Stocks Slightly Lower into Final Hour on Virus Fears, Rising Jobless Claims, Technical Selling, Energy/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 21.4 -1.3%
• Bloomberg Global Risk On/Risk Off Index 1,283.0 -21.0 points

• Euro/Yen Carry Return Index 128.86 +.17%

• Emerging Markets Currency Volatility(VXY) 10.16 -.49%

• S&P 500 Implied Correlation 49.3 +1.6%

• ISE Sentiment Index 148.0 +35.0 points
  

• Total Put/Call .64 unch.

• NYSE Arms .94 +32.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 512.61 +1.0%
  

• US Energy High-Yield OAS 680.32 -.51%

• European Financial Sector CDS Index 60.06 +1.5%

• Italian/German 10Y Yld Spread 118.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 59.72 -1.84%
  

• Emerging Market CDS Index 168.06 +2.2%
  

• iBoxx Offshore RMB China Corporate High Yield Index 179.84 +.3%

• 2-Year Swap Spread 9.5 unch.

• TED Spread 12.75 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.75 unch.
  
• MBS  5/10 Treasury Spread  75.25 +1.75 basis points
  
• IHS Markit CMBX BBB- 6 70.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.22 +.41%
• 3-Month T-Bill Yield .08% unch.

• Yield Curve 72.25 +1.75 basis points
  

• China Iron Ore Spot 124.70 USD/Metric Tonne -2.1%

• Citi US Economic Surprise Index 81.4 +4.4 points

• Citi Eurozone Economic Surprise Index 109.6 -.6 point
  

• Citi Emerging Markets Economic Surprise Index 56.5 +.9 point

• 10-Year TIPS Spread 1.76 +3.0 basis points
• 100.0% chance of no change at Jan. 27th meeting, 100.0% chance of no change at March 17th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +68 open in Japan 
• China A50 Futures: Indicating +18 open in China

• DAX Futures: Indicating +1 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.0%

Sector Underperformers:

• 1) Gold & Silver -3.1% 2) Pharma -1.2% 3) Software -.7%

Stocks Falling on Unusual Volume: 

• PLUG, AIR, SATS, EPAC, EIX, GRBK, PEN, LIND, CRM, MOV, VLDR, TITN, CIIC, VMW, REZI, SRG, PPL, SBE, GIII, EVOP, ARWR, PSTG, RETA, GCO, NKLA, BLNK, RVP, CRSR and GPS
  

Stocks With Unusual Put Option Activity:

• 1) AL 2) GNW 3) GPS 4) ADSK 5) SHAK
  

Stocks With Most Negative News Mentions:

• 1) NKLA 2) GOOS 3) DRI 4) ACB 5) TCMD
  

Charts:

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

Bull Radar

 Style Outperformer:

• Mid-Cap Growth +.4%

Sector Outperformers:

• 1) Gold & Silver +1.4% 2) Internet +1.0% 3) Homebuilding +.6%

Stocks Rising on Unusual Volume:

• FSR, APPN, PLTR, WORK BCOV, JWN, VERI, RMG, ASPN, ANGO, RAD, LCA, FROG, BYSI, LE, MRNA, ATEC, LGVW, EGAN, RAPT, BALY and APXT
  

Stocks With Unusual Call Option Activity:

• 1) GPS 2)  3) EHC 4) FIT 5) MDLZ

Stocks With Most Positive News Mentions:

• 1) JWN 2) ADSK 3) KFY 4) FSR 5) ZS
  

Charts:

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

Afternoon Market Internals

 NYSE Composite Index:

• Volume Running +18.1% Above 100-Day Average
• 2 Sectors Rising, 9 Sectors Declining
• 42.4% of Issues Advancing, 55.1% Declining
• 108 New 52-Week Highs, 1 New Lows
• 84.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 59.8% 
• Bloomberg Global Risk-On/Risk-Off Index 1,285.0 -18.0 points
• Vix 21.6 -.1%
• Total Put/Call .64 unch.
• TRIN/Arms .89 +25.4%

Wednesday Watch

Night Trading 

• Asian equity indices are +.75% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 59.0 -2.5 basis points.

• China Sovereign CDS 29.75 -2.5 basis points.

