Stocks Falling Substantially into Final Hour on Mideast War Resumption Fears, Surging Eurozone Sovereign Debt Angst, AI Infrastructure Build-Out Worries, Tech/Alt Energy Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 63.1 +2.9%
• BofA Private Credit Proxy Index 66.2 +2.0% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .41 unch.
• BofA Global Financial Stress Indicator .04 -2.0 basis points
• European Financial Sector CDS Index 76.3 +4.7% 
• Emerging Market CDS Index 170.0 +4.3% 
• Israel Sovereign CDS 63.0 +3.4% 
• Bloomberg Global Trade Policy Uncertainty Index .6 unch.
• US Morning Consult Daily Consume Sentiment Index 84.3 -2.8

• Citi US Economic Surprise Index 42.0 +2.5

• Citi Eurozone Economic Surprise Index 27.9 -1.5

• Citi Emerging Markets Economic Surprise Index 30.2 -1.1
• S&P 500 Current Quarter EPS Growth Rate YoY(113 of 500 reporting) +38.3% +1.2 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 411.75 +.32:  Growth Rate +25.4% unch., P/E 18.6 -.2
• S&P 500 Current Year Estimated Profit Margin 16.36% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(3 of 10 reporting) +499.8% -103.1 percentage points
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,092.71 +.38: Growth Rate +62.7% -.1 percentage point, P/E 16.8 -.4
• Bloomberg US Financial Conditions Index 1.2 +2.0 basis points
• US Yield Curve 30.25 basis points (2s/10s) -1.5 basis points
• Bloomberg Industrial Metal Index 171.2 -1.9%
• Dutch TTF Nat Gas(European benchmark) 91.1 euros/megawatt-hour +4.2%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 10.6% +.3%
• US Atlanta Fed GDPNow Q3 Forecast +3.5% unch.
• US 10-Year T-Note Yield 4.96% -16.0 basis points
• 1-Year TIPS Spread 3.03 +1.0 basis point

• Highest target rate probability for Dec. 9th FOMC meeting: 73.8% (-2.3 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 56.7%(+12.3 percentage points) chance of 4.0%-4.25%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -200 open in Japan 
• China A50 Futures: Indicating -33 open in China
• KOSPI 200 Futures: Indicating -13 open in South Korea 

• DAX Futures: Indicating +109 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/biotech/industrial sector longs
• Disclosed Trades: Added to my (QQQ) hedges and to my emerging market shorts
• Market Exposure: Moved to 25% net long

Bear Radar

Style Underperformer:

• Mid-Cap Growth -3.1%

Sector Underperformers:

• 1) Lithography/Photonics -9.0% 2) Space -7.6% 3) Alt Energy -4.5%

Stocks Falling on Unusual Volume: 

• LB, MSGS, ARMK, ERO, BAP, MLI, EGO, RBC, BWXT, EME, FUTU, SPXC, LBRT, ALMR, WWD, IR, FLS, ETN, NEXA, CLMT, IESC, HWM, PRIM, PLXS, FR, KYIV, ASTS, RGT, WDC, CRBS, AMAT, ANET, THRM, PH, WCC, QNT, HIMX, SCCO, HIMX, ARIS, META, NBIS, HSAI, KEYS, STX, VRT, APH, CDE, TLN, ROG, MOG/A, GFS, HBM, IREN, PWR, TXG, SPCX, KLAC, Q, FIX, SKE, LFUS, CR, LSCC, ESI, SANM, CIEN, APLD, VECO, TER, MKSI, AYA, ZLAB, FLEX, ONTO, VST, ECG, CRWV, FEIM, GLXY, STRL, ASX, GEV, BE, POWL, EZPW, PENG, FCEL, LRCX, WULF, CLS, TH, LITE, TSEM, LGN, ATI, ENTG, INIO, AAOI, NVT, AEIS, COHR, BAND, ICHR, MSM, FCFS, VIAV, CECO, UCTT, SIMO, GGG, OII, SEI, VICR, COHU, CRS, KALU, MRNA, FPS and TTMI

Stocks With Unusual Put Option Activity:

• 1) KSS 2) XLY 3) FPS 4) TSEM 5) HWM

Stocks With Most Negative News Mentions:

• 1) MRNA 2) NVEC 3) FCEL 4) FLNC 5) ASTS

Sector ETFs With Most Negative Money Flow:

• 1) XLU 2) XLV 3) XLF 4) XLE 5) XLY

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.0%

Sector Outperformers:

• 1) Homebuilding +3.0% 2) Foods +2.7% 3) Insurance +2.5%

Stocks Rising on Unusual Volume:

