Wednesday, September 30, 2020

Thursday Watch

Night Trading 
  • Asian equity indices are unch. to +1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 77.25 unch.
  • China Sovereign CDS 48.25 -3.0 basis points.
  • Bloomberg Emerging Markets Currency Index 59.37 +.05%.
  • Bloomberg Global Risk-On/Risk Off Index 146.0 -18.0 points.
  • Volatility Index(VIX) futures 32.45 -1.29%
  • FTSE 100 futures +.29%.
  • S&P 500 futures +.41%.
  • NASDAQ 100 futures +.41%.
Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:
  • (BBBY)/-.29
  • (CAG)/.57
  • (STZ)/2.51
  • (PEP)/1.49
After the Close:
  • None of note
Economic Releases
7:30 am EST
  • Challenger Job Cuts YoY for Sept.
8:30 am EST
  • Initial Jobless Claims for last week are estimated to fall to 850K versus 870K the prior week.
  • Continuing Claims are estimated to fall to 12200K versus 12580K the prior week.
  • Personal Income for Aug. is estimated to fall -2.5% versus a +.4% gain in July.
  • Personal Spending for Aug. is estimated to rise +.8% versus a +1.9% gain in July.
  • The PCE Core MoM for Aug. is estimated to rise +.3% versus a +.3% gain in July.
10:00 am EST
  • Construction Spending MoM for Aug. is estimated to rise +.7% versus a +.1% gain in July.
  • ISM Manufacturing for Sept. is estimated to rise to 56.4 versus a reading of 56.0 in Aug.
  • ISM Prices Paid for Sept. is estimated to fall to 58.8 versus 59.5 in Aug. 
Afternoon:
  • Wards Total Vehicle Sales for Sept. are estimated to rise to 15.7M versus 15.19M in Aug.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Bowman speaking, Eurozone PMI report, weekly Bloomberg Consumer Comfort Index and the (TWLO) investor day could also impact trading today.
Market Hours
Normal:
  • 9:30 am - 4:00 pm EST
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finished modestly lower. The Portfolio is 50% net long heading into the day.

 

Stocks Higher into Afternoon on Stimulus Hopes, US Economic Data, End-of-Quarter Window-Dressing, Healthcare/Homebuilding Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 25.6 -2.6%
  • Bloomberg Global Risk On/Risk Off Index 192.0 +87.0 points
  • Euro/Yen Carry Return Index 128.16 -.33%
  • Emerging Markets Currency Volatility(VXY) 11.90 -1.0%
  • S&P 500 Implied Correlation 56.9 +1.88%
  • ISE Sentiment Index 115.0 +6.0 points
  • Total Put/Call .77 -2.5%
  • NYSE Arms .45 -73.4%
Credit Investor Angst:
  • North American Investment Grade CDS Index 57.9 -3.4%
  • US Energy High-Yield OAS 880.89 +.28%
  • European Financial Sector CDS Index 78.25 -2.4%
  • Italian/German 10Y Yld Spread 139.0 -1.0 basis point
  • Asia Ex-Japan Investment Grade CDS Index 77.41 +.24%
  • Emerging Market CDS Index 228.45 -3.08%
  • iBoxx Offshore RMB China Corporate High Yield Index 177.93 -.07%
  • 2-Year Swap Spread 9.5 unch.
  • TED Spread 13.0 -.25 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -13.25 +2.75 basis points
  • MBS  5/10 Treasury Spread  92.75 -.5 basis point
  • IHS Markit CMBX BBB- 6 66.25 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 589.35 +.67%
  • 3-Month T-Bill Yield .10% +1.0 basis point
  • Yield Curve 52.25 -.75 basis point
  • China Iron Ore Spot 117.0 USD/Metric Tonne -.10%
  • Citi US Economic Surprise Index 172.9 +4.7 points
  • Citi Eurozone Economic Surprise Index 47.80 -.8 point
  • Citi Emerging Markets Economic Surprise Index 49.3 +1.9 points
  • 10-Year TIPS Spread 1.66 +2.0 basis points
  • 100.0% chance of no change at Dec. 16th meeting, 100.0% chance of no change at Jan. 27th meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +215 open in Japan 
  • China A50 Futures: Indicating +36 open in China
  • DAX Futures: Indicating +29 open in Germany
Portfolio:
  • Higher: On gains in my tech/biotech/medical/industrial/consumer staple sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
  • Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:
  • Mid-Cap Value +1.1%
Sector Underperformers:
  • 1) Disk Drives -1.4% 2) Paper -.2% 3) Education -.2%
Stocks Falling on Unusual Volume: 
  • SHLL, TWST, AMSC, ANGO, SRNE, VIR, WKHS, BIG, CLDX, FMCI, WDC, MU, PRGS, PAR, EPAC, UNFI and IMXI
Stocks With Unusual Put Option Activity:
  • 1) MU 2) BBBY 3) REGN 4) XLI 5) EFA
Stocks With Most Negative News Mentions:
  • 1) BTU 2) IRWD 3) DIS 4) AWI  5) MAS
Charts:

 

Bull Radar

Style Outperformer:
  • Large-Cap Growth +1.5%
Sector Outperformers:
  • 1) Healthcare Providers +2.7% 2) Homebuilding +2.7% 3) Airlines +2.2%
Stocks Rising on Unusual Volume:
  • DDOG, NKLA, NOVA, KLDO, REGI, SAIL, MIK, HIBB, VSTO, SNX, CZR, DUK, WGO, PII and ELAN
Stocks With Unusual Call Option Activity:
  • 1) NYMT 2) DUK 3) SPR 4) TFC 5) FIT
Stocks With Most Positive News Mentions:
  • 1) SNX 2) GOOS 3) PENN 4) BDX 5) INFO
Charts:

 

Mid-Day Market Internals

NYSE Composite Index:

 

Tuesday, September 29, 2020

Wednesday Watch

Evening Headlines
Bloomberg: 
Wall Street Journal:
Fox News:
CNBC.com:
MarketWatch.com:         
Zero Hedge:   
Night Trading 
  • Asian equity indices are -1.0% to -.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 77.25 unch.
  • China Sovereign CDS 51.25 +2.0 basis points.
  • Bloomberg Emerging Markets Currency Index 58.96 +.01%.
  • Bloomberg Global Risk-On/Risk Off Index 89.0 -12.0 points.
  • Volatility Index(VIX) futures 29.95 +.59%
  • FTSE 100 futures +.04%.
  • S&P 500 futures +.13%.
  • NASDAQ 100 futures +.12%.
Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:
  • None of note
After the Close:
  • None of note
Economic Releases
8:15 am EST
  • The ADP Employment Change for Sept. is estimated to rise to 648K versus 428K the prior week.
9:45 am EST
  • The MNI Chicago PMI report for Sept. is estimated to rise to 52.0 versus 51.2 in Aug.
10:00 am EST
  • Pending Home Sales MoM for Aug. is estimated to rise +3.2% versus a +5.9% gain in July.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory gain of +465,000 barrels versus a -1,639,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,368,450 barrels versus a -4,025,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,374,360 barrels versus a -3,364,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.2% versus a -1.0% decline prior.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Bowman speaking, UK GDP report, government funding deadline, weekly MBA Mortgage Applications report and the (TOT) investor day could also impact trading today.
Market Hours
Normal:
  • 9:30 am - 4:00 pm EST
BOTTOM LINE: Asian indices are modestly lower, weighed down by commodity and transportation shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.