Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on less financial sector pessimism, decreasing sovereign debt angst, bargain-hunting and short-covering. My intermediate-term trading indicators are giving mostly bearish signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,087.69 -4.23%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,087.69 -4.23%
  
• DJIA 10,193.39 -4.02%
  
• NASDAQ 2,229.04 -5.02%
  
• Russell 2000 649.29 -6.44%
  
• Wilshire 5000 11,227.32 -4.52%
  
• Russell 1000 Growth 484.44 -4.18%
  
• Russell 1000 Value 560.89 -4.46%
  
• Morgan Stanley Consumer 669.65 -3.43%
  
• Morgan Stanley Cyclical 837.87 -5.63%
• Morgan Stanley Technology 545.05 -3.64%
  
• Transports 4,241.59 -5.48%
  
• Utilities 361.79 -4.75%
  
• MSCI Emerging Markets 37.13 -6.63%
  
• Lyxor L/S Equity Long Bias Index 980.07 -.75%
  
• Lyxor L/S Equity Variable Bias Index 855.88 -.22%
  
• Lyxor L/S Equity Short Bias Index 843.21 +2.11%
  

Sentiment/Internals

• NYSE Cumulative A/D Line +82,319 -6.03%
  
• Bloomberg New Highs-Lows Index -399 -547
  
• Bloomberg Crude Oil % Bulls 54.0 +3.85%
  
• CFTC Oil Net Speculative Position +67,361 --27.49%
  
• CFTC Oil Total Open Interest 1,387,907 -5.60%
  
• Total Put/Call 1.33 +19.82%
  
• OEX Put/Call .89 -27.05%
  
• ISE Sentiment 64.0 -21.95%
  
• NYSE Arms .34 -89.03%
  
• Volatility(VIX) 40.10 +28.36%
  
• G7 Currency Volatility (VXY) 15.74 +15.57%
  
• Smart Money Flow Index 8,726.50 -4.53%
  
• Money Mkt Mutual Fund Assets $2.844 Trillion -1.2%
  
• AAII % Bulls 41.30 +12.84%
  
• AAII % Bears 33.70 -7.92%
  

Futures Spot Prices

• CRB Index 251.42 -2.76%
  
• Crude Oil 70.04 -7.56%
  
• Reformulated Gasoline 196.12 -8.24%
  
• Natural Gas 4.03 -7.03%
  
• Heating Oil 189.67 -8.28%
  
• Gold 1,176.10 -4.60%
  
• Bloomberg Base Metals 190.62 -5.20%
  
• Copper 306.10 -2.05%
  
• US No. 1 Heavy Melt Scrap Steel 370.67 USD/Ton -.71%
  
• China Hot Rolled Domestic Steel Sheet 4,291 Yuan/Ton -3.31%
• S&P GSCI Agriculture 300.23 +1.81%
  

Economy

• ECRI Weekly Leading Economic Index 127.30 -3.56%
  
• Citi US Economic Surprise Index +19.40 +5.1 points
  
• Fed Fund Futures imply 90.0% chance of no change, 10.0% chance of 25 basis point cut on 6/23
• US Dollar Index 85.37 -.84%
  
• Yield Curve 247.0 -20 basis points
  
• 10-Year US Treasury Yield 3.24% -22 basis points
  
• Federal Reserve's Balance Sheet $2.333 Trillion +.64%
  
• U.S. Sovereign Debt Credit Default Swap 41.47 +2.77%
  
• Western Europe Sovereign Debt Credit Default Swap Index 126.17 +10.51%
  
• 10-Year TIPS Spread 1.96% -27 basis points
  
• TED Spread 34.0 +4 basis points
  
• N. America Investment Grade Credit Default Swap Index 123.49 +13.97%
  
• Euro Financial Sector Credit Default Swap Index 141.35 +9.37%
  
• Emerging Markets Credit Default Swap Index 304.34 +21.20%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 304.0 +50 basis points
  
• M1 Money Supply $1.700 Trillion -2.02%
• Business Loans 607.50 -.65%
  
• 4-Week Moving Average of Jobless Claims 453,500 +.7%
  
• Continuing Claims Unemployment Rate 3.6% unch.
  