• Bloomberg Emerging Markets Currency Index 61.0 +.05%.
• Bloomberg Global Risk-On/Risk Off Index 1,355.0 +50.0 points.
• Volatility Index(VIX) futures 23.55 -.21%
• FTSE 100 futures +.76%.

• S&P 500 futures +.44%.

• NASDAQ 100 futures +.68%.

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (DE)/1.45
• (FRO)/.37
  

After the Close:

• None of note
  

Economic Releases 

8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 730K versus 742K the prior week.
• Continuing Claims are estimated to fall to 6000K versus 6372K prior.
• The Advance Goods Trade Balance for Oct. is estimated at -$80.4B versus -$79.4B in Sept. 
• Wholesale Inventories MoM for Oct. is estimated to rise +.4% versus a +.4% gain in Sept.
• Retail Inventories MoM for Oct. is estimated to rise +.6% versus a +1.6% gain in Sept.
• Durable Goods Orders for Oct. is estimated to rise +.9% versus a +1.9% gain in Sept.
• Durables Ex Transports for Oct. is estimated to rise +.5% versus a +.9% gain in Sept.
• Cap Goods Orders Non-Defense Ex Air for Oct. is estimated to rise +.5% versus a +1.0% gain in Sept.
  

10:00 am EST

• Personal Income for Oct. is estimated to fall -.1% versus a +.9% gain in Sept.
• Personal Spending for Oct. is estimated to rise +.4% versus a +1.4% gain in Sept.
• The PCE Core Deflator MoM for Oct. is estimated unch. versus a +.2% gain in Sept.
• New Home Sales for Oct. is estimated to rise to 975K versus 959K in Sept.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of+214,640 barrels versus a +769,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +732,180 barrels versus a +2,611,000 barrel gain the prior week. Distillate Inventories are estimated to fall by -2,527,360 barrels versus a -5,216,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.66% versus a +2.9% gain prior.
  

2:00 pm EST

• Nov. 5 FOMC Meeting Minutes.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Mexico Retail Sales report and the weekly MBA Mortgage Application report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Surging into Afternoon on Vaccine Hopes, Less European/Emerging Markets/US High-Yield Debt Angst, Oil Gain, Energy/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 21.96 -3.1%
• Bloomberg Global Risk On/Risk Off Index 1,280.0 +171.0 points

• Euro/Yen Carry Return Index 128.64 +.36%

• Emerging Markets Currency Volatility(VXY) 10.23 -.68%

• S&P 500 Implied Correlation 49.37 +.65%

• ISE Sentiment Index 113.0 unch.
  

• Total Put/Call .60 -10.5%

• NYSE Arms .93 +36.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.27 -5.8%
  

• US Energy High-Yield OAS 688.74 -1.93%

• European Financial Sector CDS Index 59.18 -5.88%

• Italian/German 10Y Yld Spread 118.0 -3.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 60.66 -3.06%
  

• Emerging Market CDS Index 164.29 -3.22%
  

• iBoxx Offshore RMB China Corporate High Yield Index 179.31 +.05%

• 2-Year Swap Spread 9.5 +.5 basis point.

• TED Spread 12.5 -1.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.75 +3.75 basis points
  
• MBS  5/10 Treasury Spread  73.50 -1.5 basis points
  
• IHS Markit CMBX BBB- 6 70.25 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.95 +.17%
• 3-Month T-Bill Yield .08% +1.0 basis point

• Yield Curve 70.5 +1.5 basis points
  

• China Iron Ore Spot 125.45 USD/Metric Tonne -3.21%

• Citi US Economic Surprise Index 77.0 +1.4 points

• Citi Eurozone Economic Surprise Index 110.2 +7.4 points
  

• Citi Emerging Markets Economic Surprise Index 55.6 -1.7 points

• 10-Year TIPS Spread 1.73 +2.0 basis points
• 100.0% chance of no change at Jan. 27th meeting, 100.0% chance of no change at March 17th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +290 open in Japan 
• China A50 Futures: Indicating +12 open in China

• DAX Futures: Indicating +13 open in Germany

Portfolio:

• Higher: On  gains in my industrial/tech/medical/consumer staple sector longs
  

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

• Market Exposure: Moved to 75% Net Long