Stocks Higher into FInal Hour on US Economic Data, Oil Gain, Short-Covering, Transport/Gaming Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 32.9 -5.3%

• Euro/Yen Carry Return Index 124.45 +.54%

• Emerging Markets Currency Volatility(VXY) 10.69 -.56%

• S&P 500 Implied Correlation 67.1 -2.75%

• ISE Sentiment Index 119.0 +27.0 points

• Total Put/Call .98 -6.67%

• NYSE Arms .69 -50.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.90 -.87%
  

• US Energy High-Yield OAS 990.50 +1.77%

• European Financial Sector CDS Index 84.80 -.4%

• Italian/German 10Y Yld Spread 177.5 +.25 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 87.78 -.13%
  

• Emerging Market CDS Index 204.12 -.67%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.38 +.07%

• 2-Year Swap Spread 6.75 -.25 basis point

• TED Spread 17.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -8.25 +.75 basis point
• MBS  5/10 Treasury Spread  111.0 unch.
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.14 -.01%
• 3-Month T-Bill Yield .13% -1.0 basis point

• Yield Curve 47.5 -1.75 basis points

• China Iron Ore Spot 97.75 USD/Metric Tonne -3.24%

• Citi US Economic Surprise Index 167.40 +5.3 points

• Citi Eurozone Economic Surprise Index -99.80 -18.0 points

• Citi Emerging Markets Economic Surprise Index -26.0 -7.7 points

• 10-Year TIPS Spread 1.33 +1.0 basis point
• 100.0% chance of no change at Sept. 16 meeting, 100.0% chance of no change at Nov. 5th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +345 open in Japan 
• China A50 Futures: Indicating -176 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/medical/industrial/consumer staple sector longs

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

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.3%

Sector Underperformers:

• 1) Coal -3.6% 2) Biotech -.2% 3) Internet -.2%

Stocks Falling on Unusual Volume: 

• SONO, BRP, ITCI, DOCU, AMED, MDLA, VAPO, SMAR, AKRO, MDGL, CLDR, VIR, SPT, RNG, BYND, IDYA, NOVA, AXSM, FSLY, NGM, BCLI, HRTX and ICPT

Stocks With Unusual Put Option Activity:

• 1) BGCP 2) EWY 3) XLB 4) KBH 5) IYR

Stocks With Most Negative News Mentions:

• 1) BYND 2) PPC 3) ELVT 4) ELAN  5) CHK

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +3.9%

Sector Outperformers:

• 1) Airlines +5.4% 2) Alt Energy +5.1% 3) Gaming +5.0%

Stocks Rising on Unusual Volume:

• WKHS, SHLL, PCRX, RAD, KRO, DOOR, ZGNX, SBCF, MATW, BDN, BLD, SAIA and IRM

Stocks With Unusual Call Option Activity:

• 1) BLNK 2) CSX 3) ON 4) DDD 5) WKHS

Stocks With Most Positive News Mentions:

• 1) COTY 2) NVAX 3) NKLA 4) PLRX 5) MOS

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -24.3% Below 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 75.2% of Issues Advancing, 23.0% Declining
• 38 New 52-Week Highs, 1 New Low
• 19.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.6%
• Vix 33.4 -4.0%
• Total Put/Call 1.04 -1.0%
• TRIN/Arms .62 -55.3%

Monday Watch

Today's Headlines

Bloomberg:   

