Morning Market Internals

NYSE Composite Index:

• Volume Running -8.3% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 75.8% of Issues Advancing, 21.0% Declining
• 154 New 52-Week Highs, 42 New Lows
• 47.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.7%
• Vix 18.7 -5.0%
• Total Put/Call .92 -15.6%
• TRIN/Arms .79 -38.8%

Wednesday Watch

Evening Headlines

Bloomberg:   

• Wounded Johnson's Brexit Plan in Tatters as Election Fight Looms.

• What to Expect From the Brexit Showdown in Parliament.

• Japan’s Small Banks Load Up on Risk as They Fight to Survive.

• Asia Stocks to Dip Amid Trade Woes, Weak Data. Asian stocks were set for a cautious start Wednesday after declines in U.S. equities and Treasury yields following a weak American manufacturing report and amid an impasse in the trade war. Futures pointed lower in Japan and Australia, while Hong Kong contracts were flat. Technology shares underperformed after Huawei Technologies accused the U.S. government of harassing workers and attacking its internal network. The 10-year Treasury yield slid and the dollar dropped. Futures on the S&P 500 Index were flat. The underlying gauge sank 0.7% on Tuesday. Futures on Japan’s Nikkei 225 fell 0.3%. Hang Seng futures earlier closed flat. Futures on Australia’s S&P/ASX 200 Index dipped 0.6%.  

• U.K. Snap Election, Trump’s 2020 Threat, U.S. Factories: Eco Day.

• Crisis Among India Shadow Banks Pushes Up Funding Costs Overseas.

• Fed's Rosengren Sees ‘No Immediate’ Easing Needed.

• Oil Hits One-Week Low as Trump Tweet Fuels Market ‘Bloodbath’

Wall Street Journal:

• ‘Father is Surgeon,’ ‘1 mil pledge’: The Role of Money in USC Admissions.

• U.S. Factory Activity Shrinks for First Time in 3 Years.

• Italy’s 5 Star Approves Coalition Government With Ex-Foes.

Fox News:

• Hurricane Dorian leaves horrific trail of destruction in Bahamas as storm creeps toward US.

MarketWatch.com:   

• What bond bubble? Economist says ‘uncomfortable truth’ is that rally in fixed-income market is justified.

CNBC:

• Trump was so angry after China’s trade retaliation that he wanted to double tariffs.

• Kroger joins Walmart in asking shoppers not to openly carry guns in stores.

• NRA slams Walmart for caving to ‘anti-gun elites’ after retailer ends handgun ammo sales.

Zero Hedge:

• UK Rebel MPs Successfully Seize Control Of Parliamentary Business, General Election Likely.

• Dorian-Devastated Island With 50K Residents Now 70% Under Water.

• Amazon Partners With Police On Ring Doorbell; May Be Developing Facial Recognition Surveillance Network.

• Texas Shooter Was Banned From Buying Firearms Due To Mental Issues; Prior Purchase Attempt Denied.

• Bonds, Bitcoin, & Bullion Bid As Manufacturing Slump Sparks Stocks, Commodities Dump.

Night Trading 

• Asian equity indices are -.5% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 64.25 -.25 basis point.

• China Sovereign CDS 46.0 unch.

• Bloomberg Emerging Markets Currency Index  64.897 +.04%.

• FTSE 100 futures n/a.

• S&P 500 futures unch.

• NASDAQ 100 futures +.08%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (AEO)/.32

• (MIK)/.14

• (NAV)/1.22

• (VRA)/.27

After the Close:

• (HOME)/.15

• (AVAV)/N/A

• (CPRT)/.57

• (PANW)/1.42

• (PVTL)/-.03

• (VRNT)/.80

Economic Releases
8:30 am EST

• The Trade Deficit for July is estimated at -$53.4B versus -$55.2B in June.
  

2:00 pm EST

• US Fed Beige Book.

