Wednesday Watch

Night Trading 

• Asian equity indices are -.25% to +.75% on average. 
• Asia Ex-Japan Investment Grade CDS Index 71.25 unch. 
• China Sovereign CDS 36.5 unch.
• China Iron Ore Spot 90.80 USD/Metric Tonne +.2%. 
• Crude Oil 95.01/bbl. +.9%. 
• Gold 4,179.60 USD/t oz. +.06%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.04 +.03%.
• Bloomberg Emerging Markets Currency Index 33.64 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 136.50 +.5%.
• US 10-Year Yield 5.22% +1.0 basis point
• Japan 30-Year Yield 4.06% unch.
• Volatility Index(VIX) futures 17.6 -.3%.
• Euro Stoxx 50 futures +.27%. 
• S&P 500 futures +.04%.
• NASDAQ 100 futures +.07%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and energy shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.

Stocks Slightly Lower into Final Hour on Mideast War Resumption Fears, Oil Gain, Earnings Outlook Jitters, Financial/Pharma Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 58.8 +1.0%
• BofA Private Credit Proxy Index 67.0 -.9% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .41 unch.
• BofA Global Financial Stress Indicator -.00 -1.0 basis point
• European Financial Sector CDS Index 71.5 +.4% 
• Emerging Market CDS Index 158.5 +1.2% 
• Israel Sovereign CDS 59.5 +1.0% 
• Bloomberg Global Trade Policy Uncertainty Index .7 unch.
• US Morning Consult Daily Consume Sentiment Index 87.1 +1.4

• Citi US Economic Surprise Index 33.1 -1.7

• Citi Eurozone Economic Surprise Index 48.7 -1.1

• Citi Emerging Markets Economic Surprise Index 21.8 -.1
• S&P 500 Current Quarter EPS Growth Rate YoY(26 of 500 reporting) +67.6% -76.4 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 409.09 +.12:  Growth Rate +24.6% unch., P/E 19.1 unch.
• S&P 500 Current Year Estimated Profit Margin 16.35% -2.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(1 of 10 reporting) +1,013.1% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,088.49 +.78: Growth Rate +62.1% +.1 percentage point, P/E 18.0 unch.
• Bloomberg US Financial Conditions Index 1.19 -2.0 basis points
• US Yield Curve 42.0 basis points (2s/10s) -2.5 basis points
• Bloomberg Industrial Metal Index 174.9 -.3%
• Dutch TTF Nat Gas(European benchmark) 86.9 euros/megawatt-hour +3.0%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 9.6% +.2%
• US Atlanta Fed GDPNow Q3 Forecast +3.6% unch.
• US 10-Year T-Note Yield 5.23% -1.0 basis point
• 1-Year TIPS Spread 2.78 -3.0 basis points

• Highest target rate probability for Dec. 9th FOMC meeting: 70.8% (+.9 percentage point) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 45.9%(+1.1 percentage points) chance of 4.0%-4.25%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +530 open in Japan 
• China A50 Futures: Indicating -108 open in China
• KOSPI 200 Futures: Indicating +16 open in South Korea 

• DAX Futures: Indicating +180 open in Germany

Portfolio:

• Higher: On gains in my energy/consumer discretionary sector longs, emerging market shorts and index hedges
• Disclosed Trades: Covered some of my (QQQ) hedges
• Market Exposure: Moved to 75% net long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.8%

Sector Underperformers:

• 1) Space -3.5% 2) Lithography/Photonics -2.7% 3) Pharma -2.2%

Stocks Falling on Unusual Volume: 

• APLD, S, IMCR, HESM, DPZ, C, FBK, TTWO, ANGO, WLTH, JNJ, QNT, HELP, IDR, ASTS, MLYS, DPC, CIFR, FUN, CDNL and SNDX

Stocks With Unusual Put Option Activity:

• 1) BMBL 2) MAT 3) INIO 4) HWM 5) ITUB

Stocks With Most Negative News Mentions:

• 1) ASTS 2) SNDX 3) AARD 4) FCEL 5) INV

Sector ETFs With Most Negative Money Flow:

• 1) FTXR 2) EUFN 3) XLF 4) ARKK 5) ITA

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +.1%

Sector Outperformers:

• 1) Energy +2.4% 2) Computer Services +2.1% 3) Agriculture +1.1%

Stocks Rising on Unusual Volume:

• EFXT, INFY, FWRG, ACIC, QDEL, HPK, BCE, PR, BP, IFF, VEEV, LOCO, CEPU, NVTS and ACI

Stocks With Unusual Call Option Activity:

• 1) BMBL 2) FLG 3) TDOC 4) EXE 5) INSM 

Stocks With Most Positive News Mentions:

• 1) FRMI 2) OLLI 3) VRNS 4) FCHL 5) AS

Sector ETFs With Most Positive Money Flow:

• 1) XLP 2) QTEC 3) SMH 4) IYH 5) XBI

Charts: 

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

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (ASML)/12.19
• (BAC)/1.10
• (BLK)/14.32
• (FAST)/.34
• (MS)/2.93
• (PGR)/4.35
• (STT)/3.68 

After the Close: 

• (HOMB)/64

Economic Releases 

8:30 am EST

• Real Avg. Weekly Earnings YoY for Sept.
• CPI MoM for Sept. is estimated to rise +.6% versus a +.4% gain in Aug.
• Core CPI MoM for Sept. is estimated to rise +.2% versus a +.3% gain in Aug. 

2:00 pm EST

• Fed's Beige Book report release.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bowman speaking, Fed's Barkin speaking, Thomson Reuters IPSOS PCSI for Oct., IEA monthly report, IMF meetings, weekly MBA Mortgage Applications report, API weekly crude oil stock report and the (CAMT) analyst day  could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -8.9% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.6 -1.4
• 6 Sectors Rising, 5 Sectors Declining
• 49.8% of Issues Advancing, 48.7% Declining 
• TRIN/Arms 1.17 +50.0%
• Non-Block Money Flow +$156.5M
  
• 48 New 52-Week Highs, 161 New Lows
• 39.0% (-1.7%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 49. -1.6

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 8.0% unch.
• Strait of Hormuz traffic returns to normal by October 31st 1.0% unch.
• Iran agrees to end enrichment of uranium by Dec. 31st 11.0% -1.0 percentage point
• Israel withdraws from Lebanon by December 31st 10.0% unch.
• US Invades Iran before 2027 17.0% -1.0 percentage point
• US announces end of Iranian blockade by October 31st 14.0% unch.

Other

• Bloomberg Global Risk-On/Risk-Off Index 135.6 -.8%
• Global Monitor Iran Instability Index 60.0 -1.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 40.0% +5.0 percentage points
• US High-Yield Tech Sector OAS Index 455.0 +16.25 basis points
• Bloomberg Cyclicals/Defensives Index 268.2 -1.0%
• Morgan Stanley Growth vs Value Index 148.4 -1.4%
• CNN Fear & Greed Index 44.0 (Moved to FEAR from NEUTRAL) -3.0
• 1-Day Vix 9.3 +20.6%
• Vix 15.5 +1.9%
• Total Put/Call .80 -8.1%