• The U.S.-China Feud Quietly Gets Nasty.
• Southeast Asia Leaders Sound Alarm on South China Sea Tensions.
• Speedier Cargoes From China Now Come at a Price.     
• Reckoning Looms for Emerging Markets as Economic Clouds Darken.
• Amateur Traders Pile Into Asian Stocks, Making the Pros Nervous.   
• Putin Seizes Moment to Rule Until He’s 83 Amid Fading Popularity.  
• Mexico’s Nayarit Says Hospitals Full, at Odds With Federal Data.
• Global Cases Pass 10 Million; Record Gain in Tokyo: Virus Update. U.S. Stock Futures Drop at Open, Crude Oil Falls: Markets Wrap. U.S. equity futures fell at the open Monday after deaths around the world from the coronavirus topped half a million and infections continued to mount in American states. Crude oil fell. S&P 500 futures opened about 0.6% down and contracts in Japan and Australia pointed lower. In currencies, the Australian dollar saw a modest decline. Providing some comfort was data over the weekend providing more signs the Chinese economy is continuing to recover from its shutdown. Chinese markets reopen after a two-day holiday. S&P 500 futures fell 0.7% as of 7:01 a.m. in Tokyo. The gauge fell 2.4% on Friday. Futures on Japan’s Nikkei 255 dropped 0.8%. Hang Seng futures lost 0.4%. Futures on Australia’s S&P/ASX 200 Index declined 1.6%.
• Fed’s ‘Run It Hot’ Recipe Works for Markets. Jobs? Not So Much.  
• Treasuries’ Best Run Since 1995 Shows Traders Girding for Worst.  
• America’s Shifting Covid-19 Epidemic in Five Charts.  
• Florida Virus Cases Jump as DeSantis Blames ‘Socializing’ Youths.

Wall Street Journal:

• U.S. Presses Europe to Uproot Chinese Security-Screening Company.
• I’m Leaving Seattle for Texas So My Employees Can Be Free.
• Florida’s School Choice Blowout.
• Bubba Wallace and the ‘Noose’ That Wasn’t.
• Six Months That Shook the World.
• American Companies Find Willing Buyers of Debt Abroad.
• Public Transit Use Is Tied to Higher Covid-19 Death Rates.
• Masks Could Help Stop Coronavirus. So Why Are They Still Controversial?
• Powell Has Become the Fed’s Dr. Feelgood.
• Texas Tried Reopening Offices Early. It Was Hard Even Before the Coronavirus Surge.
• Pandemic Led to Sharp Rise in Alzheimer’s Deaths.

Barron's:

• Had bullish commentary on (NVDA), (MMP), (BBY) and (VZ).

Fox News:

• Trump pushes back on NY Times report on Russian Afghan attacks, as Biden calls it ‘shocking revelation’.
• California joins these big states implementing new coronavirus restrictions amid troubling spikes.

CNBC:   

• ‘We have to act’ — HHS Secretary Azar warns ‘window closing’ to halt coronavirus spike.
• Wall Street is underpricing a Joe Biden win: Wells Fargo’s Chris Harvey.
• Trump fans are flocking to the social media app Parler — its CEO is begging liberals to join them.
• Here are five charts illustrating the U.S. economic recovery amid the coronavirus pandemic.
• U.S. coronavirus cases surge by more than 45,000, total over 2.5 million.
• New York investigating coronavirus cluster after Florida traveler tests positive.
• Credit card industry reins in balance-transfer offers as banks from JPMorgan to Amex fear defaults.
• Top analysts are betting on stocks like Mastercard(MA) and Nvidia(NVDA) right now into the second half.

Zero Hedge:   

