Bull Radar

Style Outperformer:

• Mid-Cap Value -.4%

Sector Outperformers:

• 1) Hospitals +1.8% 2) Utilities +1.6% 3) Airlines +1.4%

Stocks Rising on Unusual Volume:

• ULTA, ESPR, THC and NTLA

Stocks With Unusual Call Option Activity:

• 1) THC 2) PVH 3) HBAN 4) DNKN 5) RAD

Stocks With Most Positive News Mentions:

• 1) GWR 2) ULTA 3) WFC 4) AKS 5) SYMC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +3.2% Above 100-Day Average
• 1 Sector Rising, 9 Sectors Declining
• 22.6% of Issues Advancing, 74.4% Declining
• 15 New 52-Week Highs, 39 New Lows
• 56.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 37.7%
• Vix 17.6 +10.5%
• Total Put/Call 1.12 +6.67%
• TRIN/Arms 1.29 +41.7%

Thursday Watch

Evening Headlines

Bloomberg:

• China's Cooling Property Market May Risk Economic Growth. Actions by China’s policy makers to rein in property prices in the bubble-prone nation may prove so effective that the economy’s growth rate could be affected next year. At least 21 cities have introduced purchase restrictions and toughened mortgage lending since late September, reversing two years of easing to support home buyers. Goldman Sachs Group Inc. says more tightening is likely to follow if prices keep soaring, while Citigroup Inc. estimates shrinking demand may lead sales volume to contract in the fourth quarter. 
• Asian Stocks Retreat as Commodity Shares Drop While Japan Gains. Asian stocks outside Japan fell for a third day as a stronger dollar weighed on commodity producers, while a weakening yen buoyed the Topix index. The MSCI Asia Pacific Index excluding Japan dropped 0.2 percent to 448.07 as of 8:07 a.m. in Hong Kong. Japan’s Topix index advanced 0.6 percent after the yen fell 0.7 percent on Wednesday.
• OPEC-Russia Roadshow Heads to Vienna for Crucial Oil-Cuts Talks. (video) OPEC’s effort to secure cooperation of non-members in a global deal to curb crude output will roll on from Istanbul to Vienna, with Russia on board but growing internal differences over sharing the burden of cuts. Russia is ready to participate in a “technical exchange” to set a road map for oil production levels in the Austrian capital on Oct. 29, Energy Minister Alexander Novak told reporters Wednesday. Talks in Istanbul were positive and cooperation between members of the Organization of Petroleum Exporting Countries and other producers is now well established, said Qatar’s Energy Minister Mohammed Al Sada.

Wall Street Journal:

• Future of Banking Looks Dark—Why That’s a Problem. Institutions’ sagging profitability poses wider threats to economic growth.
• America’s Dazzling Tech Boom Has a Downside: Not Enough Jobs. The discontent driving Donald Trump’s campaign stems partly from the dashed employment promises of the late 1990s; $7-an-hour robots.
• Biggest Economic Risk to Europe Lies in the Politics. Some policy makers say the potential for another shock to the eurozone is alarmingly high, Simon Nixon writes.

Fox News:

• FBI, DOJ roiled by Comey, Lynch decision to let Clinton slide by on emails, says insider. (video) The decision to let Hillary Clinton off the hook for mishandling classified information has roiled the FBI and Department of Justice, with one person closely involved in the year-long probe telling FoxNews.com that career agents and attorneys on the case unanimously believed the Democratic presidential nominee should have been charged.

MarketWatch:

• Why China’s banks may eventually need a nearly $2 trillion capital infusion.

CNBC:

• Earnings up next for markets with Fed believed to be still aiming for December. (video)
• A Democratic sweep is a realistic possibility, conservative scholar says. (video)

Zero Hedge:

• Will Eliminating Cash Save The Economy? (Spoiler Alert: Don't Be Stupid!).
• Steve Cohen Boosts Bonuses For Top Traders, But... (graph)
• The Beer Goggles Stock Market.
• Wells Fargo CEO John Stumpf To Retire Effective Immediately.
• Oil Tumbles After Biggest Crude Inventory Build In 6 Months. (graph)
• Stocks Steady After Fed Despite JOLTS Slump, Crude Dump, VIX Jump. (graph)

Business Insider:

• Multiple women say Donald Trump made inappropriate sexual advances on them.
• Challenging Iran is 'the last thing' Obama wants to do — even as Iran-backed militants fire on US Navy ships.
• There has been a big shift inside the Federal Reserve. In the minutes for the central bank's Federal Open Markets Committee September meeting, several higher-ups at the Fed hinted that the policy of historically low interest rates was doing more harm than good to the economy.
• New email suggests DNC chair had exact CNN town hall question in advance.
• The economic outlook is gloomy, and this time the government can't help.

Telegraph:

• If Europe insists on a hard Brexit, so be it.

