Stocks Higher into Final Hour on Coronavirus Treatment Optimism, Cental Bank Stimulus Hopes, Short-Covering, Airline/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 22.7 +.8%

• Euro/Yen Carry Return Index 129.52 +.12%

• Emerging Markets Currency Volatility(VXY) 11.25 +.18%

• S&P 500 Implied Correlation 38.07 -6.5%

• ISE Sentiment Index 75.0 -36.0 points

• Total Put/Call .74 +4.2%

• NYSE Arms .66 -27.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 66.37 -1.69%
  

• US Energy High-Yield OAS 779.24 -.46%

• European Financial Sector CDS Index 62.22 -2.25%

• Italian/German 10Y Yld Spread 142.50 +.5 basis point
  

• Asia Ex-Japan Investment Grade CDS Index  62.84 -2.53%
  

• Emerging Market CDS Index 179.53 -2.08%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.41 +.12%

• 2-Year Swap Spread 6.75 -1.25 basis points

• TED Spread 16.25 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.5 -1.5 basis points
  
• MBS  5/10 Treasury Spread  89.0 +.25 basis point
  
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.11 +.11%
• 3-Month T-Bill Yield .9% unch.

• Yield Curve 48.5 -.75 basis point
  

• China Iron Ore Spot 120.0 USD/Metric Tonne -1.4%

• Citi US Economic Surprise Index 236.70 -17.9 points

• Citi Eurozone Economic Surprise Index 133.20 +.7 point

• Citi Emerging Markets Economic Surprise Index 25.4 -.7 point

• 10-Year TIPS Spread 1.68 +4.0 basis points
• 100.0% chance of no change at Nov. 5th meeting, 100.0% chance of no change at Dec. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +74 open in Japan 
• China A50 Futures: Indicating -63 open in China

• DAX Futures: Indicating -31 open in Germany

Portfolio:

• Slightly Lower: On losses in my biotech/medical sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.5%

Sector Underperformers:

• 1) Healthcare Providers -1.4% 2) Biotech -1.1% 3) Education -1.1%

Stocks Falling on Unusual Volume: 

• INSG, LRN, UPWK, OTRK, PINS, CWH, EHTH, RST, PRPL, CDLX, TDOC, NLS, FLGT, BE, PLUG, OSTK, CHGG, PSNL, BCLI, VCYT, BKE, OOMA, SDGR, EXPI, TCRR, APPS, IMUX, NVAX, GRWG, VIR, CODX and TCDA
  

Stocks With Unusual Put Option Activity:

• 1) PANW 2) IBB 3) UNH 4) BBY 5) KRE
  

Stocks With Most Negative News Mentions:

• 1) DHI 2) PINS 3) ZM 4) CHDN  5) AMD
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.5%

Sector Outperformers:

• 1) Airlines +5.4% 2) Oil Service +3.5% 3) Banks +2.6%

Stocks Rising on Unusual Volume:

• SHLL, RBNC, FL, FIZZ, PLCE, ANGI, VSAT and BBY
  

Stocks With Unusual Call Option Activity:

• 1) EPR 2) ANGI 3) ADMA 4) LB 5) IBIO

Stocks With Most Positive News Mentions:

• 1) BBY 2) EXC 3) VERX 4) LULU 5) DE

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -23.9% Below 100-Day Average
• 9 Sectors Rising, 3 Sectors Declining
• 71.8% of Issues Advancing, 25.8% Declining
• 84 New 52-Week Highs, 9 New Lows
• Bloomberg Risk-On/Risk-Off Index 4.46 +.6 point
  
• 45.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.0%
• Vix 22.6 +.3%
• Total Put/Call .67 -5.63%
• TRIN/Arms .80 -12.1%

Monday Watch

Today's Headlines

Bloomberg:     

• China Risk May Overshadow Emerging Markets Eyeing Vaccine Hopes.  
• China Investors Brace for Record Defaults in Risky End to 2020.  
• South Korea Warns of ‘Massive’ Coronavirus Risk.
• Trump Weighs Fast-Tracking U.K. Covid Vaccine Before Election: FT.  
• Australia Jobs Rebound Slowing on State Controls, Treasurer Says.  
• Dollar Steady, U.S. Stock Futures Edge Higher. The dollar was steady in early trading and stocks in Asia looked set for a muted start to the week, as investors monitored a mixed global picture for the coronavirus and looked ahead to Federal Reserve Chair Jerome Powell’s speech on policy. Crude oil advanced. The greenback was steady against most G-10 peers as currency markets opened. Equity-index futures signaled a small decline when Japan begins trading, while South Korean assets will be closely watched as that country considered further restrictions to halt an infection flareup there. S&P 500 contracts opened modestly higher after U.S. shares ended Friday with a fourth week of gains and tech shares set a fresh all-time high. Gold began the week on the back foot. S&P 500 futures advanced 0.2% as of 8:21 a.m. in Tokyo. The gauge rose 0.3% on Friday. Futures on Japan’s Nikkei 225 were little changed. Hang Seng Index future gained 0.3%. Futures on Australia’s S&P/ASX 200 Index dipped 0.2%.
  