• Chesapeake Files For Bankruptcy, Wiping Out $7 Billion In Debt And Any Existing Equity Value.
• Global Coronavirus Deaths Top 500,000; Dallas Pushes To Revive Lockdown As Cases Hit Record Highs: Live Updates.
• As COVID-19 Cases Spike Nationally, Black Lives Matter Plans More Rallies, Marches.
• 41% Of Businesses On Yelp Have Permanently Closed As V-Shaped Recovery Implodes.
• Bears Capitulate: Institutions Hammered With 3rd Biggest Short Squeeze In History.
• Toyota, Volkswagen And Daimler: Here Are The Corporate Bonds The Fed Is Buying The Most.
• Reopening Of Popular Michigan College Bar Results In 85 COVID-19 Infections.
• Comey Miniseries Gets Pre-Election Airdate, After Director Pleads For Chance To Sway Voters.
• Public Transit Use Largely Responsible For 'Racial Discrepancy' In COVID-19 Death Rates.
• All Players In The NYT 'Russian Bounties' In Afghanistan Story Have Slammed It As Fake News.
• Triple Threat - 3 Major Risks The Markets Are Not Pricing In Yet.
• Corona-Depression: Southern Europe Will Never Recover.
• "Eat The Rich!": BLM Invades Beverly Hills - Then The Cops Showed Up.
• "Stressed All The Time" - Millennials/Gen Z-ers See Job Mobility Plunge.
• Woman Assaulted At BLM Protest For Holding "Police Lives Matter" Sign.
• NYU Prof: "Hundreds, If Not Thousands" Of Universities Will Soon Be "Walking-Dead".
• Princeton Dumps Woodrow Wilson's Name Due To "Racist Thinking".
• Texas Realtors Stop Using 'Master Bedroom' Over Slavery Connotations.
• "Disturbing Parallel To HIV": COVID-19 Can Cause Depletion Of Important Immune Cells, NY Times Admits.
• Is This The Next Big Short?
• Minneapolis City Council Members Enjoy Costly Private Security Detail As Push To "Defund The Police" Continues.
• It's Not Just Red States - Philadelphia, San Francisco Fear 'Second Wave' As Thousands Infected At BLM Protests.
• From Book-Burning To Statue-Toppling: History Shows Free Speech Is The Loser In Mob Rule.
• V-Shaped Narrative Dies As Commercial Real Estate Bust Accelerates.
• Conservative Journalist Jack Posobiec Assaulted By DC Antifa.
• Illicit Raves Across Europe Are Contributing To A Revival In COVID-19 Infections.

MarketWatch.com:

• 7 reasons the stock market may face a severe bout of turbulence this week and beyond — only one is rising coronavirus cases.
• ‘All I hear is old-timers say that the retail bros are going to get crushed,’ Barstool’s David Portnoy says—but ‘I’m beating them like a drum’. 

Business Insider:

• The 3 stimulus plans Congress is debating that could put extra cash into your bank account.
• Dave Portnoy says the day-trading revolution will slow down once sports return and people go back to work, but gambling analysts aren't so sure.
• Warren Buffett has warned about the dangers of speculating for years. Day traders aren't listening.

The Epoch Times:

• Chinese Regime Forces Chinese Banks, Their Investors to Sacrifice $212 Billion.
• Burgeoning Outbreak in Beijing Shuts Down Neighborhoods, Businesses.
• Chinese Professor Found Guilty of Economic Espionage, Theft of US Trade Secrets.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking coronavirus: Map, data and timeline.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading

• Asian indices are -1.5% to -.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 87.75 1.25 basis points.
• China Sovereign CDS 52.0 +1.75 basis points.
• Bloomberg Emerging Markets Currency Index 60.14 -.01%.
• FTSE 100 futures n/a.
• S&P 500 futures -.17%.
• NASDAQ 100 futures -.33%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note

After the Close:

• (MLHR)/-.20
• (MU)/.68

Economic Releases
10:00 am EST

• Pending Home Sales MoM for May is estimated to rise +18.9% versus a -21.8% decline in April.

10:30 am EST

• The Dallas Fed Manufacturing Activity for June is estimated to rise to -24.9 versus -49.2 in May.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German Inflation data report and the (JACK) Meet and Greet could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are modestly lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.

• Global Economy Week by Bloomberg. 

• The Week Ahead by Yahoo. (video)

• Stocks to Watch Next Week by Seeking Alpha.

• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on global recession fears, coronavirus second wave worries, oil weakness, rising Biden presidency odds, European/Emerging Market/US High-Yield Debt Angst and technical selling. My intermediate-term trading indicators are giving bearish signals and the Portfolio is 25% net long heading into the week.