Stocks Surging into Final Hour on Less Emerging Markets Currency/Debt Angst, Economic Optimism, Technical Buying, Tech/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 11.5 -2.0%

• Euro/Yen Carry Return Index 137.78 +1.04%

• Emerging Markets Currency Volatility(VXY) 11.64 -.43%

• S&P 500 Implied Correlation 33.44 -1.44%

• ISE Sentiment Index 238.0 +105.17%
  

• Total Put/Call .86 -7.5%

• NYSE Arms .56 +5.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.99 +8.6% (new series)
  

• America Energy Sector High-Yield CDS Index 393.0 -.86%

• European Financial Sector CDS Index 78.74 +16.0%

• Italian/German 10Y Yld Spread 241.0 +3.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 11.15 -6.77%

• Emerging Market CDS Index 199.27 unch.
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.35 -.33%

• 2-Year Swap Spread 18.75 +2.0 basis points

• TED Spread 17.25 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -12.0 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.63 +.66%
• 3-Month T-Bill Yield 2.16% unch.

• Yield Curve 26.75 -.75 basis point

• China Iron Ore Spot 68.61 USD/Metric Tonne -.31%

• Citi US Economic Surprise Index -5.1 +1.4 points

• Citi Eurozone Economic Surprise Index -20.70 -.1 point

• Citi Emerging Markets Economic Surprise Index -9.5 -.3 point

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

Overseas Futures:

• Nikkei 225 Futures: Indicating +65 open in Japan 
• China A50 Futures: Indicating +100 open in China

• DAX Futures: Indicating +31 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.7%

Sector Underperformers:

• 1) Homebuilders -1.8% 2) Defense -1.3% 3) Gold & Silver -.1%

Stocks Falling on Unusual Volume: 

• THO, SKY, RHT, SFIX, WLH, BRKR, CRSP, NVCR and NOC

Stocks With Unusual Put Option Activity:

• 1) NOC 2) MAT 3) GPRO 4) SO 5) RRC

Stocks With Most Negative News Mentions:

• 1) SFIX 2) SKX 3) WLH 4) SSW 5) BRKR

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.1%

Sector Outperformers:

• 1) Computer Hardware +1.8% 2) Alt Energy +1.7% 3) Biotech +1.4%

Stocks Rising on Unusual Volume:

• ALT, IEFA, GWPH, FTV, ACAD, EFV, BFR, BMA, TRC, TOCA, QTRX, NERV, ACXM, EGOV, SELB, IGV, OBSV, CRON, SURF, GGAL, ECH, STM, EDN, FOLD, CEPU, MTW, FATE, MLHR, YELP, UAA, RDC, UNVR, SCS and AFIN

Stocks With Unusual Call Option Activity:

• 1) DXJ 2) AXTA 3) XLF 4) ACAD 5) UAA

Stocks With Most Positive News Mentions:

• 1) ACAD 2) UAA 3) GALT 4) MTW 5) FBP

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +5.4% Above 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 62.1% of Issues Advancing, 33.9% Declining
• 68 New 52-Week Highs, 49 New Lows
• 50.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.4%
• Vix 11.5 -2.0%
• Total Put/Call .72 -22.6%
• TRIN/Arms .79 +48.9%

Thursday Watch

Evening Headlines

Bloomberg:   

• Americans Could Learn to Live Without ‘Made in China’.  

• Charting Japan's Economic Recovery.

• Asia Stocks Face Mixed Start; Treasuries Edge Down. Asian stocks were set for a muted start after a strong recent rally as U.S. equities nudged higher and Treasury yields ticked up toward the highest level this year. The kiwi dollar rose as economic growth topped estimates. With little in the way of new leads for equity traders to latch on to, futures pointed to a flat start in China and Australia. Small gains were seen in Japan, where stocks climbed to a three-month high and Hong Kong futures also edged up. The yield on 10-year Treasuries continued this week’s march above the much-watched 3 percent mark and on Wednesday reached as high as 3.09 percent, a level unseen since May. Oil climbed above $71 a barrel. Futures on Japan’s added 0.2 percent in Singapore. Futures on Hong Kong’s Hang Seng Index gained 0.6 percent. FTSE China A50 Index futures were little changed. Futures on Australia’s S&P/ASX 200 Index slid 0.1 percent. S&P 500 futures were little changed.     

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

• Treasury Yields Take Flight, Setting Up Big Shorts for Rewards.  

• Goldman Regains Commodities Top Spot in Tie With Banking Rivals.

Wall St. Journal:

• GOP to Push Ahead on Kavanaugh Pick.

• Trump to Nominate Ex-Fed Economist to Bank’s Board.

• Calpers Looks to China for a New Chief of Investment. 

• Korean Deal Offers New Life to Nuclear Talks, as Doubts Persist.

• New Apps Turn Cars Into Phones, Raising Safety Questions. 

• Unprofitable Firms Are Outperforming Other Growth Stocks.  

• Trump Names Darrell Issa to Head Trade and Development Agency

• Explore the Full WSJ/THE College Rankings.

MarketWatch.com:

• 7 ways to invest in the automation megatrend.

Fox News:

• Grassley slams Dems for 'abuse' of confirmation process, will view new complaints 'very skeptically'.

CNBC:    

• Trade wars could be worse for China's economy than the pain they inflict on US.

• As investors chase pot stocks rally, some show caution: 'This is just stupid time'.

• After-hours buzz: TLRY, RHT & more. 

• Amazon(AMZN) is testing a shopping site called Scout that recommends products based on your likes.  

• One group of stocks just hit all-time highs, and traders see more gains to come.

Zero Hedge:

• DOJ Vows To Investigate After Second Veritas Video Exposes "Deep Throat" Types Within HHS. 

• Chicago Set To Offer $350 Million ObamaLand Center 99-Year Lease For Just $10.

• Emerging Market Euphoria Is Back With A Bang.  

• Tesla(TSLA) DOJ Probe Getting Wider, May Piggyback On SEC Subpoenas

• Tilray(TLRY) Plummets From All Time High, Halted 5 Times.

• Amazon(AMZN) To Open 3,000 Cashierless Convenience Stores By 2021.

• US Stocks Pop, Stop, & Drop As Global Bond Bloodbath Reaches 5-Year-High Yields.

Telegraph:     

• Shanghai is worst performing market, with no end in sight.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 77.25 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 12.0 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 66.19 -.01%.

• FTSE 100 futures +.45%.

• S&P 500 futures +.06%.

• NASDAQ 100 futures +.08%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (DRI)/1.24

• (THO)/2.03

After the Close:

• (MU)/1.24

• (SCS)/.29

• (UFI)/.86

Economic Releases

8:30 am EST

• The Philly Fed Business Outlook Index for September is estimated to rise to 18.0 versus 11.9 in August.

• Initial Jobless Claims for last week are estimated to rise to 210K versus 204K the prior week.

• Continuing Claims are estimated to rise to 1705K versus 1696K the prior week.
  

10:00 pm EST

• The Leading Index for August is estimated to rise +.5% versus a +.6% gain in July.

• Existing Home Sales for August is estimated to rise to 5.36M versus 5.34M in July.
  

12:00 pm EST

• The 2Q Change in Household Net Worth.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan CPI report, Bloomberg Economic Expectations Index for Sept., weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, BMO Capital Real Estate Conference, Citi SMID Conference and the DA Davidson Industrials/Services Conference 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.