Stocks Rising into Final Hour on Earnings Optimism, Oil Gain, Short-Covering, Commodity/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 18.2 -7.9%
• Bloomberg Global Risk On/Risk Off Index 2,815.0 +244.0 points

• Euro/Yen Carry Return Index 134.41 +.56%

• Emerging Markets Currency Volatility(VXY) 8.8 +.6%

• S&P 500 Implied Correlation 37.2 -5.9%

• ISE Sentiment Index 100.0  -1.0 point
  

• Total Put/Call .81 +5.2%

• NYSE Arms .45 -2.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.5 -2.8%
  

• US Energy High-Yield OAS 426.88 -3.4%

• European Financial Sector CDS Index 55.51 -2.6%

• Italian/German 10Y Yld Spread 108.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 86.30 +.1%
  

• Emerging Market CDS Index 161.94 -.4%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 38.85 -.01%

• 2-Year Swap Spread 8.5 +.5 basis point

• TED Spread 9.0 -.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.0 +.5 basis point
  
• MBS  5/10 Treasury Spread  73.25 -.75 basis point
  
• IHS Markit CMBX BBB- 6 73.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.78 +.16%
• 3-Month T-Bill Yield .05% +1.0 basis point
  

• Yield Curve 101.0 +3.0 basis points
  

• China Iron Ore Spot 202.90 USD/Metric Tonne -5.7%

• Citi US Economic Surprise Index 12.1 -2.3 points

• Citi Eurozone Economic Surprise Index 60.3 -3.9 points
  

• Citi Emerging Markets Economic Surprise Index 58.5 -1.8 points

• 10-Year TIPS Spread 2.30 +4.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

US Covid-19:

• 79 infections/100K people(last 7 days) +4/100K people
• 15% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +402 open in Japan 
• China A50 Futures: Indicating -2 open in China

• DAX Futures: Indicating +21 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Growth +.4%

Sector Underperformers:

• 1) Utilities -.5% 2) Medical Equipment -.2% 3) Foods -.2%

Stocks Falling on Unusual Volume: 

• UP, NFLX, HOG, FOUR, HCSG and SNBR
  

Stocks With Unusual Put Option Activity:

• 1) PETS 2) HOG 3) CNC 4) BOX 5) KO
  

Stocks With Most Negative News Mentions:

• 1) SNBR 2) ATHM 3) LDI 4) INTZ 5) DPZ
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.9%

Sector Outperformers:

• 1) Oil Service +5.4% 2) Alt Energy +4.5% 3) Gaming +3.5%

Stocks Rising on Unusual Volume:

• SAVA, AHT, AGFY, LE, PLL, AVPT, AMEH, IPG, INMB, CMG, CUK, AFIB, CCL, NCLH, PBF, STEP, GATO, CNK, BLDR, SOFI, LAD, HA, HWC, ISEE, CRX, RADI, HAL, SAVE, PTRA, SWI, RCL, XENT, UAL, EOG, ALBO, MRNA, AAL, AN, RPD, NRIX and LUV
  

Stocks With Unusual Call Option Activity:

• 1) OIH 2) CMG 3) APO 4) KSU 5) ISRG

Stocks With Most Positive News Mentions:

• 1) CEMI 2) LEXX 3) IPG 4) CMG 5) NIO
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -9.2% Below 100-Day Average 
• 7 Sectors Rising, 4 Sectors Declining
• 72.9% of Issues Advancing, 22.9% Declining
• 81 New 52-Week Highs, 11 New Lows
• 75.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.7%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,785.0 +213.0 points
• Russell 1000: Growth/Value 17,504 -.46%
  
• Vix 18.7 -5.4%
• Total Put/Call .85 +10.4%
• TRIN/Arms .46 unch.

Wednesday Watch

Evening Headlines

Bloomberg:                  

• China Cities Warn of New Power Outages as Heat Strains Grids.  
• U.K. Growth Slowed in June for Most Sectors in Lloyds Survey.   
• EU Proposes Ban on Anonymous Cryptocurrency Transactions.
• J&J Jab Against Delta; Japan Warns of Tokyo Cases: Virus Update.
• Asian Stocks Track U.S. Rally as Traders Buy Dip: Markets Wrap.
• Delta From Delta, $22 Trillion Hole, Policy Stability: Eco Day.
• Treasury Rally Pauses for Breath After Yields Take a Hammering.
  
• Inflation Is Here — These 35 Metrics Tell You How Much to Worry.
  
• Bankers Need 72-Hour Work Week to Master Job, Says Erdoes.
• JPMorgan Entices Dimon to Stick Around With Surprise Stock Award.
• Schumer Heads for Infrastructure Vote Defeat as Talks Drag.

Wall Street Journal:

• U.S. Set to Drop Opposition to Nord Stream 2 Pipeline.
• The Olympics Are Turning Into a $20 Billion Bust for Japan. 
• Chinese Suppliers Shun Xinjiang Workers as U.S. Forced-Labor Ban Looms.
• A Deeper Look at Critical Race Theory.

Fox News: 

• Amazon workers fume after billionaire Bezos thanks them for funding his rich hobby.
  

CNBC.com:

• Biden to nominate Google critic and progressive favorite Kanter to lead DOJ Antitrust Division.
• Corporate earnings will dictate the market’s next move, Jim Cramer says.
• Stocks making the biggest moves after hours: Netflix, Chipotle, United Airlines and more.
  

