Stocks Rising into Final Hour on Earnings Optimism, China Trade Deal Hopes, Technical Buying, Tech/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.0 +3.0%

• Euro/Yen Carry Return Index 125.60 +.5%

• Emerging Markets Currency Volatility(VXY) 7.2 +.14%

• S&P 500 Implied Correlation 30.0 -1.1%

• ISE Sentiment Index 105.0 +29.0
  

• Total Put/Call .76 -8.4%

• NYSE Arms 1.05 +52.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.78 -1.79%
  

• America Energy Sector High-Yield CDS Index 502.0 +1.12%

• European Financial Sector CDS Index 57.52 -.46%

• Italian/German 10Y Yld Spread 133.75 +2.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 67.20 -1.62%
  

• Emerging Market CDS Index 191.27 +.09%
  

• iBoxx Offshore RMB China Corporate High Yield Index 167.08 +.11%

• 2-Year Swap Spread 3.0 +.25 basis point

• TED Spread 26.75 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.41 +.28%
• 3-Month T-Bill Yield 1.64% -2.0 basis points

• Yield Curve .18 unch.

• China Iron Ore Spot 81.50 USD/Metric Tonne -.29%

• Citi US Economic Surprise Index 3.0 -1.9 points

• Citi Eurozone Economic Surprise Index -52.50 +3.6 points

• Citi Emerging Markets Economic Surprise Index -16.60 +2.9 basis points

• 10-Year TIPS Spread 1.65 unch.
• 94.0% chance of Fed rate cut at Dec. 11th meeting, 95.7% chance of cut at Jan. 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +118 open in Japan 
• China A50 Futures: Indicating +60 open in China

• DAX Futures: Indicating +10 open in Germany

Portfolio:

• Higher: On gains in my tech/retail/industrial/biotech/medical sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.4%

Sector Underperformers:

• 1) Homebuilders -2.0% 2) Gold & Silver -1.7% 3) Utilities -1.3%

Stocks Falling on Unusual Volume: 

• NEP, CVA, AVX, B, PLD, ANIK, ARLP, AWI, MCY, CWEN and BPMC

Stocks With Unusual Put Option Activity:

• 1) RSX 2) BGS 3) MYL 4) COTY 5) RSX

Stocks With Most Negative News Mentions:

• 1) PCG 2) BPMC 3) MYL 4) AVX 5) NIO

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Social Media +2.1% 2) Robotics +1.7% 3) Semis +1.7%

Stocks Rising on Unusual Volume:

• TIF, LPT, SAFM, DCPH, ROKU, IRTC, ON, ASMB, CRCM, ILMN, CTB, AMG, ZM, CURO, VCRA, WORK, BYND, T, FSS, CCMP, GNRC, AIMC, PSX, VRRM, IART, ON, ASMB, PPC, VCYT, EHTH, SAH, SNAP, ANGO, TTD, X, THC, TSN, WOR, SONO, MTW, GNRC, AIMC, NGHC, QCOM, BHE, EOLS, EW, LRCX, MKSI, IART, CATM, VRRM, DLX and HAE

Stocks With Unusual Call Option Activity:

• 1) CLVS 2) CXO 3) BAX 4) PFE 5) QCOM

Stocks With Most Positive News Mentions:

• 1) SPOT 2) ROKU 3) CRSP 4) T 5) CTB

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +8.4% Above 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 55.8% of Issues Advancing, 41.6% Declining
• 127 New 52-Week Highs, 13 New Lows
• 57.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.6%
• Vix 13.0 +3.0%
• Total Put/Call .76 -8.4%
• TRIN/Arms 1.14 +65.2%

Monday Watch

Today's Headlines

Bloomberg:

• Trump Says Islamic State's Al-Baghdadi Killed in U.S. Raid.  

• U.S. Strike on Al-Baghdadi Built on Weeks of Syria Surveillance.

• Lawmakers Shower Praise on U.S. Forces After Al-Baghdadi Death.

