Stocks Closing Mostly Higher on Less Emerging Markets Debt/Currency Angst, Economic Optimism, Oil Gain, Commodity/Financial Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 11.94 -6.7%

• Euro/Yen Carry Return Index 136.30 -.06%

• Emerging Markets Currency Volatility(VXY) 11.65 -1.44%

• S&P 500 Implied Correlation 33.61 -3.72%

• ISE Sentiment Index 114.0 -4.2%
  

• Total Put/Call .94 +13,25%

• NYSE Arms .51 -25.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.06 -.25%
  

• America Energy Sector High-Yield CDS Index 396.0 -.84%

• European Financial Sector CDS Index 67.86 -.08%

• Italian/German 10Y Yld Spread 236.50 +5.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 11.98 -1.24%

• Emerging Market CDS Index 199.27 -3.5%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.85 +.05%

• 2-Year Swap Spread 16.75 +.75 basis point

• TED Spread 16.50 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -13.25 +.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.20 +.57%
• 3-Month T-Bill Yield 2.16% unch.

• Yield Curve 27.5 +2.75 basis points

• China Iron Ore Spot 69.06 USD/Metric Tonne +.03%

• Citi US Economic Surprise Index -7.5 -.8 point

• Citi Eurozone Economic Surprise Index -20.60 -2.7 points

• Citi Emerging Markets Economic Surprise Index -9.2 +.5 point

• 10-Year TIPS Spread 2.15+2.0 basis points
• 100.0% chance of Fed rate hike at Nov. 8th meeting, 100.0% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -37 open in Japan 
• China A50 Futures: Indicating +77 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

• Slightly Lower: On losses in my tech sector longs and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.7%

Sector Underperformers:

• 1) Utilities -2.4% 2) Software -1.3% 3) REITs -1.2%

Stocks Falling on Unusual Volume: 

• ARGX, GTHX, CPRT, GOV, SFIX, MEDP, NVTA, MAN and MED

Stocks With Unusual Put Option Activity:

• 1) SYMC 2) MJ 3) TBT 4) BK 5) BSX

Stocks With Most Negative News Mentions:

• 1) RFP 2) ABBV 3) SAFM 4) PAH 5) RMTI

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.5%

Sector Outperformers:

• 1) Steel +2.5% 2) Oil Service +2.4% 3) Banks +2.1%

Stocks Rising on Unusual Volume:

• CRON, GWPH, CSBR, VKTX, CGC, AIMC, KL, HEP, RDC, ORIG, BWA, UNVR, EDU, TUR, LBRT, FDX, AFI, JHG, GHG, PX, FATE, COF, AXTA, NVCR, ROCK, HEP and AFIN

Stocks With Unusual Call Option Activity:

• 1) NBEV 2) AXTA 3) XLB 4) XME 5) PRU

Stocks With Most Positive News Mentions:

• 1) VKTX 2) JNPR 3) BA 4) AN 5) SPWR

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +.5% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 49.2% of Issues Advancing, 47.5% Declining
• 67 New 52-Week Highs, 57 New Lows
• 50.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.9%
• Vix 11.7 -8.2%
• Total Put/Call .98 +18.1%
• TRIN/Arms .44 -34.8%

Wednesday Watch

Evening Headlines

Bloomberg:     

• China's Plunge-Protection Team Is Poised to Save Stock Markets.

• Chinese Art and Antiquities Spared From Trump Tariffs, For Now.

• Asia Stocks Rally Seen Extending; Dollar Steady. Asian stocks looked set to extend a rally in the wake of the latest salvos in the trade war that look likely to be less intense than many had feared. Treasuries held losses and the dollar remained steady. Futures signaled gains for equities in Japan and China, building on an advance that began in Asia Tuesday and extended into the U.S. session. That’s despite the U.S.-China trade war deepening as Beijing announced retaliatory tariffs on $60 billion of U.S. goods and the Trump administration threatened duties on virtually all Chinese imports. Commodities also rallied. The yen was steady before the Bank of Japan concludes its meeting that will likely see policy left unchanged, keeping monetary stimulus in place. Futures on Japan’s Nikkei 225 rose 1.5 percent in Singapore. FTSE China A50 futures advanced 0.7 percent. Futures on Hong Kong’s Hang Seng Index gained 0.5 percent. Futures on Australia’s S&P/ASX 200 Index rose 0.5 percent.

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

• Beijing Fears, China Cuts Treasuries, Abe the Survivor: Eco Day.

Wall St. Journal:

• Behind Your Rising Health-Care Bills: Secret Hospital Deals That Squelch Competition.

• U.S. Orders Chinese Media Firms to Register as Foreign Agents.

• Benefit Gains Exceed Wage Growth, Labor Data Show.