Afternoon:

• Wards Total Vehicle Sales for August is estimated to fall to 16.8M versus 16.82M in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bowman speaking, Eurozone PMI report, China Services PMI report, weekly US retail sales reports, weekly MBA Mortgage Applications report, Wells Fargo Healthcare Conference, DA Davidson Tech Conference, Cowen Transport Conference, Keefe/Bruyette/Woods Insurance Conference, Citi Tech Conference, Robert Baird Healthcare Conference,  Citi Biotech Conference, Goldman Retailing Conference, could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by consumer and commodity shares in the region. I expect US stocks to open mixed 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 China Trade Tensions, Global Growth Fears, Oil Decline, Biotech/Retail Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 20.3 +7.0%

• Euro/Yen Carry Return Index 120.72 -.16%

• Emerging Markets Currency Volatility(VXY) 8.85 unch.

• S&P 500 Implied Correlation 47.11 +4.8%

• ISE Sentiment Index 72.0 +18.0%
  

• Total Put/Call 1.14 -6.6%

• NYSE Arms 1.30 +54.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 55.34 +2.22%
  

• America Energy Sector High-Yield CDS Index 425.0 +1.89%

• European Financial Sector CDS Index 64.19 +2.83%

• Italian/German 10Y Yld Spread 158.25 -8.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.28 -.2%
  

• Emerging Market CDS Index 214.27 -1.68%
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.11 +.08%

• 2-Year Swap Spread -.75 -.5 basis point

• TED Spread 15.0 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -15.25 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.94 +.18%
• 3-Month T-Bill Yield 1.95% -3.0 basis points

• Yield Curve .01 +2.0 basis points

• China Iron Ore Spot 86.20 USD/Metric Tonne +.55%

• Citi US Economic Surprise Index -9.4 -5.2 points

• Citi Eurozone Economic Surprise Index -36.40 +1.2 points

• Citi Emerging Markets Economic Surprise Index -15.1 -1.5 points

• 10-Year TIPS Spread 1.51 -3.0 basis points
• 100.0% chance of Fed rate cut at Oct. 30th meeting, 100.0% chance of cut at Dec. 11th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -75 open in Japan 
• China A50 Futures: Indicating -15 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio:

• Slightly Lower: On losses in my medical/biotech/retail/industrial/tech sector longs

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.6%

Sector Underperformers:

• 1) Gaming -2.8% 2) Semis -2.1% 3) Banks -2.1%

Stocks Falling on Unusual Volume: 

• SWAV, DSLV, NSSC, CXO, I, SY, ESTC, PAM, MOV, WSBC, AGYS, DGLD, USAC, SAM, TOT, ALXN, CP, RXN, TBK, MRNA, GNRC, MOV, ANF and SWA

Stocks With Unusual Put Option Activity:

• 1) CXO 2) SLCA 3) DOCU 4) HES 5) EWH

Stocks With Most Negative News Mentions:

• 1) MNK 2) PUMP 3) SAM 4) KPTI 5) VNTR

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.8%

Sector Outperformers:

• 1) Gold & Silver +2.1% 2) Utilities +1.4% 3) REITs +.7%

Stocks Rising on Unusual Volume:

• CONN, AJX, MDCO, INMD, EBS, AMBA, HRTG, USLV, WB, YEXT, MAG, UVE, AG, SNY, PAAS and PTGX

Stocks With Unusual Call Option Activity:

• 1) MPLX 2) CLF 3) NOC 4) MDCO 5)RSX

Stocks With Most Positive News Mentions:

• 1) MDCO 2) CONN 3) EBS 4) ARDX 5) NEM

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +.3% Above 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 33.7% of Issues Advancing, 63.7% Declining
• 124 New 52-Week Highs, 77 New Lows
• 49.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.6%
• Vix 19.8 +4.4%
• Total Put/Call 1.23 +.8%
• TRIN/Arms 1.41 +69.1%