Stocks Reversing Higher into Final Hour on Dovish FOMC Commentary, Earnings Outlooks, Economic Data, Road&Rail/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 13.6 -3.0%

• Euro/Yen Carry Return Index 125.78 -.08%

• Emerging Markets Currency Volatility(VXY) 7.03 +.29%

• S&P 500 Implied Correlation 35.34 -2.13%

• ISE Sentiment Index 109.0 +23.9%
  

• Total Put/Call .95 -5.0%

• NYSE Arms .92 -32.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 53.27 -2.0%
  

• America Energy Sector High-Yield CDS Index 632.0 +2.8%

• European Financial Sector CDS Index 61.71 +.73%

• Italian/German 10Y Yld Spread 186.5 -1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.66 +.14%
  

• Emerging Market CDS Index 159.21 -1.41%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.77 -.07%

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

• TED Spread 19.5 +3.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -16.25 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.94 +.42%
• 3-Month T-Bill Yield 2.05% -7.0 basis points

• Yield Curve 26.5 +4.5 basis points

• China Iron Ore Spot 113.95 USD/Metric Tonne -.57%

• Citi US Economic Surprise Index -41.50 +4.8 points

• Citi Eurozone Economic Surprise Index -8.80 unch.

• Citi Emerging Markets Economic Surprise Index -29.80 -1.4 points

• 10-Year TIPS Spread 1.75 -1.0 basis point
• 100.0% chance of Fed rate cut at Sept. 18th meeting, 100.0% chance of cut at October 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +119 open in Japan 
• China A50 Futures: Indicating +28 open in China

• DAX Futures: Indicating +25 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.1%

Sector Underperformers:

• 1) Telecom -.8% 2) Oil Service -.6% 3) Shipping -.6%

Stocks Falling on Unusual Volume: 

• EGBN, NFLX, URI, SAP, PLXS, KERN, AMRN, TCBI, ADVM, ZBRA, CARA, CCI, MTB, CRC, GPC, BPT, CLVS and ADTN

Stocks With Unusual Put Option Activity:

• 1) AET 2) ZBRA 3) CRC 4) CELG 5) URI

Stocks With Most Negative News Mentions:

• 1) STG 2) STMP 3) S 4) CTL 5) AM

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.3%

Sector Outperformers:

• 1) Road & Rail +2.2% 2) Computer Services +1.6% 3) Banks +1.2%

Stocks Rising on Unusual Volume:

• POOL, USLV, TBK, ADS, FDC, IBM, EBAY, KERN, FISV, ALEC, WBS, ACMR, NVS, ASML, PNFP, WNS, PM, GLPG, SLP, DOOR, BUD, ALLY, NVTA, SBNY, PAYS, BIG and WBS

Stocks With Unusual Call Option Activity:

• 1) ENPH 2) IBM 3) EBAY 4) URI 5) SMH

Stocks With Most Positive News Mentions:

• 1) EWBC 2) HON 3) PM 4) DHR 5) POOL

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.5% Below 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 47.5% of Issues Advancing, 49.6% Declining
• 149 New 52-Week Highs, 94 New Lows
• 60.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.2%
• Vix 14.1 +.9%
• Total Put/Call .91 -9.0%
• TRIN/Arms .98 -28.5%

Thursday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 65.25 +.75 basis point.

• China Sovereign CDS 43.50 +.5 basis point.

• Bloomberg Emerging Markets Currency Index  67.66 +.01%.

• S&P 500 futures -.24%.

• NASDAQ 100 futures -.37%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (ADS)/3.95
• (BBT)/1.08
• (BX)/.52
• (DHR)/1.16
• (GPC)/1.65
• (HON)/2.08
• (MTB)/3.68
• (MS)/1.16
• (NVS)/1.21
• (NUE)/1.31
• (PM)/1.32
• (PPG)/1.83
• (SAP)/1.11
• (SNA)/3.21
• (STI)/1.45
• (TSM)/2.55
• (UNP)/2.14
• (UNH)/3.46

After the Close:

• (OZK)/.85
• (COF)/2.87
• (CRWD)/-.48
• (ETFC)/1.10
• (ISRG)/2.87
• (MSFT)/1.21

Economic Releases 

8:30 am EST

• The Philly Fed Business Outlook Index for July is estimated to rise to 5.0 versus .3 in June.
• Initial Jobless Claims for last week are estimated to rise to 216K versus 209K the prior week.
• Continuing Claims are estimated to fall to 1700K versus 1723K prior.
  

10:00 am EST

• The Leading Index for June is estimated to rise +.1% versus unch. in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Bostic speaking, Australia Unemployment Rate report, Japan CPI report, Bloomberg Economic Expectations Index for July, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and financial 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 Modestly Lower into Final Hour on Earnings Jitters, Oil Decline, Profit-Taking, Transport/Energy Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.2 +2.9%

• Euro/Yen Carry Return Index 126.0 -.04%

• Emerging Markets Currency Volatility(VXY) 7.01 +.43%

• S&P 500 Implied Correlation 34.6 +3.4%

• ISE Sentiment Index 94.0 -11.3%
  

• Total Put/Call .96 +7.9%

• NYSE Arms 1.15 -19.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 53.83 -.19%
  

• America Energy Sector High-Yield CDS Index 615.0 +1.07%

• European Financial Sector CDS Index 61.26 +1.25%

• Italian/German 10Y Yld Spread 188.25 +2.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.78 +1.76%
  

• Emerging Market CDS Index 160.25 +.44%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.77 -.17%

• 2-Year Swap Spread 3.25 +.25 basis point

• TED Spread 16.25 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -16.0 +1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.65 +.03%
• 3-Month T-Bill Yield 2.12% -2.0 basis points

• Yield Curve 22.0 -4.0 basis points

• China Iron Ore Spot 115.35 USD/Metric Tonne -.29%

• Citi US Economic Surprise Index -46.30 -4.3 points

• Citi Eurozone Economic Surprise Index -8.80 unch.

• Citi Emerging Markets Economic Surprise Index -28.40 +. point

• 10-Year TIPS Spread 1.76 -4.0 basis points
• 100.0% chance of Fed rate cut at Sept. 18th meeting, 100.0% chance of cut at October 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -69 open in Japan 
• China A50 Futures: Indicating -44 open in China

• DAX Futures: Indicating -24 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/medical/biotech sector longs and index hedges

• Disclosed Trades: None

• Market Exposure: 75% Net Long