Stocks Rising into Afternoon on Falling Biden Presidency Odds, Earnings Optimism, Short-Covering, Tech/Homebuilding Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 25.8 -2.4%
• Bloomberg Global Risk On/Risk Off Index 478.0 +88.0 points

• Euro/Yen Carry Return Index 130.84 -.13%

• Emerging Markets Currency Volatility(VXY) 11.24 +1.54%

• S&P 500 Implied Correlation 43.4 -2.4%

• ISE Sentiment Index 120.0 +18.0 points

• Total Put/Call .60 -23.1%

• NYSE Arms 1.15 -14.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 63.45 -2.57%
  

• US Energy High-Yield OAS 760.45 +.19%

• European Financial Sector CDS Index 58.47 -4.86%

• Italian/German 10Y Yld Spread 148.5 +3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  60.31 -1.5%
  

• Emerging Market CDS Index 163.66 -4.65%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.56 -.14%

• 2-Year Swap Spread 9.0 +.25 basis point

• TED Spread 15.0 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -3.75 -1.5 basis points
  
• MBS  5/10 Treasury Spread  89.25 -2.75 basis points
  
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.98 +.52%
• 3-Month T-Bill Yield .09% -1.0 basis point

• Yield Curve 57.75 -2.25 basis points
  

• China Iron Ore Spot 120.10 USD/Metric Tonne +.43%

• Citi US Economic Surprise Index 206.80 -4.0 points

• Citi Eurozone Economic Surprise Index 107.20 -25.4 points

• Citi Emerging Markets Economic Surprise Index 11.2 +2.1 points

• 10-Year TIPS Spread 1.78 -1.0 basis point
• 100.0% chance of no change at Nov. 5th meeting, 100.0% chance of no change at Dec. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +12 open in Japan 
• China A50 Futures: Indicating -74 open in China

• DAX Futures: Indicating -21 open in Germany

Portfolio:

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

• Disclosed Trades:Covered some of my (IWM)/(QQQ) hedges and emerging market shorts
  

• Market Exposure: Moved to 75% Net Long

 

Bear Radar

Style Underperformer:

• Large-Cap Value -.3%

Sector Underperformers:

• 1) Biotech -2.2% 2) Pharma -1.8% 3) Utilities -1.4%

Stocks Falling on Unusual Volume: 

• CVS, TSLA,PRPL, WGO, WBA, ARWR, NGM, KRTX, RVNC, ABBV, FLGT, REGN, RYTM, OMER, OSUR, PRTS, CUE, QDEL, ICPT, VIR and ARCT
  

Stocks With Unusual Put Option Activity:

• 1) TRGP 2) MITT 3) CLDR 4) TRIP 5) ASHR
  

Stocks With Most Negative News Mentions:

• 1) MSLP 2) ABBV 3) WINS 4) FINV  5) RST
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.1%

Sector Outperformers:

• 1) Internet +2.7% 2) Homebuilding +2.1% 3) Retail +2.1%

Stocks Rising on Unusual Volume:

• ZM, HOME, SWBI, DOCU, REGI, SPWH, APPS, CHWY, CRWD, BLMN, ATNX, PD, CALX, PTON, ZUO and WMT
  

Stocks With Unusual Call Option Activity:

• 1) COMM 2) SMAR 3) GOGO 4) HRB 5) DOCU

Stocks With Most Positive News Mentions:

• 1) ZM 2) BBW 3) BLMN 4) ZEN 5) CPST

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -7.5% Below 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 58.9% of Issues Advancing, 37.6% Declining
• 65 New 52-Week Highs, 12 New Lows
• 48.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.6% 
• Bloomberg Global Risk-On/Risk-Off Index 465.0 +73.0 points
• Vix 25.9 -1.6%
• Total Put/Call .55 -29.5%
• TRIN/Arms 1.01 -25.9%

Tuesday Watch

Evening Headlines

Bloomberg:    