• Brexit Impasse Persists as Johnson Says MPs Holding U.K. Hostage.   

• Xi Uses China’s Biggest Annual Meeting for Politics, Not Economy. 

• Hong Kong Protests Flare for 21st Weekend Amid Global Unrest.

• Louis Vuitton Maker Is Looking to Buy Tiffany.

• Carles Puigdemont Accuses EU of Ignoring Catalonia Protests.

• Stocks in Asia Muted, U.S. Treasuries Hold Losses. Stocks in Asia began the week with subdued trading Monday after the S&P 500 Index climbed toward a record. Ten-year Treasury yields held near five-week highs. Equity benchmarks were little changed from Tokyo and Seoul to Sydney. Shanghai and Hong Kong shares opened to modest gains, while Singapore was closed for a holiday. Investors await the Federal Reserve’s policy decision Wednesday, along with further developments on U.S.-China trade talks and corporate earnings. Oil is trading above $56 a barrel in New York. Japan’s Topix index was little changed as of 10:35 a.m. in Tokyo. Futures on the S&P 500 added 0.1%. The underlying gauge rose 0.4% on Friday. Australia’s S&P/ASX 200 Index ticked up 0.1%. South Korea’s Kospi index added 0.4%. Shanghai Composite up 0.6%. Hang Seng rose 0.3%.  

• Oil Steady After Weekly Surge on Signs of Trade Deal Progress.   

• Five Things You Need to Know to Start Your Day.   

• Fed Cut Signals, U.S. Recession Debate, Hong Kong Slump: Eco Day.

• PG&E Cuts Off Power to More Than 2.5 Million as Fires Burn.  

• Fed, Consumers Turn a Deaf Ear to Wall Street’s Recession Siren.

• Winner-Take-All Bloat May Preserve Huge S&P 500 Profit Advantage.

• Biden Suggests He'd Be a One-Term President: Campaign Update.  

• Prologis to Buy Liberty Property in $9.7 Billion Stock Deal.

Wall Street Journal:

• Hong Kong Banks, Long Fat and Happy, Confront Leaner Times.

• Trump Moves Closer to Ending Another Post-Cold War Treaty.

• Georgia GOP on Pins and Needles Over Gov. Kemp’s Senate Choice.

• Tiffany(TIF) Receives LVMH Takeover Bid of About $120 a Share.

• Twilight of the Stock Pickers: Hedge Fund Kings Face a Reckoning.

• Microsoft’s(MSFT) Challenge of Amazon in the Cloud Gains Force.

Fox News:

• Al-Baghdadi takedown blunts criticism of Trump’s troop pullback; Dems out of the loop.

• Congresswoman steps down after reported affair that sparked ethics probe.

CNBC:

• The Fed and Apple earnings will make or break market’s return to record highs in the week ahead.

• Semis could rally up to 30% within two years, tech investor Paul Meeks predicts.

Zero Hedge:    

• California Fires Spark Massive Mandatory Evacuations; Wineries Burn As Winds Hit 93 MPH.

• UPS Drones Will Now Deliver CVS Prescriptions To Your Home.

• Mexican Oil Hedging Desk "Covered Against Downside Risk".

• Hillary's "A Donald Trump Asset" - Bill Maher Urges Clintons To "Go Away".

• The Fed's "Not QE" And How We Are Playing It.

• Trump Confirms ISIS Leader Al-Baghdadi Killed In US Raid.

• Homecoming Horror Leaves 2 Dead, 14 Injured In Mass Shooting At Texas A&M Off-Campus Party.

• Big Brother Meets Big Pharma: Harvesting Biometrics Of Everyone.

• Shocking Satire Shows 'Boston Dynamics' Testing New Robotic Super-Soldier.

Night Trading

• Asian indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 67.5 -1.0 basis point.

• China Sovereign CDS 38.75 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 66.03 -.%.

• FTSE 100 futures +.09%.

• S&P 500 futures +.18%.

