Morning Market Internals

NYSE Composite Index:

• Volume Running +16.9% Above 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 34.3% of Issues Advancing, 62.4% Declining
• 207 New 52-Week Highs, 56 New Lows
• 64.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.7%
• Vix 12.8 +5.8%
• Total Put/Call .73 +2.8%
• TRIN/Arms 1.17 +18.0%

Stocks Higher into Final Hour on Earnings Optimism, Central Bank Hopes, Less European/Emerging Markets/US High-Yield Debt Angst, Retail/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 12.24 -2.93%

• Euro/Yen Carry Return Index 125.14 -.13%

• Emerging Markets Currency Volatility(VXY) 6.95 +.29%

• S&P 500 Implied Correlation 32.70 -1.95%

• ISE Sentiment Index 94.0 -16.8%
  

• Total Put/Call .67 -10.7%

• NYSE Arms 1.01 +27.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.63 -3.26%
  

• America Energy Sector High-Yield CDS Index 647.0 +.12%

• European Financial Sector CDS Index 53.58 -3.79%

• Italian/German 10Y Yld Spread 187.0 -8.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 59.51 -3.1%
  

• Emerging Market CDS Index 156.26 -.36%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.98 -.02%

• 2-Year Swap Spread 3.25 +.25 basis point

• TED Spread 20.25 -5.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -23.0 -2.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.51 +.07%
• 3-Month T-Bill Yield 2.08% +3.0 basis points

• Yield Curve 23.0 -.75 basis point

• China Iron Ore Spot 111.37 USD/Metric Tonne +.24%

• Citi US Economic Surprise Index -50.3 -5.4 points

• Citi Eurozone Economic Surprise Index -33.0 -24.5 points

• Citi Emerging Markets Economic Surprise Index -22.2 +.6 point

• 10-Year TIPS Spread 1.79 -2.0 basis points
• 100.0% chance of Fed rate cut at Sept. 18th meeting, 100.0% chance of cut at October 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +11 open in Japan 
• China A50 Futures: Indicating +3 open in China

• DAX Futures: Indicating +27 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%

Sector Underperformers:

• 1) Steel -1.1% 2) Tobacco -.5% 3) Drugs -.4%

Stocks Falling on Unusual Volume: 

• IRBT, HCSG, SGEN, ROL, EEFT, TUP, WSBC, SIX, CAT, FLIR, APH and MKTX

Stocks With Unusual Put Option Activity:

• 1) KNX 2) AET 3) MNK 4) MDLS 5) EMB

Stocks With Most Negative News Mentions:

• 1) TUP 2) IRBT 3) LKSD 4) CAT 5) BA

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.0%

Sector Outperformers:

• 1) Semis +3.0% 2) Retail +1.6% 3) Banks +1.6%

Stocks Rising on Unusual Volume:

• TER, SNAP, SLP, CSTM, TSEM, TXN, MANH, UPS, SLAB, CRNX, CSGP, NAVI, VLRS, MOR, ACHC, DFS, CMG, WIX, IART, SWP, MLI, BKU, THC, BOKF, AN, GHDX, LAD, DFS, EW, CSGP, BKU, UPS, GWW, RHI, TRMK, UCTT, SC, SLAB, DIOD, AERI, OC, CSL, NTRS, SYNA, MLI, ACLS, MXL, ACHC and EVR

Stocks With Unusual Call Option Activity:

• 1) LQD 2) FEYE 3) EW 4) TER 5) ADI

Stocks With Most Positive News Mentions:

• 1) SNAP 2) CMG 3) TXN 4) HAS 5) EW

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +5.7% Above 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 59.0% of Issues Advancing, 38.1% Declining
• 169 New 52-Week Highs, 40 New Lows
• 62.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.5%
• Vix 12.5 -.9%
• Total Put/Call .86 +14.7%
• TRIN/Arms .89 +12.7%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 60.50 -2.5 basis points.

• China Sovereign CDS 40.50 -1.5 basis points.

• Bloomberg Emerging Markets Currency Index  67.42 -.07%.

• S&P 500 futures unch.

• NASDAQ 100 futures -.19%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (ALXN)/2.34
• (ANTM)/4.62
• (T)/.89
• (BA)/1.90
• (BSX)/.38
• (CAT)/3.11
• (FLIR)/.54
• (FCX)/-.05
• (GD)/2.69
• (HLT)/1.02
• (KNX)/.57
• (NSC)/2.79 
• (NOC)/4.65
• (OC)/1.16
• (TROW)/1.88
• (TUP)/1.02
• (UPS)/1.93
• (VFC)/.29

After the Close:

• (CERN)/.64
• (CUZ)/.76
• (FFIV)/2.48
• (FB)/1.86
• (F)/.31
• (LSTR)/1.54
• (LVS)/.78
• (ORLY)/4.67
• (PYPL)/.83
• (RJF)/1.82
• (NOW)/.63
• (TSLA)/-.40
• (VAR)/1.13
• (XLNX)/.92

Economic Releases

9:45 am EST

• Preliminary Markit US Manufacturing PMI for July is estimated to rise to 51.0 versus 50.6 in June.
• Preliminary Markit US Services PMI for July is estimated to rise to 51.8 versus 51.5 in June.
  

10:00 am EST

• New Home Sales for June are estimated to rise to 659K versus 626K in May.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -4,443,150 barrels versus a -3,116,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,395,170 barrels versus a +3,565,000 barrel gain the prior week. Distillate inventories are estimated to rise by +382,420 barrels versus a +5,686,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.08% versus a -.3% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Manufacturing PMI report, weekly MBA Mortgage Applications report, House hearing on (STI)/(BBT) merger, Mueller's testimony to House on Russia and the $41B 5Y T-Note auction could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology 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 day.