Bear Radar

Style Underperformer:

• Mid-Cap Value -.3%

Sector Underperformers:

• 1) Oil Service -1.8% 2) Insurance -.8% 3) Foods -.7%

Stocks Falling on Unusual Volume: 

• ACET, MOMO, WSR, SFM and UBNT

Stocks With Unusual Put Option Activity:

• 1) KITE 2) PSTG 3) DG 4) EXPE 5) SFM

Stocks With Most Negative News Mentions:

• 1) GCO 2) MBUU 3) ALL 4) PGR 5) AMID

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.6%

Sector Outperformers:

• 1) Gold&Silver +3.4% 2) Biotech +1.9% 3) Hospitals +1.1%

Stocks Rising on Unusual Volume:

• IXYS, KITE, JUNO, LCII, THO, CLLS, TR, JILL, NTLA, ZAGG, MZOR, HFC, IMMU, USG, EHTH, TISI, PERY, LMAT, LL, GILD, WGO, WVE, HCCI, EDIT, VMW and USG

Stocks With Unusual Call Option Activity:

• 1) SFM 2) KITE 3) SC 4) HFC 5) HFC

Stocks With Most Positive News Mentions:

• 1) CMTA 2) TDOC 3) CORE 4) KNL 5) GILD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -28.6% Below 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 39.6% of Issues Advancing, 55.2% Declining
• 61 New 52-Week Highs, 37 New Lows
• 39.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 34.2%
• Vix 11.4 +1.1%
• Total Put/Call .97 unch.
• TRIN/Arms 1.36 +30.4%

Monday Watch

Today's Headlines

Bloomberg:

• China Industrial Profits Keep Pace as Factory Inflation Holds. Chinese industrial firms maintained a profit surge, underscoring the economy’s resilience even amid slowing factory output and investment. Industrial profits increased 16.5 percent in July from a year earlier, versus the 19.1 percent pace a month earlier, the nation’s statistics bureau said Sunday.

• China Money Rate Confusion Shows How PBOC Keeps Traders on Edge. The capacity of China’s central bank to surprise markets is so great that, last week, it left investors chewing over whether a data error was a policy signal. A closely watched Chinese benchmark rate surged 55 basis points at the open on Wednesday. While the National Interbank Funding Center was cited as saying later that the outsized price move was a mistake, the confusion shows the downside to the monetary authority’s opaque use of interbank tools to adjust liquidity in the financial system.

• May Under Pressure From Labour and EU as Brexit Talks Resume. Brexit talks resume on Monday with Prime Minister Theresa May under pressure on two fronts: European negotiators are pushing her to reveal her hand, while the opposition Labour Party has made a bid to lure May’s critics to their side. Labour’s announcement on Sunday that it wants Britain to stay in the European Union’s single market and customs union for up to four years after it leaves the bloc -- a proposal that will delight business -- means it’s now worthwhile for Conservative lawmakers who want to maintain ties with Europe to rebel and seek cross-party deals. May, who wants to leave the single market in 2019, lacks a parliamentary majority.

• Dollar Extends Decline, Asian Equities Open Mixed. Asian stocks fluctuated at the open while the greenback extended its slide against major developed currencies after Federal Reserve Chair Janet Yellen dashed expectations on Friday that she would provide clues on monetary policy tightening. Benchmarks rose in Tokyo and Seoul after the S&P 500 Index surged to its best week in a month on tax-reform optimism. Investors will be weighing the wider impact after Tropical Storm Harvey inundated Texas and the heart of the U.S. oil and gas industry. Crude fell after initially jumping as much as 0.7 percent after a storm that hit Texas disrupted U.S. output. Japan’s Topix index climbed 0.2 percent as of 9:12 a.m. in Tokyo, while South Korea’s Kospi index was little changed. Australia’s S&P/ASX 500 Index fell 0.3 percent.

• Libya's Oil Disruptions Widen as Two More Fields Halt Output. Two more oil fields in Libya are being closed after an armed group took over pipelines to both deposits, further disrupting the OPEC nation’s plan to boost crude production. El Feel, or Elephant, stopped production, Wessam Al-Messmari, an office manager for the Petroleum Facilities Guard that is protecting the field, said Sunday by phone. State-run National Oil Corp. declared force majeure at the deposit, according to a person familiar with the situation who asked not to be identified because the information isn’t public.

• Cohn or Yellen? Bond Traders Say Same Difference. Bond traders are betting that no matter who’s leading the Federal Reserve come February, policy makers won’t stray from the path they’ve been laying out for months. With Janet Yellen coming off what may have been her final address as Fed chair at the central bank’s annual Jackson Hole gathering, investors are starting to look ahead to who might follow her. The clear front-runner, judging by a survey of economists: White House adviser Gary Cohn, whose fate roiled markets this month when rumors swirled that he’d resign over President Donald Trump’s response to a violent white-supremacist rally. Once it became clear he was staying put, markets settled down.

