Stocks Rising into Final Hour on Earnings Optimism, China Trade Deal Hopes, Short-Coveruing, Tech/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 13.2 -4.1%

• Euro/Yen Carry Return Index 125.04 -.15%

• Emerging Markets Currency Volatility(VXY) 7.16 -2.98%

• S&P 500 Implied Correlation 30.9 -6.0%

• ISE Sentiment Index 76.0 +1.2%
  

• Total Put/Call .84 +9.1%

• NYSE Arms .83 -46.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 53.67 -1.4%
  

• America Energy Sector High-Yield CDS Index 496.0 -.18%

• European Financial Sector CDS Index 57.63 -.65%

• Italian/German 10Y Yld Spread 131.5 +.5 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 68.29 -1.15%
  

• Emerging Market CDS Index 191.17 -2.19%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.90 -.03%

• 2-Year Swap Spread 2.75 -.75 basis point

• TED Spread 27.5 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -23.0 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.22 +.16%
• 3-Month T-Bill Yield 1.66% unch.

• Yield Curve .18 unch.

• China Iron Ore Spot 86.40 USD/Metric Tonne +.9%

• Citi US Economic Surprise Index 4.9 -.7 point

• Citi Eurozone Economic Surprise Index -56.1 +1.2 points

• Citi Emerging Markets Economic Surprise Index -19.50 +1.4 basis points

• 10-Year TIPS Spread 1.65 +3.0 basis points
• 93.3% chance of Fed rate cut at Dec. 11th meeting, 95.4% chance of cut at Jan. 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +41 open in Japan 
• China A50 Futures: Indicating +31 open in China

• DAX Futures: Indicating -9 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.3%

Sector Underperformers:

• 1) Utilities -1.3% 2) REITs -.8% 3) Insurance -.7%

Stocks Falling on Unusual Volume: 

• GILD, PFG, APA, VFC, PRO, ALB, DRQ, FCN, CASH, ILMN, MXL and GVA

Stocks With Unusual Put Option Activity:

• 1) FSLR 2) GIS 3) ILMN 4) KEX 5) NWL

Stocks With Most Negative News Mentions:

• 1) PCG 2) VCRA 3) HEXO 4) APA 5) ALB

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.8%

Sector Outperformers:

• 1) Steel +3.3% 2) Semis +1.9% 3) Airlines +1.9%

Stocks Rising on Unusual Volume:

• ANIK, BOOM, ROCK, BJRI, AMAG, RMD, MHK, ENVA, B, HEES, TILE, CHTR, INTC, GT, SPSC, FIX, FCX, LBRDK, CURO, VC, ITW, SIVB, PSX, TSLA, KOD, LRN, DLX, ICPT, ALK, DPZ, AIMT, OIS, NVDA, MRTX, AAL, EAT, CAT, IPOA, VRSN, CAKE, JNPR, CLW, TRN, SAIA, FITB and RS

Stocks With Unusual Call Option Activity:

• 1) ILMN 2) GT 3) FLEX 4) INTC 5) TIF

Stocks With Most Positive News Mentions:

• 1) CHTR 2) INTC 3) JNPR 4) PSX 5) ITW

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +5.3% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 60.3% of Issues Advancing, 35.4% Declining
• 109 New 52-Week Highs, 16 New Lows
• 56.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.2%
• Vix 13.2 -4.0%
• Total Put/Call .80 +3.9%
• TRIN/Arms .79 -49.0%

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 68.5 -.5 basis point.

• China Sovereign CDS 39.25 -5. basis point.

• Bloomberg Emerging Markets Currency Index  66.212 +.02%.
• FTSE 100 futures +.01%.

• S&P 500 futures -.02%.

• NASDAQ 100 futures +.03%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (BUD)/1.26
• (ALV)/1.41
• (B)/.79
• (CHTR)/1.69
• (GT)/.52
• (ITW)/1.96
• (LEA)/3.17
• (PSX)/2.48
• (VFC)/1.30
• (VZ)/1.23
• (WY).10

After the Close:

• None of note

Economic Releases
2:00 pm EST

• The Monthly Budget Statement for Sept. is estimated to fall to $83.0B versus $119.1B in Aug.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German IFO Index 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 rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Slightly Higher into Afternoon on Earnings Optimism, Oil Gain, Technical Buying, Tech/Alt Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.9 -.6%

• Euro/Yen Carry Return Index 125.17 -.34%

• Emerging Markets Currency Volatility(VXY) 7.44 -1.3%

• S&P 500 Implied Correlation 32.2 +3.6%

• ISE Sentiment Index 74.0 -4.1%
  

• Total Put/Call .79 -12.2%

• NYSE Arms 1.62 +105.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.63 +.49%
  

• America Energy Sector High-Yield CDS Index 497.0 +1.1%

• European Financial Sector CDS Index 58.01 +1.41%

• Italian/German 10Y Yld Spread 131.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 69.07 -.53%
  

• Emerging Market CDS Index 194.66 -1.60%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.95 -.01%

• 2-Year Swap Spread 3.5 -.25 basis point

• TED Spread 28.75 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.13 -.21%
• 3-Month T-Bill Yield 1.66% +1.0 basis point

• Yield Curve .18 unch.

• China Iron Ore Spot 84.60 USD/Metric Tonne -.04%

• Citi US Economic Surprise Index 5.6 -.4 point

• Citi Eurozone Economic Surprise Index -57.3 unch.

• Citi Emerging Markets Economic Surprise Index -20.90 -.1 basis point

• 10-Year TIPS Spread 1.62 +1.0 basis point
• 94.0% chance of Fed rate cut at Dec. 11th meeting, 96.1% chance of cut at Jan. 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +70 open in Japan 
• China A50 Futures: Indicating +13 open in China

• DAX Futures: Indicating -19 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech sector longs

• Disclosed Trades: None

• Market Exposure: 75% Net Long