• NASDAQ 100 futures +.31%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (AMG)/3.14

• (T)/.94

• (CTB)/.49

• (DO)/-.69

• (L)/.68

• (WBA)/1.41

After the Close:

• (AKAM)/1.00

• (GOOG)/12.69

• (AVB)/2.35

• (BYND)/.04

• (BRO)/.39

• (CGNX)/.20

• (NXPI)/1.93

• (OI)/.55

• (RIG)/-.37

• (VNO)/1.31

• (XPO)/1.02

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for Sept. is estimated to rise to .15 versus .10 in Aug.

• Advance Goods Trade Balance for Sept. is estimated at -$73.5B versus -$72.8B in Aug.

• Wholesale Inventories MoM for Sept. is estimated to rise +.3% versus a +.2% gain in Aug.

10:30 am EST

• Dallas Fed Manufacturing Activity for Oct. is estimated at 0.0 versus 1.5 in Sept.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Japan CPI report could also impact trading today.

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

Today's Headlines

Bloomberg:  

• China Says Part of Phase 1 Trade Deal Text ‘Basically Completed’.

• Energy Markets Have ‘Ready Supply’ of Oil as U.S. Boosts Exports.

• Are We Heading for Recession? These Surging Stocks Point to No.

• Bitcoin Surges 15% in Bounce Back From Lowest in Five Months.

• The Rumbling Sound in U.S. Stocks Is the Return of Risk Appetite.

• Your Weekend Reading: Humanity’s Giant Leap.

• Bolton Threat, Brexit Gamble and Instagram Excess: Weekend Reads.

Wall Street Journal:

• SoftBank’s WeWork Bailout Draws Investor Concern.

• Blackstone’s Online-Shopping Play: Warehouses.

• Whose Advice Are You Taking? The Fight Over College Counseling at Elite High Schools.

• Tech Workers and Asians Against Racial Preferences.

• This Impeachment Subverts the Constitution.

MarketWatch.com:

• Three things to watch when the Fed meets next week.

• This unexpected trade-war outcome will send stocks soaring, says Jefferies analyst.

• Weekend roundup: Where to retire on $5 million, outside California | Tesla’s surprise | A Nobel Prize and biotech stocks.

CNBC:

• Tesla(TSLA) did not talk about three important things on its triumphant Q3 earnings call.

• Microsoft snags hotly contested $10 billion defense contract, beating out Amazon(AMZN).

• Head of the fastest-growing ETF this year lays out her bull case.

Zero Hedge:

• FBI Entrapped Flynn With Manipulated Evidence As Clapper Allegedly Issued 'Kill Shot' Order: Court Docs.

• Biden Donors 'Furious' Over 'Very Alarming' Money Situation As Most Obama Bundlers Flee.

• Busted: Joe Biden Intervened To Help Hunter's Lobbying Efforts On Multiple Occasions

• Meet WeWork's Epic Cash Black Hole: 36% Of Shanghai Locations Are Vacant.

• Trump Accuses Obama Of "Treason".

• 40 Killed, 1,000 Wounded In One Day As Violent Protests Sweep Across Iraq.

• Oxford University Bans Clapping At Student Union Events To "Stop Triggering Anxiety".

• 'What You Think' Is Controlled By 'What You Watch', And 'What You Watch' Is Controlled By 'The Elite'.

• DoD Awards Massive 'JEDI' Deal To Microsoft Over "Surprised" Amazon(AMZN).

• California Faces "Biggest Blackout Ever" As 2.5 Million PG&E Customers May Have No Power For Days.

• GM Strike Ends After Longest Work-Stoppage Since 1970, Over $2 Billion In Costs.

• The Social Decay That We See All Around Us Is Absolutely Breathtaking.

• Obama-Appointed Judge Rules DoJ Must Release More Details From Mueller Report.

• Stocks Soar To All-Time Highs Despite Record Global Uncertainty.

Business Insider:

• Netflix(NFLX) is changing how it reports one of its most-watched metrics. Wall Street analysts have mixed feelings on the move.