Friday Watch

Night Trading 

• Asian equity indices are +.25 to +1.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 64.75 -1.0 basis point. 
• China Sovereign CDS 33.0 -.5 basis point.
• China Iron Ore Spot 97.50 USD/Metric Tonne +1.2%. 
• Crude Oil 101.4/bbl. -.5%. 
• Gold 4,386.3 USD/t oz. -.28%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.12 -.12%.
• Bloomberg Emerging Markets Currency Index 34.0 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 131.1 -.2%.
• US 10-Year Yield 4.94% +1.0 basis point.
• Japan 30-Year Yield 4.04% -4.0 basis points.
• Volatility Index(VIX) futures 18.0 +.2%.
• Euro Stoxx 50 futures -.47%. 
• S&P 500 futures -.05%.
• NASDAQ 100 futures -.17%.

Morning Preview Links

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

Stocks Higher into Close on Lower Long-Term Rates, Earnings Outlook Optimism, Short-Covering, Tech/Biotech Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 50.7 -2.5%
• BofA Private Credit Proxy Index 72.5 +2.7% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .37 unch.
• BofA Global Financial Stress Indicator -.01 -1.0 basis point
• European Financial Sector CDS Index 55.1 -2.0%
• Emerging Market CDS Index 139.2 -1.9%
• Israel Sovereign CDS 53.7 -1.8%
• Bloomberg Global Trade Policy Uncertainty Index .9 unch.
• US Morning Consult Daily Consume Sentiment Index 88.8 +1.0

• Citi US Economic Surprise Index 34.2 +3.3

• Citi Eurozone Economic Surprise Index 66.5 -.6

• Citi Emerging Markets Economic Surprise Index 17.3 +.7
• S&P 500 Current Quarter EPS Growth Rate YoY(3 of 500 reporting) +19.8% -5.1 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 401.50 +.22:  Growth Rate +22.4% unch., P/E 19.0 +.1
• S&P 500 Current Year Estimated Profit Margin 16.27% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 983.40 +2.40: Growth Rate +46.5% +.4 percentage point, P/E 19.1 +.2
• Bloomberg US Financial Conditions Index 1.22 +2.0 basis points
• US Yield Curve 26.0 basis points (2s/10s) -2.25 basis points
• Bloomberg Industrial Metal Index 180.1 +1.8%
• Dutch TTF Nat Gas(European benchmark) 78.2 euros/megawatt-hour +.2%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 9.9 -1.1 percentage points
• US Atlanta Fed GDPNow Q3 Forecast +5.1% unch.
• US 10-Year T-Note Yield 4.93% -9.0 basis points
• 1-Year TIPS Spread 2.42 +2.0 basis points

• Highest target rate probability for Dec. 9th FOMC meeting: 48.5% (-1.7 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 42.6%(unch.) chance of 4.25%-4.5%. (current target rate is 3.75-4.0%)
  

Portfolio:

• Higher: On gains in my tech/industrial/biotech/consumer discretionary sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 75% net long

Bear Radar

Style Underperformer:

• Large-Cap Value +.7%

Sector Underperformers:

• 1) Gambling -1.4% 2) Insurance -.3% 3) Construction -.1%

Stocks Falling on Unusual Volume: 

• CBIO, NSIT, NVST, BLDR, ATRO, ASND, ASTH, BBNX, KIDS, IMXI, LAD, CRWV, REAX, JXN, MTZ, SWMR, TTAN, SAH, AN and DSP

Stocks With Unusual Put Option Activity:

• 1) SPXS 2) GNRC 3) ARKG 4) TMUS 5) AS

Stocks With Most Negative News Mentions:

• 1) DVLT 2) BBNX 3) INV 4) CAR 5) SMPL

Sector ETFs With Most Negative Money Flow:

• 1) XLF 2) XLE 3) KRE 4) IYF 5) XLU

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.5%

Sector Outperformers:

• 1) Computer Hardware +4.3% 2) Space +4.1% 3) Semis +3.2%

Stocks Rising on Unusual Volume:

• GNRC, SDGR, VICR, ELMT, TEM, OKLO, ARCT, XE, SCTX, PRE, BHVN, VITL, TWST, SMCI, PSIX, PURR, INIO, MASS, BRUN, INTC, CAI, IONQ, ABCL, SITM, APLD, QBTS, TSEM, PBLS, CRSP, NTLA, TH, NVAX, LPTH, CROX, HNRG, LEU, NEXA, VERA, EROC, CMPS, FRNM, IPX, SMTC, HYMC, ALMR, FPS, MGNI, GENB, AMD, GFS, ODD, BEAM, ILMN, CRESY, AYA, BMNR, ZGN, GRAL, MARA, HL, RKLB, GFL, ASST, HSHP, FSLR, OMER, RDWR, HAWK, CMBT, SSMR, SHIP, STNG, CEPU, EGO, BURL, DRTS, CRVS, COIN, CIEN, DELL, AUGO, YETI, HMY, IP, NVO, INGM, ECAT, HMY, NOK, AUGO, FTRE, ZTO, CRDO, IOVA, ETN, LUV, ETN, GBDC, STOK, ENVA, MBX, IOVA and PUBM

Stocks With Unusual Call Option Activity:

• 1) JETS 2) GNRC 3) SECZ 4) USAS 5) XRT 

Stocks With Most Positive News Mentions:

• 1) GNRC 2) SECZ 3) DOMH 4) VITL 5) ATCH

Sector ETFs With Most Positive Money Flow:

• 1) SMH 2) ARKK 3) XAR 4) RSPT 5) VIS

Charts: 

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

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• None of note

After the Close: 

• None of note

Economic Releases 

9:15 am EST

• Industrial Production MoM for Aug. is estimated to rise +.3% versus a +.2% gain in July.
• Manufacturing Production MoM for Aug. is estimated to rise +.3% versus a +.2% gain in July.
• Capacity Utilization for Aug. is estimated at 76.4% versus 76.3% in July. 

10:00 am EST

• Leading Index for Aug. is estimated to rise +.1% versus a +.2% gain in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bowman speaking, Fed's Schmid speaking, BOJ decision, weekly US Baker Hughes oil rig count and the weekly CFTC speculative net positioning reports could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -6.2% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 20.9 +2.7
• 10 Sectors Rising, 1 Sector Declining
• 70.1% of Issues Advancing, 27.7% Declining 
• TRIN/Arms 1.03 -27.5%
• Non-Block Money Flow +$222.8M
  
• 51 New 52-Week Highs, 77 New Lows
• 47.8% (+4.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.1 +.8

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 8.0% unch.
• Strait of Hormuz traffic returns to normal by October 31st 7.0% -1.0 percentage point
• Iran agrees to end enrichment of uranium by Dec. 31st 13.0% unch.
• Israel withdraws from Lebanon by December 31st 7.0% unch.
• US Invades Iran before 2027 17.0% -1.0 percentage point
• US announces end of Iranian blockade by October 31st 34.0% -3.0 percentage points

Other

• Bloomberg Global Risk-On/Risk-Off Index 131.6 +.02%
• Global Monitor Iran Instability Index 70.0 +10.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 90.0% unch.
• US High-Yield Tech Sector OAS Index 402.75 -1.5 basis points
• Bloomberg Cyclicals/Defensives Index 269.2 +.4%
• Morgan Stanley Growth vs Value Index 148.0 +.3%
• CNN Fear & Greed Index 30.0 (FEAR) +1.0
• 1-Day Vix 11.2 -34.3%
• Vix 15.6 -12.2%
• Total Put/Call .89 -7.3%