Stocks Higher into Afternoon on Lower Long-Term Rates, AI Infrastructure Build-Out Optimism, Technical Buying, Tech/Homebuilding Sector Strength

Overseas Futures:

• Nikkei 225 Futures: Indicating +630 open in Japan 
• China A50 Futures: Indicating -20 open in China
• KOSPI 200 Futures: Indicating +9 open in South Korea 

• DAX Futures: Indicating +9 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/consumer discretionary/industrial sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 75% net long

Monday's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (PLAY)/.18

After the Close: 

• None of note

Economic Releases 

• None of note 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Morgan Stanley Industrials Conference, Truist Tech Symposium, Goldman Sachs Consumer/Retail Conference, AI Infra Summit, Piper Sandler Growth Frontiers Conference, (DECK) annual meeting and the Oppenheimer Fintech Leaders Conference could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Friday Watch

Night Trading 

• Asian equity indices are -2.25% to -.75% on average. 
• Asia Ex-Japan Investment Grade CDS Index 65.5 +.75 basis point. 
• China Sovereign CDS 35.0 +.25 basis point.
• China Iron Ore Spot 97.7 USD/Metric Tonne -.6%. 
• Crude Oil 102.50/bbl. unch. 
• Gold 4,370.0 USD/t oz. -.85%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.26 -.03%.
• Bloomberg Emerging Markets Currency Index 34.21 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 130.6 -.4%.
• US 10-Year Yield 4.96% unch.
• Japan 30-Year Yield 4.06% +6.0 basis points.
• Volatility Index(VIX) futures 19.0 -.7%.
• Euro Stoxx 50 futures -.24%. 
• S&P 500 futures +.14%.
• NASDAQ 100 futures +.04%.

Morning Preview Links

BOTTOM LINE: Asian indices are lower, weighed down by consumer discretionary and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.

Stocks Falling into Final Hour on Mideast War Escalation Worries, Rising Fed Rate-Hike Odds, Mideast War-Induced Inflation Fears, Tech/Consumer Discretionary Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 51.9 +2.4%
• BofA Private Credit Proxy Index 71.2 -.9% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .33 +2.0 basis points
• BofA Global Financial Stress Indicator -.09 +4.0 basis points
• European Financial Sector CDS Index 56.0 +2.4%
• Emerging Market CDS Index 140.2 +1.8%
• Israel Sovereign CDS 53.5 +.8%
• Bloomberg Global Trade Policy Uncertainty Index 1.0 unch.
• US Morning Consult Daily Consume Sentiment Index 88.2 -1.3

• Citi US Economic Surprise Index 25.2 -.4

• Citi Eurozone Economic Surprise Index 75.60 -.5

• Citi Emerging Markets Economic Surprise Index 19.5 +.3
• S&P 500 Current Quarter EPS Growth Rate YoY(494 of 500 reporting) +53.2% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 400.63 +.37:  Growth Rate +22.1% +.1 percentage point, P/E 19.0 -.1
• S&P 500 Current Year Estimated Profit Margin 16.30% -1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +131.6% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 977.09 +1.07: Growth Rate +45.5% +.1 percentage point, P/E 18.9 -.1
• Bloomberg US Financial Conditions Index 1.22 -1.0 basis point
• US Yield Curve 39.25 basis points (2s/10s) -1.5 basis points
• Bloomberg Industrial Metal Index 179.0 -3.4%
• Dutch TTF Nat Gas(European benchmark) 82.0 euros/megawatt-hour +3.4%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 10.7 -.5 percentage point
• US Atlanta Fed GDPNow Q3 Forecast +4.4% -30.0 basis points
• US 10-Year T-Note Yield 4.95% +11.0 basis points
• 1-Year TIPS Spread 2.58 +12.0 basis points

• Highest target rate probability for Oct. 28th FOMC meeting: 55.3% (+.5 percentage point) chance of 3.75%-4.0%. Highest target rate probability for Dec. 9th meeting: 45.9%(+6.3 percentage points) chance of 4.0%-4.25%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -1,370 open in Japan 
• China A50 Futures: Indicating -142 open in China
• KOSPI 200 Futures: Indicating -37 open in South Korea 

• DAX Futures: Indicating -23 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/consumer discretionary/biotech sector longs
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 25% net long

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.4%

Sector Underperformers:

• 1) Nuclear -3.7% 2) Gold & Silver -3.5% 3) Homebuilding -2.8%

Stocks Falling on Unusual Volume: 

• WHR, SITE, LULU, DRVN, SN, SBAC, SQM, OCTV, FTAI, ARCT, BIRK, SHOE, ENB, M, TGLS, LH, LEN, BRSL, BLDR, PSLV, CIFR, VRT, CHYM, USAR, BHP, FRVO, DYN, RCUS, ASMB, CRI, TECK, BKR, SCCO, FCX, ANRO, LECO, XE, LEU, PURR, RELY, DFH, ERO, VCX, REAX, AXGN, COO, BHVN, AEO and NAVN

Stocks With Unusual Put Option Activity:

• 1) ITB 2) XLY 3) RCL 4) KC 5) MXL

Stocks With Most Negative News Mentions:

• 1) AEO 2) BHVN 3) CCOI 4) AARD 5) FCX

Sector ETFs With Most Negative Money Flow:

• 1) XBI 2) XLK 3) XLY 4) XLP 5) DRAM

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.4%

Sector Outperformers:

• 1) I-Banking +.4% 2) Energy +.4% 3) Defense +.2%

Stocks Rising on Unusual Volume:

• WLTH, SWKS, AVAV, PLSE, QRVO, TYRA, VIST, CRESY, OBE, FTH, ASO, SWMR, XP, PAYP, CVI, MNDY, SITM, FOUR, YPF, TRMK, LFST, SEDG and STNE 

Stocks With Unusual Call Option Activity:

• 1) IMPP 2) PRMW 3) AVAV 4) PCT 5) IEF 

Stocks With Most Positive News Mentions:

• 1) WLTH 2) CMRC 3) DBI 4) AVAV 5) ASO

Sector ETFs With Most Positive Money Flow:

• 1) SOXX 2) XLF 3) XLE 4) IYW 5) KRE

Charts: 

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