Night Trading 

• Asian equity indices are -.5% to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 116.75 +5.75 basis points. 
• Asia Pacific Sovereign CDS Index 34.25 +1.25 basis points.
• Bloomberg Emerging Markets Currency Index 72.71 -.07%. 
• S&P 500 futures -.06%. 
• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (DAL)/1.66
• (LNN)/.41
• (PGR)/.33
• (TSM)/3.68
• (WGO)/.49

Economic Releases
8:30 am EST

• The Import Price Index MoM for September is estimated to rise +.1% versus a -.2% decline in August.
• Initial Jobless Claims for last week are estimated to rise to 253K versus 249K the prior week.
• Continuing Claims are estimated to fall to 2050K versus 2058K prior.   

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Harker speaking, ECB Decision, ECB press conference, $12B 30Y T-Bond auction, China CPI report, Bloomberg US Economic Survey for October, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (HPQ) analyst meeting, (ULTA) investor day and the (SAFM) investor conference could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Slightly Higher into Final Hour on Central Bank Hopes, Less European/Emerging Markets Debt Angst, Yen Weakness, Utility/REIT Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 15.58 +1.43%

• Euro/Yen Carry Return Index 119.92 +.35%

• Emerging Markets Currency Volatility(VXY) 10.39 -.29%

• S&P 500 Implied Correlation 45.09 +1.10%

• ISE Sentiment Index 96.0 +65.52%
  

• Total Put/Call 1.02 -8.11%

• NYSE Arms 1.0 -13.18% 

Credit Investor Angst:

• North American Investment Grade CDS Index 75.89 +.47%
  

• America Energy Sector High-Yield CDS Index 609.0 +.08%

• European Financial Sector CDS Index 98.88 -1.24%

• Western Europe Sovereign Debt CDS Index 20.90 +.05%

• Asia Pacific Sovereign Debt CDS Index 34.23 +2.24%

• Emerging Market CDS Index 237.31 -1.13%
  

• iBoxx Offshore RMB China Corporate High Yield Index 132.38 +.07%

• 2-Year Swap Spread 22.75 -.5 basis point

• TED Spread 52.50 -3.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -39.50 +.5 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.21 -.11%
• 3-Month T-Bill Yield .34% +1.0 basis point 

• Yield Curve 91.0 +2.0 basis points
  

• China Import Iron Ore Spot $57.16/Metric Tonne -.90%

• Citi US Economic Surprise Index -7.80 -2.6 points

• Citi Eurozone Economic Surprise Index 22.8 +.6 point

• Citi Emerging Markets Economic Surprise Index -13.70 -1.8 points

• 10-Year TIPS Spread 1.65% unch.
• 67.6% chance of Fed rate hike at Dec. 14 meeting, 70.3% chance at Feb. 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +155 open in Japan 
• China A50 Futures: Indicating +17 open in China

• DAX Futures: Indicating +6 open in Germany

Portfolio: 

• Slightly Lower: On losses in my biotech sector longs

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Analysts’ Perfect Stock Plunges as China Property Risks Grow. For a perfect stock, China Resources Land Ltd. is taking a beating. Shares of the property developer have plummeted 17 percent from this year’s high on Sept. 9, the fastest pace on the city’s benchmark equity gauge. All 33 analysts tracked by Bloomberg have a buy rating on the company, giving a consensus score of 5 out of 5. That’s the highest of any constituent of the Hang Seng Index. While Mizuho Securities Asia Ltd. says the company’s earnings outlook remains buoyant, investor sentiment toward the Hong Kong-based developer and its peers has soured as China rolls out measures to cool the nation’s real estate market. Barings Asset Management (Asia) Ltd. says the shares, which are valued at $17 billion, will probably extend their rout. “This is a very volatile sector,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Barings, which oversees $275 billion globally. If history is any guide, “the correction could continue and could be quite severe,” he said.
• Shearing: Emerging Market One-Off Growth Factors Are Done. (video)
• Europe Stocks Fall Amid Investor Anxiety Over Earnings, Stimulus. (video) European stocks retreated for a second day amid investor concern about corporate earnings and the implications of an expected tightening of U.S. monetary policy. Ericsson AB dragged technology shares to the worst performance on the Stoxx Europe 600 Index, tumbling 20 percent, the most in nine years, after reporting a slump in third-quarter sales and profitability. Finnish peer Nokia Oyj dropped 5.1 percent. Glencore Plc led commodity producers to the biggest gains on the European equity benchmark as metals prices climbed. The Stoxx 600 fell 0.5 percent to 338.56 at the close of trading.
• OPEC Faces Half-Million-Barrel Dispute With Members on Cuts. (video) The scale of the internal differences OPEC must resolve before securing a deal to cut supply was revealed Wednesday as the group’s latest output estimates showed a half-million-barrel difference of opinion over how much two key members are pumping. Venezuela and Iraq’s own figures on how much crude they produced in September were 565,000 barrels a day higher than estimates compiled by the Organization of Petroleum Exporting Countries from so-called secondary sources. The two nations are disputing the data, which could determine the production target for each country when caps on members’ output are decided next month.
• Libya’s Oil Production Set to Reach Three-Year High by December. Libya’s oil production is set to reach a three-year high by December as fields restart and ports reopen after five years of armed conflict crippled sales. Output is now 540,000 barrels a day and will reach 900,000 barrels by the end of the year, Libya’s National Oil Corp. Chairman Mustafa Sanalla said Wednesday in Istanbul. That would be the highest production since June 2013, according to data compiled by Bloomberg.
• Greatest Skeptics of Coal Surge May Be the Miners Themselves. Surging coal prices have been a surprise blessing for mining companies this year. Few of them seem to believe it will last. The rally has been driven by Chinese policy changes that curbed production rather than any pickup in demand. That means producers who sought to survive a downturn by shuttering mines aren’t yet ready to buy into it. Coking coal, used to make steel, has almost tripled this year while thermal, used to generate electricity, is up 56 percent. The biggest miners such as BHP Billiton Ltd. and Teck Resources Ltd. remain cautious on how long the rally will last. While Glencore Plc this week said it plans to restart a small mine, exports will be unchanged.
• Inside the Fed’s September Minutes: The Annotated Meeting.
• Clinton’s Tax Plan Seen Costing 697,000 Jobs Amid Lower Wages. Hillary Clinton’s proposed tax increases on people with high incomes and on businesses would constrain economic growth, leading to lower wages and about 697,000 fewer jobs. The Democratic presidential nominee’s tax plan, which includes proposals to raise taxes on multimillionaires and impose a “financial risk fee” on banks, would change economic behavior enough to reduce U.S. gross domestic product by 2.6 percent over the long run, according to a study prepared by the Washington-based Tax Foundation. In that slightly smaller economy, wages would be 2.1 percent lower, the report said.