• Average 30-Year Mortgage Rate 4.84% -9 basis points
  
• Weekly Mortgage Applications 569.20 -1.54%
  
• ABC Consumer Confidence -44 +3 points
  
• Weekly Retail Sales +3.1% -20 basis points
  
• Nationwide Gas $2.83/gallon -.05/gallon
  
• U.S. Cooling Demand Next 7 Days 36.0% above normal
• Baltic Dry Index 3,844 -2.16%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 50.0 -4.76%
  
• Rail Freight Carloads 218,206 +4.50%
  
• Iraqi 2028 Government Bonds 79.40 -4.62%
  

Best Performing Style

• Mid-Cap Growth -3.97%

Worst Performing Style

• Small-Cap Value -6.99%

Leading Sectors

• Education +3.41%
• Semis -.93%
• Telecom -2.38%
• Restaurants -2.93%
• Wireless -3.65%

Lagging Sectors

• Alternative Energy -7.99%
• Steel -8.62%
• Gaming -8.68%
  
• Coal -10.15%
• Gold -10.61%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Reversing Morning Losses on Heavy Volume on Short-Covering, Bargain-Hunting, Less Financial Sector Pessimism, Diminishing Economic Fear

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Heavy
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 39.31 -14.15%
  
• ISE Sentiment Index 79.0 +14.49%
  
• Total Put/Call 1.23 -17.45%
  
• NYSE Arms .54 -86.66%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 123.49.0 bps +.40%
  
• European Financial Sector CDS Index 145.18 bps -3.46%
  
• Western Europe Sovereign Debt CDS Index 118.83 bps -.56%
  
• Emerging Market CDS Index 303.67 bps -3.15%
  
• 2-Year Swap Spread 43.0 +4 bps
  
• TED Spread 35.0 +2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .15% -1 bp
  
• Yield Curve 249.0 -3 bps
  
• China Import Iron Ore Spot $151.90/Metric Tonne -1.75%
  
• Citi US Economic Surprise Index +19.40 +.2 point
  
• 10-Year TIPS Spread 1.96% +1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +41 open in Japan
• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Higher: On gains in my Technology, Medical, Biotech and Retail long positions
  
• Disclosed Trades: Covered all my (IWM), (QQQQ) hedges and some of my EEM short
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 is reversing morning losses substantially on heavy volume. On the positive side, Bank, I-Bank, Steel, Oil Tanker, Coal, Airline, Road&Rail, REIT, Networking, Disk Drive and Oil Service stocks are especially strong, rising 2.5+%. Small-Caps and Cyclicals are outperforming today. The rise in the euro, profit-taking and equity strength are weighing on gold again. Oil is flat despite the equity rally and bounce in the euro. The Eurozone Investment Grade CDS Index is falling -5.0%, which is a large positive. The Shanghai Composite reversed morning losses and finished at session highs, rising +1.1%. (XLF) has traded well throughout the day. On the negative side, Utility, Software, Telecom, Medical and HMO shares are mildly lower today. The Japan sovereign cds is up another +4.4% to 94.5 bps. While a test of morning lows is likely over the coming weeks, the market's hugely oversold state and very high investor angst readings could lead to further stock gains in the short-term. I may put some hedges back on into the close, depending on the action in the final hour. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting, short-covering, less financial sector pessimism and diminishing economic fear.

Bull Radar

Style Outperformer:

• Mid-Cap Growth (+1.13%)

Sector Outperformers:

• Oil Service (+2.89%), Steel (+2.73%) and I-Banks (+2.24%)

Stocks Rising on Unusual Volume:

• BEXP, CLF, SWC, IOC, BCS, BBD, GS, JPM, CATY, NITE, STP, INTU, MBT, VMED, CTSH, NDSN, HIBB, CRUS, NVLS, TECD, MRVL, FMCN, PLXS, UNFI, TROW, CISG, DGIT, CTSH, CTCT, AAPL and VLTR
  

Stocks With Unusual Call Option Activity:

• 1) XCO 2) ARO 3) RSH 4) BLK 5) NOVL
  

Stocks With Most Positive News Mentions:

• 1) PEP 2) ABT 3) DELL 4) GOOG 5) WFC