MarketWatch.com:        

• United Airlines to Wall Street: Profit should return next quarter.  
• Bitcoin slips below $30,000 ‘key support’ as stock market rebound leaves cryptos behind.  
• Netflix lays out mobile games plan that could set a collision course with Apple.  
• Chipotle stock heads toward record high after earnings show sales jumped nearly 40%.  
• 10 software stocks with sales expected to increase up to 174% through 2023.

Zero Hedge:

• More Than 50% Of Australians On Lockdown As Delta Fears Spread.
• Lawmakers Sound Alarm Over China Purchases Of US Farmland.
• Street Justice: Man Found Dead On Staten Island With "I Touch Little Girls" Scrawled Across His Chest. 
• Goldman Flow Desk: No Institutions Bought Today's Dip.
• Over 200 People In 27 States Being Monitored For Monkeypox: CDC.
• California Appeals Court Overturns Anti-Misgendering Law On First Amendment Grounds.
• The Gigantic Holes In Anti-Oil ESG Activism.
• Arkansas Emerges As America's Newest COVID Case 'Hot Spot' As Delta Continues To Dominate.
• "Extremely Disconnected" Energy Stocks Face Explosive Short Squeeze: JPM.
• WTI Tumbles After Surprise Crude Build.
• Massive Short-Squeeze Erases Yesterday's Dramatic Stock Losses.
  

TheGatewayPundit.com:

• “Dr. Fauci as You Are Aware It is a Crime to Lie to Congress, Section 1001 of the US Criminal Code” — Senator Paul Threatens Liar Fauci with Felony for Lying to Congress (VIDEO).
• “Patriot” Is Hate Speech: MSNBC Warns Viewers to Be on the Lookout for Online Groups That Use the Word “Patriot”.
• FIREWORKS! Senator Rand Paul Rips Arrogant Fauci: “There Will be Responsibility For Those Who Funded the Wuhan Lab, Including Yourself” (VIDEO).
• REVEALED: FBI Played Larger Role in Whitmer Kidnapping Case Than Previously Reported: FBI Informants Helped Hatch the Plot!

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
  
• NYTimes.com:  County Trends and Clusters.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity.
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks.
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 86.0 +.5 basis point.

• China Sovereign CDS 38.0 -.5 basis point.
  

• Bloomberg Emerging Markets Currency Index 59.70 +.02%.
• Bloomberg Global Risk-On/Risk Off Index 2,607.0 +36.0 points.
• Volatility Index(VIX) futures 21.40 -.4%.
• FTSE 100 futures +.57%.

• S&P 500 futures +.20%.

• NASDAQ 100 futures +.08%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ANTM)/6.34
• (ASML)/2.49
• (BKR)/.16
• (KO)/.56
• (CMA)/1.60
• (HOG)/1.18
• (IPG)/.43
• (JNJ)/2.29
• (KNX)/.88
• (NDAQ)/1.73
• (NVR)/72.43
• (SAP)/1.17
• (STX)/1.88
• (VZ)/1.30
  

After the Close:

• (CCI)/1.63
• (CSX)/.37
• (DFS)/3.74
• (KMI)/.19
• (LSTR)/2.35
• (LVS)/-.17
• (SLG)/1.62
• (THC)/1.07
• (TXN)/1.85 
• (VMI)/2.50
• (WHR)/6.00
  

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,912,820 barrels versus a -7,896,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,047,800 barrels versus a +1,038,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,161,100 barrels versus a +3,657,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.31% versus a -.4% decline prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Senate procedural vote on $1.2T infra bill, 20Y T-Bond auction and the weekly MBA Mortgage Applications report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer 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 day.

Stocks Surging into Afternoon on Earnings Optimism, Stable Long-Term Rates, Oil Gain, Financial/Consumer Discretionary Sector Strength

 

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 20.4 -9.3%
• Bloomberg Global Risk On/Risk Off Index 2,533.0 +182.0 points

• Euro/Yen Carry Return Index 133.62 +.18%

• Emerging Markets Currency Volatility(VXY) 8.8 +.8%

• S&P 500 Implied Correlation 41.1 -7.9%

• ISE Sentiment Index 105.0  +19.0 points
  

• Total Put/Call .72 -28.7%

• NYSE Arms .60 -63.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.15 -.65%
  

• US Energy High-Yield OAS 445.15 +1.2%

• European Financial Sector CDS Index 56.99 +1.0%

• Italian/German 10Y Yld Spread 110.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 86.62 +1.56%
  

• Emerging Market CDS Index 163.24 -2.27%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 38.81 -.31%

• 2-Year Swap Spread 8.0 +1.25 basis points

• TED Spread 9.25 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.5 unch.
  
• MBS  5/10 Treasury Spread  74.0 +1.0 basis point
  
• IHS Markit CMBX BBB- 6 73.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.71 +.11%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 98.0 -8.0 basis points
  

• China Iron Ore Spot 213.0 USD/Metric Tonne +1.1%

• Citi US Economic Surprise Index 14.4 -3.2 points

• Citi Eurozone Economic Surprise Index 64.2 -3.2 points
  

• Citi Emerging Markets Economic Surprise Index 60.3 +1.1 points

• 10-Year TIPS Spread 2.26 -2.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

US Covid-19:

• 75 infections/100K people(last 7 days) +7/100K people
• 14% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +352 open in Japan 
• China A50 Futures: Indicating +9 open in China

• DAX Futures: Indicating +35 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and added consumer discretionary longs
  

• Market Exposure: Moved to 100% Net Long