• China Retaliates With Tariffs on $60 Billion of U.S. Goods.

MarketWatch.com:

• How trade-war fears have become less of a factor for stock-market investors.

• Investors load up on U.S. stocks while growing cautious about the rest of the world, survey shows.

• Ethereum technology could slice bitcoin’s market cap in half, says tech analyst.

Fox News:

• Feinstein lashes out at GOP, admits challenges finding the truth as Kavanaugh accuser goes silent.

CNBC:  

• 'Another trillion in debt, here we come': Cohn sees Trump working with Democrats on infrastructure

• Dow surges 185 points as latest US-China trade barbs are not as bad as feared

• FedEx: Amazon's new delivery service 'should not be confused as competition'

• Netflix(NFLX) shares up 5 percent after solid Emmys performance

• After-hours buzz: TLRY, FIT & more.

• Canada's Trudeau under growing pressure to get NAFTA deal done.

• Square(SQ) may start acting more like a bank using its hit Cash app.

• Top technician says rail and defense stocks are set to take off, despite trade war tensions.

Zero Hedge:

• Feinstein Questions Kavanaugh Accuser's Truth, Lawyer Demands Full FBI Probe Before Hearing.

• Alhambra: China Central Bankers Are Desperate... "Like 2015 Desperate".

• Debt-Laden Canadians Struggling Amid Decade-High Monthly Payments.

• Crescat: The Hamstrung Fed, Gold, & The Bursting Of China's "Mother Of All Credit Bubbles".

• Evacuated Solar Observatory Set To Re-Open; Officials Offer Unbelievable Explanation.

• Trump Is Still No Closer To Impeachment. At What Point Do Russiagaters Lose Faith?

• WTI Drops After Surprise Crude Build.

• Trump Declassification Order Will Expose FBI's "Insurance Policy" From Strzok-Page Text: Nunes.

• International Demand For US Bonds Rebounds, But China Dumps Most Since Jan.

• Stocks Bounce, Erase Trade Tantrum Losses, Amid Bond Bloodbath.

Business Insider:

• New York's top lawyer says many crypto exchanges lack 'fairness, integrity and security' — and it could harm consumers.

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 77.50 -.5 basis point. 

• Asia Pacific Sovereign CDS Index 12.25 unch.

• Bloomberg Emerging Markets Currency Index 65.82 -.01%.

• FTSE 100 futures +.04%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (CPRT)/.48

After the Close:

• (MLHR)/.65

• (RHT)/.82

Economic Releases

8:30 am EST

• The Current Account Balance for 2Q is estimated at -$103.4B versus -$124.1B in 1Q.

• Housing Starts for August are estimated to rise to 1238K versus 1168K in July.

• Building Permits for August are estimated to fall to 1310K versus 1311K in July.
  

10:30 pm EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,691,180 barrels versus a -5,296,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +16,090 barrels versus a +1,250,000 barrel gain the prior week. Distillate inventories are estimated to rise by +570,640 barrels versus a +6,163,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall -.72% versus a +1.0% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK CPI report and the weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by consumer 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 Surging into Final Hour on Diminished Trade War Fears, Economic Optimism, Less Emerging Markets Currency/Debt Angst, Biotech/Road&Rail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.84 -6.1%

• Euro/Yen Carry Return Index 136.32 +.25%

• Emerging Markets Currency Volatility(VXY) 11.77 -.93%

• S&P 500 Implied Correlation 34.76 -.03%

• ISE Sentiment Index 120.0 +50.0%
  

• Total Put/Call .81 -.10%

• NYSE Arms .66 +.35%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.28 -.51%
  

• America Energy Sector High-Yield CDS Index 400.0 +.01%

• European Financial Sector CDS Index 67.91 -.12%

• Italian/German 10Y Yld Spread 231.0 -7.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.11 +1.10%

• Emerging Market CDS Index 205.49 +.02%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.77 -.25%

• 2-Year Swap Spread 16.0 -.75 basis point

• TED Spread 17.50 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -14.0 -1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.90 +.07%
• 3-Month T-Bill Yield 2.16% +1.0 basis point

• Yield Curve 24.75 +3.0 basis points

• China Iron Ore Spot 68.72 USD/Metric Tonne -.09%

• Citi US Economic Surprise Index -6.7 +9.6 points

• Citi Eurozone Economic Surprise Index -17.90 -8.7 points

• Citi Emerging Markets Economic Surprise Index -9.70 +6.6 points

• 10-Year TIPS Spread 2.13+2.0 basis points
• 98.7% chance of Fed rate hike at Nov. 8th meeting, 99.7% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +305 open in Japan 
• China A50 Futures: Indicating +63 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 75% Net Long