Friday Watch

Night Trading 

• Asian equity indices are +.5% to +1.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 66.0 -.75 basis point. 
• China Sovereign CDS 34.75 -.5 basis point.
• China Iron Ore Spot 99.3 USD/Metric Tonne +.1%. 
• Crude Oil 91.81/bbl. +.6% 
• Gold 4,523.60 USD/t oz. -.35%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.31 +.05%.
• Bloomberg Emerging Markets Currency Index 34.26 -.08%.
• Bloomberg Global Risk-On/Risk Off Index 128.9 -.3%.
• US 10-Year Yield 4.77% unch.
• Japan 30-Year Yield 4.02% -5.0 basis points.
• Volatility Index(VIX) futures 18.1 -.3%.
• Euro Stoxx 50 futures -.03%. 
• S&P 500 futures +.01%.
• NASDAQ 100 futures +.06%.

Morning Preview Links

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

Stocks Surging into Final Hour Mideast War De-escalation Rhetoric, Falling Fed Rate-Hike Odds, Earnings Outlook Optimism, Tech/Financial Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 50.2 -.7%
• BofA Private Credit Proxy Index 73.4 -.1% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .31 -1.0 basis point
• BofA Global Financial Stress Indicator -.13 +2.0 basis points
• European Financial Sector CDS Index 53.9 -1.0%
• Emerging Market CDS Index 136.9 -1.0%
• Israel Sovereign CDS 53.1 +.2%
• Bloomberg Global Trade Policy Uncertainty Index .7 -.1
• US Morning Consult Daily Consume Sentiment Index 90.0 +3.6

• Citi US Economic Surprise Index 18.5 +1.8

• Citi Eurozone Economic Surprise Index 75.4 +2.5

• Citi Emerging Markets Economic Surprise Index 23.4 +.4
• S&P 500 Current Quarter EPS Growth Rate YoY(492 of 500 reporting) +53.2% +.7 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 397.78 +.54:  Growth Rate +21.2% +.1 percentage point, P/E 19.5 +.2
• S&P 500 Current Year Estimated Profit Margin 16.29% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +131.5% -1.8 percentage points
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 971.40 +.89: Growth Rate +44.7% -42.4 percentage points, P/E 19.5 +.4
• Bloomberg US Financial Conditions Index 1.25 +2.0 basis points
• US Yield Curve 42.75 basis points (2s/10s) +2.5 basis points
• Bloomberg Industrial Metal Index 180.91 +.8%
• Dutch TTF Nat Gas(European benchmark) 71.2 euros/megawatt-hour -3.3%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 12.0 unch.
• US Atlanta Fed GDPNow Q3 Forecast +4.7% -.1 percentage point
• US 10-Year T-Note Yield 4.76% -2.0 basis points
• 1-Year TIPS Spread 2.29 +2.0 basis points

• Highest target rate probability for Oct. 28th FOMC meeting: 50.2% (-5.4 percentage points) chance of 3.75%-4.0%. Highest target rate probability for Dec. 9th meeting: 42.9%(+5.2 percentage points) chance of 3.75%-4.0%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +350 open in Japan 
• China A50 Futures: Indicating -3 open in China
• KOSPI 200 Futures: Indicating +17 open in South Korea 

• DAX Futures: Indicating +55 open in Germany

Portfolio:

• Higher: On gains in my tech/consumer discretionary/industrial sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 100% net long

Bear Radar

Style Underperformer:

• Small-Cap Value +.5%

Sector Underperformers:

• 1) Oil Service -1.6% 2) Foods -1.5% 3) Agriculture -.9%

Stocks Falling on Unusual Volume: 

• HPE, VALE, AVGO, GIII, FRVO, CLYM, TCOM, AEHR, TTC, GOLD, TSN, CPB, CIEN, VSXY, MEI and RARE

Stocks With Unusual Put Option Activity:

• 1) LUMN 2) PATH 3) SNOW 4) AS 5) PBR

Stocks With Most Negative News Mentions:

• 1) WIX 2) CAPR 3) REPL 4) PSNY 5) TSN

Sector ETFs With Most Negative Money Flow:

• 1) DRAM 2) GDX 3) ICLN 4) IYW 5) IGV

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +2.0%

Sector Outperformers:

• 1) Software +3.6% 2) I-Banking +3.5% 3) Robotics +2.7%

Stocks Rising on Unusual Volume:

• SNOW, CRCL, HOOD, SMMT, MSTR, BMNR, CBIO, ALMS, CIFR, HSAI, BULL, RIOT, BLSH, ASST, CLS, GLXY, COIN, MARA, BTDR, CLSK, PURR, BE, MIR, SPCX, TSLA, GFI, HMY, PFG, ESTC, PCG, OCTV, DELL, NEXA, IOT, NMCO, LCLN, AYA, CWK, VCX, WLY, ZS, WD, MRX, CIGI, AGX, GNW, BLBD, NTSK, LII, SBSW, FUBO, TRLV, AI and EXK

Stocks With Unusual Call Option Activity:

• 1) DPRO 2) CHGG 3) RARE 4) FXY 5) SNOW 

Stocks With Most Positive News Mentions:

• 1) SNOW 2) HOOD 3) DLTH 4) CHPT 5) CRCL

Sector ETFs With Most Positive Money Flow:

• 1) SMH 2) KRE 3) XLE 4) XLI 5) XLV

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 

8:30 am EST

• The Change in Non-Farm Payrolls for August is estimated to rise to 55K versus -23K in July.
• Average Hourly Earnings MoM for Aug. is estimated to rise +.3% versus a +.1% gain in July.
• The Unemployment Rate for Aug. is estimated at 4.1% versus 4.1% in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The weekly US Baker Hughes rig count, weekly CFTC speculative net positioning reports and the (NVDA) IFA Congress 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 -9.5% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 13.5 +.5
• 10 Sectors Rising, 1 Sector Declining
• 61.4% of Issues Advancing, 36.3% Declining 
• TRIN/Arms 1.30 +51.2%
• Non-Block Money Flow +$371.5M
  
• 76 New 52-Week Highs, 57 New Lows
• 58.2% (+1.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 57.7 +7.3

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 9.0% unch.
• Strait of Hormuz traffic returns to normal by September 30th 3.0% unch.
• Iran agrees to end enrichment of uranium by Sept. 30th 3.0% unch.
• Israel withdraws from Lebanon by September 30th 1.0% unch.
• US Invades Iran before 2027 15.0% -1.0 percentage point
• US announces end of Iranian blockade by September 30th 18.0% -2.0 percentage points

Other

• Bloomberg Global Risk-On/Risk-Off Index 129.9 -.9%
• Global Monitor Iran Instability Index 72.0 +7.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 90.0% unch.
• US High-Yield Tech Sector OAS Index 431.75 -3.0 basis points
• Bloomberg Cyclicals/Defensives Index 270.8 +.2%
• Morgan Stanley Growth vs Value Index 147.3 +.9%
• CNN Fear & Greed Index 36.0 (FEAR) +1.0
• 1-Day Vix 9.1 -13.1%
• Vix 14.6% -4.3%
• Total Put/Call .73 -8.8%