• BHVN, MLTX, EGBN, KSS, HCSG, GSHD, SPOT, WCN, POOL, BMI, Z, ROP, AVEX, RTO, BL, WGO, MNDY, RH, AMN, R, LEN, SSL, FTDR, EFX, LAD, MHO, WHR, BX, KBH, CWST, NDAQ, CSX, NRDS, TRI, RKT, CELC, BBT, PG, KBR, ADBE, ZGN, BETR, LGIH, WSO, ABG, VLY, BETR, TRU, HURN, STVN, CNOB, ATEC, ARHS, TCBI, ROL, CENTA, QLYS, BIIB, ALC, TSCO, NHP, PHM, ACI, ULTA, CHKP, EROK, SONY, RAPP, APPN, SAP and QLYS

Stocks With Unusual Call Option Activity:

• 1) FHN 2) UAL 3) TTMI 4) TSEM 5) SOLS 

Stocks With Most Positive News Mentions:

• 1) SMCI 2) SPCX 3) CRDO 4) MARA 5) INSW

Sector ETFs With Most Positive Money Flow:

• 1) ALAI 2) XLI 3) SMH 4) KBWB 5) VOX

Charts: 

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

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (AXP)/4.50
• (ALV)/2.23
• (BAH)/1.48
• (GNTX)/.50
• (SLB)/.62 

After the Close: 

• None of note

Economic Releases 

9:45 am EST

• The S&P Global US Manufacturing PMI for Oct. is estimated to fall to 55.5 versus 55.9 in Sept.
• The S&P Global US Services PMI for Oct. is estimated to fall to 58.0 versus 58.8 in Sept.
• The S&P Global US Composite PMI for Oct. is estimated to fall to 57.4 versus 58.4 in Sept. 

10:00 am EST

• Final Univ. of Mich. Consumer Sentiment readings.

11:00 am EST

• Kansas City Fed Services Activity Index for Oct.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Bloomberg Oct. US Economic Survey, 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

Thursday Watch

Night Trading 

• Asian equity indices are -.75% to +.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 75.25 +.75 basis point  
• China Sovereign CDS 37.75 +.5 basis point.
• China Iron Ore Spot 90.60 USD/Metric Tonne -.5%. 
• Crude Oil 98.11/bbl. +1.0%. 
• Gold 4,133.80 USD/t oz. -.4%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.09 +.02%.
• Bloomberg Emerging Markets Currency Index 33.6 -.05%.
• Bloomberg Global Risk-On/Risk Off Index 131.4 +.4%.
• US 10-Year Yield 5.11% -1.0 basis point.
• Japan 30-Year Yield 3.92 +1.0 basis point.
• Volatility Index(VIX) futures 18.5 +1.2%.
• Euro Stoxx 50 futures unch. 
• S&P 500 futures -.38%.
• NASDAQ 100 futures -.61%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and metals & mining shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon.  The Portfolio is 50% net long heading into the day.

Stocks Higher into Final Hour on War Resolution Hopes, Earnings Outlook Optimism, Technical Buying, Tech/Alt Energy Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 61.5 -.8%
• BofA Private Credit Proxy Index 64.9 -.6% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .41 -1.0 basis point
• BofA Global Financial Stress Indicator .06 -2.0 basis points
• European Financial Sector CDS Index 72.8 -.7% 
• Emerging Market CDS Index 163.0 -2.1% 
• Israel Sovereign CDS 61.0 -1.2% 
• Bloomberg Global Trade Policy Uncertainty Index .6 +.1
• US Morning Consult Daily Consume Sentiment Index 87.1 +1.5

• Citi US Economic Surprise Index 39.5 -.6

• Citi Eurozone Economic Surprise Index 29.4 -4.0

• Citi Emerging Markets Economic Surprise Index 31.3 -.3
• S&P 500 Current Quarter EPS Growth Rate YoY(78 of 500 reporting) +37.1% -7.1 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 411.43 +.21:  Growth Rate +25.4% +.1 percentage point, P/E 18.8 unch.
• S&P 500 Current Year Estimated Profit Margin 16.35% +2.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(2 of 10 reporting) +602.9% -410.2 percentage points
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,093.09 +.45: Growth Rate +62.8% +.1 percentage point, P/E 17.2 unch.
• Bloomberg US Financial Conditions Index 1.0 +1.0 basis point
• US Yield Curve 31.75 basis points (2s/10s) -6.0 basis points
• Bloomberg Industrial Metal Index 174.5 +.8%
• Dutch TTF Nat Gas(European benchmark) 87.2 euros/megawatt-hour +2.5%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 10.3% -.9%
• US Atlanta Fed GDPNow Q3 Forecast +3.5% unch.
• US 10-Year T-Note Yield 5.12% +1.0 basis point
• 1-Year TIPS Spread 3.02 +4.0 basis points

• Highest target rate probability for Dec. 9th FOMC meeting: 76.5% (+.2 percentage point) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 44.6%(-1.3 percentage points) chance of 4.0%-4.25%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +110 open in Japan 
• China A50 Futures: Indicating -44 open in China
• KOSPI 200 Futures: Indicating -4 open in South Korea 

• DAX Futures: Indicating +63 open in Germany

Portfolio:

• Higher: On gains in my tech/biotech/energy/industrial sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
• Market Exposure: 75% net long