• Egyptian Stocks Lead Gains in Mideast; Kuwait Falls: Inside EM. 
• Oil Rallies as Twin Hurricane Threat Disrupts U.S. Production.  
• No Small Talk at Fed’s Stay-at-Home Symposium: Eco Week Ahead.
• New Antibody Tests Offer Better Snapshot of Covid-19 Immunity.
• Social Influencers Feed the Robinhood Hunger for Investing 101.  
• America’s Streets Are Getting Rougher.
• Wages Soar More Than 25% in Key Region of Battleground State.
• Banks Are Falling Out of Love With Commodity Traders.  
• Marco Is Now a Hurricane as U.S. Gulf Coast Faces Double Hit.  
• GOP Voters Say Economy, Covid-19 Response Good in CBS Poll.  
• U.S. Cases Stable; Trump Set to Expand Plasma Use: Virus Update. 
• Joe Biden Hasn’t Been Tested for Covid-19, Top Aide Says.

Wall Street Journal:

• Government Debt Has Soared to WWII Levels. Cutting It Will Be a Lot Harder This Time.
• FDA to Authorize Convalescent Plasma for Covid-19 Use.
• Many Companies Postpone Office Reopening Plans.
• ETF Boom Fuels Gold’s Rise.
• Why California Keeps Having Blackouts.
• New York City Faces Toughest Fiscal Crisis Since the 1970s.
• Europe’s Banks Rush to Restructure.

Fox News:

• Graham: Newly declassified docs show FBI briefed Clinton, not Trump, before Crossfire Hurricane.
• Trump announces emergency authorization of ‘breakthrough’ coronavirus treatment.

CNBC:

• Markets look to the Fed again to build on S&P 500 record as Congress continues to disappoint.
• Microsoft warns court that Apple blocking Epic will hurt games business.
• Wall Street’s top analysts see bigger gains for stocks like Lowe’s and Nvidia.
  

Zero Hedge:

• Another NYC 'War Zone' Weekend: Over 30 Shot, Many Of Them Bystanders, In Violence Reminiscent Of 1980s.
• Trump Announces Emergency Authorization For Blood Plasma As Treatment For COVID.
• Oregon May Soon Decriminalize Low-Level Possession Of All Drugs, Massively Reducing Arrests.
• A Love Letter To The Fed From The Adoring Stock Market.
• Florida, Texas Join California In Topping 600,000 COVID-19 Cases; FDA Approves Plasma Treatments: Live Updates.
• De Blasio's 'Utopia'? Quarter-Mile Food-Bank Line Spotted In Queens.
  
• Michigan College Unleashes "Mandatory" App To Track Students At All Times.
• America's Most And Least Affordable Places To Buy A Home.
• Trump To Announce "Major Therapeutic Treatment" Tonight, After Slamming FDA Over HCQ Snub.
• Portland BLM 'Revolutionaries' Bring Guillotine Into Suburbs Where They Burn American Flags, Fling Poo And Demand Shelter.
  
• Two Storms, One Gulf - Marco Upgraded To Hurricane As Tropical Storm Laura Looms.
• Florida Joins California In Topping 600,000 COVID-19 Cases; Pandemic "Fundamentally Changed" Sweden, PM Says: Live Updates.
• "Horrendous" Mark Tesla's P/E Ratio Moves Past The Thousand Mark et Breadth "Stinks To High Heaven", Screams Imminent Risk-Off.
• China Warns 'Necessary Countermeasures' Coming For Any Asian Country Willing To Host US Missiles.
  

MarketWatch.com: 

• Are stock-market investors overpricing or underpricing a potential coronavirus vaccine? 
  

Business Insider:

• Facebook CMO Antonio Lucio is stepping down.
• Dollar General's push to fill stores with fresh produce and frozen-food options gives the chain a big box feel.

The Epoch Times:

• Trump Says US Could ‘Decouple’ and Not Do Business With China.
  

Digital Blackboard:

• Daily New Cases by Region.

Worldometer:

• New Cases/Deaths by state.

Rt Covid-19:

• How fast virus is growing by state.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading

• Asian indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 64.0 -1.0 basis point.
• China Sovereign CDS 38.0 -1.5 basis points.
• Bloomberg Emerging Markets Currency Index 60.00 -.06%.
• FTSE 100 futures +.39%.
• S&P 500 futures +.18%.
• NASDAQ 100 futures +.22%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note
  

After the Close:

• (HTZ)/-3.48
• (PANW)/1.39
  

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for July is estimated to fall to 3.69 versus 4.11 in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Mexican Inflation Rate and the BMO Capital Markets Tech Summit could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 50% 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 mixed as global recession fears, rising China tensions and profit-taking offset coronavirus vaccine optimism, falling Biden Presidency odds and global stimulus hopes. My intermediate-term trading indicators are giving bearish signals and the Portfolio is 50% net long heading into the week.