• Fed's Mester Says Keep Up the ‘Gradual’ Pace on Rate Hikes. Federal Reserve Bank of Cleveland President Loretta Mester urged her colleagues to look past recent weak inflation data and to stick to their gradual pace of lifting interest rates, with one more increase projected before the end of this year.

• Harvey's Cost Reaches Catastrophe as Modelers See Many Uninsured.

• Trump Prepares to Lift Limits on Military Gear for Police. The Trump administration is preparing to restore the flow of surplus military equipment to local law enforcement agencies under a program that had been sharply curtailed amid an outcry over police use of armored vehicles and other war-fighting gear to confront protesters.

Wall Street Journal:

• Hurricane Harvey Slams Into Texas: Live Coverage.

• China’s Markets Can’t Agree on How Good Nation’s Economy Is. Strong currency, stocks and commodities contrast with bond pessimism.

• Tapping Your Home Equity for Cash Is Big Again. Banks insist the increased borrowing doesn’t herald a return to housing-bubble days.

• Hurricane Harvey Threatens Largest Flood Insurer: The Government. A federally underwritten program, already roughly $25 billion in debt from earlier storms, faces huge new claims.

• Immelt Drops Out of Contention for Uber CEO Job. Former GE chief executive removed himself from consideration after observing disorder and divisions among different factions of Uber’s board.

• Chicago Exchange Sale Looks Shaky as China Tensions Rise. Less than 0.5% of U.S. stocks trade on the Chicago Stock Exchange, but selling a stake to a Chinese-led group would still be risky, critics say. 

• The Big Name in Coal’s Resurgence: China. American coal producers filling voids created by overseas producers shifting exports to China.

Fox News:

• Harvey causes 'catastrophic flooding' in Houston, shuts down airport. (video)

• Trump planning Texas visit, praises Harvey recovery efforts. (video)

• Hurricane Harvey victims: Here is what you can do to help.

CNBC: 

• Trump threatens to scrap NAFTA in Sunday morning tweet.

• Major refineries are shutting down in the wake of Harvey flooding, 22 percent of Gulf production affected.

• Houston could receive record 50 inches of rain, NWS says.

Zero Hedge:

• "It's Catastrophic, Unprecedented, Epic": 5 Dead As Houston Reels Under Historic Flooding.

• FEMA: "We're Going To Be There For Years" As Trump Visits Texas On Tuesday.

• Trump Reportedly Slams Administration's Globalists, Demands "Bring Me China Tariffs".

• Mexican Peso Tumbles As Trump Repeats Border Wall, NAFTA Threats.

• Gasoline Spikes To 7-Month Highs After Harvey; Heating Oil, Crude Jump. (graph)

• On The Coming Collapse Of China's Ponzi Scheme Economy.

• Uber Selects Expedia Chief Dara Khosrowshahi As Its Next CEO.

• Bernanke Flip-Flops: Will Be Keynote Speaker At Blockchain Conference.

• Carmageddon Continues - Dealers "Wildly Overweight" SUVs As Sales Slow. (graph)

• Houston: The "Surreal" Before And After Photo. (video)

• Gone With The Wind Banned From Memphis Theater.

• China Is Weaponizing Water.

• It's Can-Kicking Time Again In The Imperial City.

Business Insider:

• An influential group of investors refuses to give up hope that Trump will get something done.

• Wall Street still acts like it hasn't learned any lessons from the financial crisis.

• Fresh data shows millennials' favorite apps — and it's bad news for Snapchat(SNAP).

• Hollywood just had the worst box office weekend in 16 years.

Night Trading

• Asian indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 78.0 -3.0 basis points.

• Asia Pacific Sovereign CDS Index 19.75 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 74.50 +.01%.

• S&P 500 futures -.10%.

• NASDAQ 100 futures -.10%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (PRXL)/.93

Economic Releases 
8:30 am EST

• Preliminary Wholesale Inventories MoM for July are estimated to rise +.3% versus a +.7% gain in June.

• The Advance Goods Trade Deficit for July is estimated at -$64.5B versus -$64.0B in June.
  

10:30 am EST

• Dallas Fed Manufacturing Activity for August is estimated to rise to 17.0 versus 16.8 in July.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Japan Jobless Rate, $26B 2Y T-Note auction and the $34B 5Y T-Note auction could also impact trading today.

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

Weekly Outlook

• Wall St. Week Ahead by Reuters.

• Stocks to Watch Next Week by Seeking Alpha.

• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as trade war concerns, oil weakness and the economic impact of Hurricane Harvey offsets technical buying, more dovish Fed commentary and tax reform hopes. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Today's Headlines

Bloomberg:

• Draghi's Drama-Free Jackson Hole Message Reaffirms Slow QE Exit. Mario Draghi’s message in Jackson Hole may not have been dramatic as three years ago but was clear nonetheless: the European Central Bank will go extremely slowly about removing its monetary stimulus. While the ECB president startled investors in 2014 by laying the groundwork for quantitative easing, his published remarks at the Federal Reserve symposium in Wyoming on Friday included nothing on policy makers’ deliberations scheduled for Sept. 7 or on their concerns over the euro’s appreciation. In response to his silence, the single currency jumped to the highest level in more than two and a half years against the dollar.

• Draghi Says Slow Inflation Progress Means Accommodation Needed. (video) Mario Draghi reaffirmed the need for caution before the European Central Bank can remove euro-area monetary stimulus, saying inflation still has a way to go. “We haven’t seen yet that self-sustained convergence of inflation toward our objective, our medium-term objective,” the ECB president said at the U.S. Federal Reserve’s Jackson Hole symposium in Wyoming on Friday. “On one hand, we are confident that as the output gap closes, inflation will continue to converge to its objective over the medium term. On the other, we have to be very patient” and “a significant degree of monetary accommodation is still warranted.”

• Kuroda Vows to Maintain Very Accommodative Policy for Some Time. Bank of Japan Governor Haruhiko Kuroda said the recent pace of growth in the world’s third-largest economy is probably unsustainable and pledged to continue with very accommodative monetary policy “for some time” because the BOJ is far from its inflation target. “I think 4 percent growth is excellent but we don’t think 4 percent growth can be sustained. Around 2 percent growth is likely,” Kuroda said in an interview on Bloomberg Television recorded on Friday in Jackson Hole, Wyoming. “I think for some time we have to continue this extremely accommodative monetary policy.”

• Texas Farmers Assess Harvey Damage to Grain Bins, Cotton Crops.

• Small-Cap Stocks Make a Comeback. A month-long selloff in small-cap stocks ended this week in a reversal that investors attributed to the same force that triggered the drop: President Donald Trump. The Russell 2000 Index, made up of stocks closely tied to the president’s growth agenda, gained 1.4 percent, the biggest weekly advance since early June. The turnaround came a week after market were roiled by Trump’s political travails.

Wall Street Journal:

• Hurricane Harvey Slams Into Texas: Live Coverage.

• Janet Yellen and Mario Draghi Warn Against Regulatory Cuts, Trade Moves. Central bankers defend financial regulations, urge against protectionist trade measures.

• Brazil’s Woes Multiply as Manufacturers Move to Paraguay. Brazilian companies say they are shifting operations next door to reduce taxes and red tape.

Barron's:

• Had bullish commentary on (VSAT), (MDT), (PYPL), (AVGO), (BA), (LMT), (VNO), (SLG) and (OA).

• Had bearish commentary on (CTC).

Fox News: 

• Hurricane Harvey hammers southern Texas as floods, fires plague residents. (video)

• North Korea missile tests didn't fail, US military says in revised report. (video)

CNBC:

• Investors pull billions from US stocks in longest outflow streak since 2004. (video)

• Hurricane Harvey closes key oil and gas facilities in Texas.

Zero Hedge:

• North Korea Fires Three Short-Range Ballistic Missiles.

• Live Coverage: Over 200,000 Without Power As Hurricane Harvey Brings "Devastating Winds And Rain" To Texas. (video)

• 15 Stunning Videos Showing Hurricane Harvey Unleash Hell Upon The Gulf Coast.

• Mystery Deepens After US Confirms 16 Diplomats Suffered "Traumatic Brain Injury" In Cuban 'Sonic Attack'.

• Congress Quietly Passed A Bill Allowing Warrantless Searches of Homes - Only 1% Opposed It.

• Here's how Walmart plans to make shopping easier.

• Bizarro World: JGB Yields Slide After BOJ Tapers.

• Trump Pardons Sheriff Joe Arpaio.

• Sebastian Gorka Resigns From White House Post.

• Is Bitcoin Really Anonymous? IRS Moves To Track Cryptocurrencies With New Chain Analysis Tools.

• Philly AntiFa 'Cell' Calls For All-Out Revolution, Demands "Gender Abolition", "Expropriate Land From Rich".

• Mueller Reportedly Probing Flynn's Role In Attempt To Find Hillary's 30,000 Missing Emails, WSJ.

• Weekend Reading: Storm Warning.

• Jackson Hole'd - Dollar Dumps To 2-Year Lows After 2 Million Ounce Gold Flush. (graph)

Business Insider:

• North Korea is just getting started on a fleet of more powerful nukes.

• An indicator of future home sales in San Francisco is plunging.