• China Detains Australian TV Anchor With Government-Run Station.
• Melbourne Drives Australian House Prices Lower.   
• Facebook Threatens to Cut Off Australians From Sharing News.
• South Korea Plans Record 2021 Bond Sales to Fund Stimulus. 
• India Is Becoming the World’s New Virus Epicenter.
• Asia Stocks Set to Retreat; U.S. Tech Shares Gain: Markets Wrap. Asian stocks looked set to pull back at the start of a new month after most U.S. equities retreated even though technology shares extended gains.Futures pointed to modest losses in Japan, Australia and Hong Kong. S&P 500 futures dipped. The U.S. benchmark notched a fifth consecutive monthly advance in August despite edging lower Monday. The dollar declined for a fifth month in a row. Treasuries advanced, with 10-year yields slipping to just above 0.70%. The Dow Jones Industrial Average led losses after its components were revamped, with Microsoft Corp. and Walmart Inc. slumping on concern China could block a possible sale of the video app TikTok. Apple Inc.’s surge as the stock split 4-for-1 lifted the Nasdaq 100 past 12,000 for the first time. S&P 500 futures ticked down 0.2% as of 8:26 a.m. in Tokyo. The S&P 500 Index fell 0.2%. Nikkei 225 futures fell 0.3% in Singapore Australia’s S&P/ASX 200 Index futures dropped 1%. Hong Kong’s Hang Seng Index futures fell 0.4%.  
• Oil Edges Higher With U.S. Crude Stockpiles Seen Falling Further.
• New Yorkers Flee for Florida and Texas as Mobility Surges.
• U.S. Cases Top 6 Million; AstraZeneca Trial Begins: Virus Update.
  
• Ford to Cut 1,000 North America Salaried Jobs Amid Overhaul.
  
• Amid Spike in Opioid Overdoses, Momentum for Reform Wavers.  
• Stocks in ‘Euphoric Land’ With Nasdaq 100 Surging Past 12,000.

Wall Street Journal:

• Portland’s Half-Century of Ruinous Leadership.
• Individual Investors Reshape the Market.
• Amazon Gets U.S. Approval for Drone Fleet for Deliveries.
• The Democratic State Budget Scare.
• Covid-19 Vaccines: What’s Coming and When?
• Portland Shooting Suspect Identified as Antifa Supporter.
• M.B.A. Job Offers Dry Up.
  

Fox News:

• Trump defends teen charged in shootings; decries Biden, ‘political violence’ before Kenosha visit.
• McEnany calls out Lemon, Cuomo for 'downplaying' earlier violence.
• Texas AG alleges election laws are being broken in lawsuit.  
  
• Slain Portland man's friend says he lost life for having wrong views.
  

CNBC.com:

• Zoom shares soar after revenue more than quadruples from last year.
• The next four weeks could give investors a scare, strategist Lindsey Bell warns.
• Coronavirus cases rising again across more than half of the U.S.
• Stocks making the biggest moves after hours: Zoom Video, Eastman Kodak, Tesla & more.
• Delta, American drop domestic change fees, following move by United.

MarketWatch.com:            

• Here are the big winners among U.S. stocks during a sizzling August.
  
• An ‘extreme’ August on the stock market might be telling us something about the November election.
  
• Trump re-election momentum could shock stock-market investors betting on Biden win, says star analyst.

Zero Hedge: 

• Kolanovic Says Trump Re-Election Odds Are Soaring, Prompting Nate Silver To Melt Down On Twitter.
• MIT Debunks Musk's Neuralink As "Neuroscience Theater" In Scathing Critique.
• California's Radical Brainwashing Curriculum Soon To Be Mandatory.
• "Quartet" Of Tropical Disturbances Brewing In The Atlantic.
• New Jersey Is Becoming The Most Hated State As Households Flee In Record Numbers.
• Watch As Democrats Spend Four Years Fantasizing About Riots, Assassination And Violent Chaos.
• As US Warship Again Transits Taiwan Strait, Taipei & Beijing Warn Each Other: 'Risk Of Accidental Conflict Likely'.
• "This Is Real... There's Going To Be A F**king War In November" - Dem Operative Admits Voter Fraud.
• J.C. Penney On Verge Of Liquidation After Mall Talks Collapse.
• Polling Firm Rasmussen Warns About "National Poll Suppression" As Biden Lead Slumps To Just 2Pts.
• New Jersey Governor "Very Seriously" Considering Tax On High-Frequency Trades.
• White House Plans To Target More Chinese Tech Firms After TikTok, WeChat, Navarro Warns.
• Stocks & Silver Soar For 5th Straight Month, Bonds & Dollar Dumped.

