in any year since 2008. This has helped drive Japan’s economy to seven straight quarterly expansions, while investors expecting growing earnings have pushed stock prices to multi-year highs. Exports to China, Japan’s largest trading partner, rose 26 percent from a year earlier. Those to the U.S. rose 7.1 percent. Shipments to the EU climbed 15.8 percent.

• China's Quest for Clean Air Is Shaking Up Industry and Inflation. The great Chinese environmental cleanup, now in full swing, is shifting the corporate landscape in unexpected ways and even stoking inflationary pressure that may soon be felt in supply chains worldwide. As President Xi Jinping’s government intensifies the fight against the country’s world-class pollution problem, companies are scrambling to adapt to tighter regulation while investing in cleaner energy. In industries from steel to textiles and consumer goods, the resulting shakeout has left the survivors with far more pricing power. That in turn is reinforcing the already-resurgent factory prices that contribute to global inflation.

• The Latest on the Political Turmoil in Zimbabwe. Zimbabweans say they feel profoundly disappointed that longtime President Robert Mugabe is resisting pressure to step aside.

• Singapore Growth Could Top 3% in 2017, Prime Minister Lee Says. Singaporean Prime Minister Lee Hsien Loong says his country is expected to exceed expectations this year by recording economic growth above 3 percent. Addressing his People’s Action Party’s 2017 convention on Sunday, Lee said Singapore was benefiting from an improved world economy, but would have to press on with plans to restructure and upgrade the economy to sustain growth.

• Euro Drops as German Talks Fail; Asian Stocks Slip. The euro declined after German Chancellor Angela Merkel’s push to form a coalition government collapsed. Asian stocks resumed last week’s slide in early trading Monday amid signs of fatigue following a stellar year for the region’s equities. Shares fell in Japan and Sydney, while Hong Kong pointed to weaker start. The dollar advanced against most G-10 counterparts, giving it a better start this week after dropping the past two. U.S. equities dropped on Friday, when the gap between two- and 10-year Treasury yields hit the tightest level in a decade, adding to concern about the pace of future economic growth. Bitcoin climbed to a fresh high, topping $8,000. Japan’s Topix index lost 0.1 percent as of 9:26 a.m. in Tokyo. The Nikkei 225 Stock Average decreased 0.1 percent. Australia’s S&P/ASX 200 Index slid 0.2 percent. South Korea’s Kospi index gained 0.2 percent.

Wall Street Journal: 

• Reducing Corporate Tax Games. The GOP reforms are far tougher on income shifting than Obama was.

• Key GOP Senator Cites Concerns Over Senate Tax Bill. Raising pressure on party leadership to make changes to secure passage. 

• The Latest Path to Silicon Valley Riches: Stake Sales. Entrepreneurs, venture investors reap riches through secondary sales in startups, rather than waiting for IPO.

• Buoyant Central and Eastern Europe Revives Overheating Fears. The economic turnaround in the region has been impressive, but there are also challenges.

MarketWatch.com:

• Will millennials give housing shares and the broader stock market a boost?

• The reasons Americans give for buying bitcoin show they have no idea what they’re doing.

Fox News: 

• Franken reportedly won't resign, amid more congressional calls to deal with allegations against him and Roy Moore. (video)

CNBC: 

• The anti-regulatory environment that Trump promised just got a big boost. (video)

• Tax reform could come before 2018, and here are the two names you want to buy: Strategist. (video)

• Many ICOs are fraudulent, say men behind two top bitcoin rivals.

Zero Hedge:

• "Worst Case Scenario" Looms As Merkel's "Jamaica Coalition" Collapses; EUR Sinks.

• ECB Proposes End To Deposit Protection.

• "People Ask, Where's The Leverage This Time?" - Eric Peters Answers.

• Apple(AAPL) Diversity Chief Forced Out After Saying White Men Can Also Be 'Diverse'.

• Big Brother Is Here: Twitter(WTR) Will Monitor Users Behavior 'Off Platform'.

• "Our Flag Is Very Special" - NFL Superstar Herschel Walker Blames NFL Commissioner For Crisis. 

• "You're So Dumb, You're Beyond Hope" - ESPN Host Hits Out At Conservative Critics.

• Weinstein Watershed - Here's A List Of The 42 Men Accused Of Sexual Misconduct (So Far).

• Think Bitcoin Is A Bubble? Here's Your Chance To Short It.

• "I Should Have Left Them In Jail" - Trump Slams UCLA Player's Parents Indignation.

• Arab League Holds Emergency Session: Iran And "Terrorist" Hezbollah Must Be Stopped.

• The Stage Has Been Set For The Next Financial Crisis.

• The U.S. Is Crushing Its Clean Energy Forecasts.

• Who's Next? Venezuela's Collapse Puts These Nations At Risk.

•  "The President Is Gone" - Zimbabwe Ruling Party Officially Ousts Mugabe.

Business Insider:

• 60,000 people in Poland held one of the largest far-right marches in Europe ever.

• New PACs are emerging on the left and the right to get women elected in 2018.

• The breakneck speed of the Republican tax bill is angering Democrats and increasing the odds it passes.

• Robots aren't just taking our jobs, they're creating them – here are 21 weird jobs humans will have in the future.

Night Trading

• Asian indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 79.25 +.25 basis point.

• Asia Pacific Sovereign CDS Index 15.75 +25 basis point.

• Bloomberg Emerging Markets Currency Index 72.85 -.06%.

• S&P 500 futures -.26%.

• NASDAQ 100 futures -.30%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (BITA)/.29

• (A)/.62

• (CUB)/.27

• (INTU)/.04

• (PANW)/.68

• (URBN)/.34

• (VIPS)/.96

Economic Releases   
10:00 am EST

• The Leading Index for October is estimated to rise +.7% versus a -.2% decline in September.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone PPI report and the (AXGN) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the week.