Stocks Slightly Higher into Final Hour on Diminished Global Growth Fears, Short-Covering, Technical Buying, Financial/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 13.94 -1.97%

• Euro/Yen Carry Return Index 124.32 +.11%

• Emerging Markets Currency Volatility(VXY) 8.09 -.61%

• S&P 500 Implied Correlation 34.84 -.51%

• ISE Sentiment Index 89.0 unch.
  

• Total Put/Call .81 -3.57%

• NYSE Arms .95 +20.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.15 -.11%
  

• America Energy Sector High-Yield CDS Index 393.0 +.54%

• European Financial Sector CDS Index 55.38 +3.16%

• Italian/German 10Y Yld Spread 133.0 -20.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 55.35 -1.85%
  

• Emerging Market CDS Index 201.15 +1.45%
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.36 +.03%

• 2-Year Swap Spread .25 +1.5 basis points

• TED Spread 17.5 -1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -7.0 +5.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.19 +.14%
• 3-Month T-Bill Yield 1.95% unch.

• Yield Curve .07+2.0 basis points

• China Iron Ore Spot 96.0 USD/Metric Tonne +4.76%

• Citi US Economic Surprise Index 17.40 +10.4 points

• Citi Eurozone Economic Surprise Index -36.50 +.3 point

• Citi Emerging Markets Economic Surprise Index -4.6 +6.6 points

• 10-Year TIPS Spread 1.66 +6.0 basis points
• 100.0% chance of Fed rate cut at Oct. 30th meeting, 100.0% chance of cut at Dec. 11th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -73 open in Japan 
• China A50 Futures: Indicating +78 open in China

• DAX Futures: Indicating -6 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.2%

Sector Underperformers:

• 1) Tobacco -1.7% 2) Telecom -1.5% 3) REITs -.9%

Stocks Falling on Unusual Volume: 

• RGNX, LL, PGR and APLS

Stocks With Unusual Put Option Activity:

• 1) LQD 2) KEM 3) AVGO 4) OSTK 5) ADVM

Stocks With Most Negative News Mentions:

• 1) TLRA 2) CBOE 3) WORK 4) XEL 5) TWTR

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.7%

Sector Outperformers:

• 1) Banks +1.8% 2) Road & Rail +1.6% 3) Agriculture +1.5%

Stocks Rising on Unusual Volume:

• MDLA, KEM, CARS, LCI, DAN, AGS, RMBS, RCG, IGT, GEL, MDC, SHLX, OI, NS, TGI, DCP, CQP, CEQP, INGN, REVG and ENBL

Stocks With Unusual Call Option Activity:

• 1) RMBS 2) SGMS 3) BHGE 4) PHM 5) LYB

Stocks With Most Positive News Mentions:

• 1) NET 2) MDC 3) KEM 4) AVY 5) BITA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +4.9% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 53.0% of Issues Advancing, 45.0% Declining
• 96 New 52-Week Highs, 6 New Lows
• 62.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.0%
• Vix 13.5 -4.9%
• Total Put/Call .85 +1.19%
• TRIN/Arms .80 -38.9%

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 55.5 -1.0 basis point.

• China Sovereign CDS 37.75 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index  66.11 +.01%.
• FTSE 100 futures +.21%.

• S&P 500 futures +.08%.

• NASDAQ 100 futures +.15%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• None of note

After the Close:

• None of note

Economic Releases

8:30 am EST

• The Import Price Index MoM for August is estimated to fall -.5% versus a +.2% gain in July.
• The Import Price Index ex Petro for August is estimated to fall -.1% versus unch. in July.
• The Export Price Index MoM for August is estimated to fall -.3% versus a +.2% gain in July.
• Retail Sales Advance MoM for August is estimated to rise +.2% versus a +.7% gain in July.
• Retail Sales Ex Autos MoM for August is estimated to rise +.1% versus a +1.0% gain in July.
• Retail Sales Ex Autos and Gas for August is estimated to rise +.2% versus a +.9% gain in July.

10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for Sept. is estimated to rise to 90.8 versus 89.8 in August. 
• Business Inventories for July is estimated to rise +.3% versus unch. in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Industrial Production report and Bloomberg US Economic Survey for Sept. could also impact trading today.

BOTTOM LINE: Asian indices are modestly higher, boosted by financial and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Bull Radar

Style Outperformer:

• Large-Cap Growth +.8%

Sector Outperformers:

• 1) Steel +2.1% 2) Gaming +1.8% 3) Homebuilders +1.7%

Stocks Rising on Unusual Volume:

• IMXI, MRNA, UGLD, LGND, RDUS, RGNX, FNKO, PDP, CHD, ERJ, VAR, RH, EIDX, LKQ, AYX, YELP, REVG, LX, CDLX, MLNX, EHTH, ZTO, ECH, XERS, TPB, CCS and TWLO

Stocks With Unusual Call Option Activity:

• 1) LKQ 2) XLB 3) LEN 4) ORCL 5) APC

Stocks With Most Positive News Mentions:

• 1) ABBV 2) MRNA 3) BX 4) ATVI 5) SHW

Charts:

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