Wall Street Journal:

• Germany’s Banking Problem Is Bigger Than Deutsche Bank. Too many banks are fighting in the same space, while political and legislative hurdles make consolidation difficult.

CNBC:

• Fed minutes: Hawks worry that delay in rate hike could cause recession. Federal Reserve officials who favor hiking interest rates worry that waiting too long could send the country into recession. At an unusually divisive Federal Open Market Committee meeting in September, hawkish members said history holds a worrisome lesson for a central bank that has kept a historically accommodative monetary policy in place for the past eight years.
• Major mall operator to close 72 shopping centers on Thanksgiving.
• Samsung will lose, but not to Apple(AAPL): Experts. (video)

Zero Hedge:

• "We Just Got A Tip" - Email Leak Reveals More Collusion Between State Department And Hillary Campaign.
• EU Exit "Only Way Out" From Greece's "Occupying Force" Of Refugees.
• Stocks Slide As ECB Hints At Delaying Additional Asset-Buying Decision. (graph)
• Wikileaks Releases Another 673 Podesta Emails In Part 5 Of Data Dump.
• Consumer Spending Deteriorates In September; BofA Finds No iPhone 7-Linked Sales Jump. (graph)
• Germany To Cut Off Welfare Benefits For EU Citizens.
• Kuroda Defends BOJ Credibility, Mocks Fed And IMF Economists.
• Yellen Will Not Be Pleased: Job Openings Miss Most On Record, Tumble To 2015 Levels. (graph)
• Political Risk Strikes US Equities. (graph)
• Even More OPEC Confusion: Unclear Who Cuts First, If Anyone, As Production Hits New Record High. (graph)
• British Bond Bloodbath Despite 'Softening' Brexit Sterling Bounce. (graph)
• Deutsche Bank(DB) Sells Another $1.5 Billion In Debt At Junk Bond Terms.

Business Insider:

• Why Mercedes plans to let its self-driving cars kill pedestrians in dicey situations.
• President Obama: We'll be debating unconditional free money 'over the next 10 or 20 years'.
• RED ALERT — Get ready for a 'severe fall' in the stock market, HSBC says.

Caixin:

• China Jan.-Sept. Railway Cargo Volume Falls -6.3% on Year. Railway cargo volume fell to 1.92b tons in Jan.-Sept., citing China Railway Corp.

Bear Radar

Style Underperformer:

• Small-Cap Growth -2.1%

Sector Underperformers:

• 1) Oil Tankers -2.2% 2) Biotech -2.2% 3) Networking -1.3%

Stocks Falling on Unusual Volume: 

• FTNT, TBPH, BBH, HUM, LPLA, CLSD, AA, IMAX, NVS, SNDX, CAVM, TPIC, COMM, ILMN, NOW, PANW, AET, NANO, HCSG, UBNT, HBI, CAB, IDTI, XLNX, FAST and NTLA

Stocks With Unusual Put Option Activity:

• 1) BX 2) LOW 3) CSX 4) ILMN 5) JNPR

Stocks With Most Negative News Mentions:

• 1) FTNT 2) CGI 3) ODP 4) LRCX 5) AA

Charts:

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