Business Insider:  

• Robinhood, TDAmeritrade, and other online stock-trading platforms all experienced issues on Monday.

The Epoch Times:

• US Firms Move Supply Chains Out of China, Explore Options Closer to Home.
• CCP Scrubs State Media Report Raising Concerns Over COVID-19 Vaccine From Internet.
  

Digital Blackboard:

• Daily New Cases by Region.

Worldometer:

• New Cases/Deaths by state.

Rt Covid-19:

• How fast virus is growing by state.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading 

• Asian equity indices are -1.0%  to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 61.0 -1.0 basis point.

• China Sovereign CDS 33.75 -1.5 basis points.

• Bloomberg Emerging Markets Currency Index 60.68 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 412.0 +21.0 points.
• Volatility Index(VIX) futures 33.20 -.08%
• FTSE 100 futures -.53%.

• S&P 500 futures -.03%.

• NASDAQ 100 futures +.18%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• None of note
  

After the Close:

• (HOME)/1.31
• (HRB)/.33
• (SCVL)/.62
  

Economic Releases

10:00 am EST

• ISM Manufacturing for August is estimated to rise to 54.6 versus 54.2 in July.
• ISM Prices Paid for August is estimated to rise to 54.3 versus 53.2 in July.
• Construction Spending MoM for July is estimated to rise 1.0% versus a -.7% decline in July.
  

Afternoon:

• Wards Total Vehicle Sales for August is estimated to fall to 14.9M versus 14.5M in July.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Brainard speaking, Treasury's Mnuchin testifying on COVID-19 response, Eurozone PMI report, German Unemployment report,  weekly US retail sales reports, Jefferies Semi/IT Hardware/Communications Summit and the (NVDA) special event could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial 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 Slightly Higher into Final Hour on Falling Biden Presidency Odds, Global Stimulus Hopes, Momentum Chasing, Tech/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 24.8 +8.0%
• Bloomberg Global Risk On/Risk Off Index 548.0 -72.0 points

• Euro/Yen Carry Return Index 130.97 +.76%

• Emerging Markets Currency Volatility(VXY) 11.14 +.91%

• S&P 500 Implied Correlation 41.8 +16.9%

• ISE Sentiment Index 102.0 -22.0 points

• Total Put/Call .77 +.10%

• NYSE Arms 1.11 +80.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.12 -1.22%
  

• US Energy High-Yield OAS 760.65 +.07%

• European Financial Sector CDS Index 61.42 +.2%

• Italian/German 10Y Yld Spread 145.5 +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  61.16 -1.5%
  

• Emerging Market CDS Index 172.08 -1.66%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.82 +.13%

• 2-Year Swap Spread 8.75 -.25 basis point

• TED Spread 14.5 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -5.25 -.75 basis point
  
• MBS  5/10 Treasury Spread  92.0 -1.5 basis points
  
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.66 -.36%
• 3-Month T-Bill Yield .10% unch.

• Yield Curve 60.0 -1.5 basis points
  

• China Iron Ore Spot 118.74 USD/Metric Tonne +.34%

• Citi US Economic Surprise Index 242.50 -31.7 points

• Citi Eurozone Economic Surprise Index 132.6 -19.3 points

• Citi Emerging Markets Economic Surprise Index 9.1 -15.9 points

• 10-Year TIPS Spread 1.79 +2.0 basis points
• 100.0% chance of no change at Nov. 5th meeting, 100.0% chance of no change at Dec. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +11 open in Japan 
• China A50 Futures: Indicating -174 open in China

• DAX Futures: Indicating +17 open in Germany

Portfolio:

• Higher: On gains in my tech/biotech/medical sector longs and emerging market shorts
  

• Disclosed Trades: None

• Market Exposure: 50% Net Long