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 mixed as better US economic data, seasonality, investor performance angst and lower food/energy prices offsets rising global growth fears, technical selling, profit-taking and more shorting. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,255.19 +.88%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,255.19 +.88%
  
• DJIA 12,184.20 +1.37%
  
• NASDAQ 2,646.85 +.76%
  
• Russell 2000 745.40 +1.41%
  
• Wilshire 5000 13,013.10 +.82%
  
• Russell 1000 Growth 585.32 +.51%
  
• Russell 1000 Value 620.03 +1.02%
  
• Morgan Stanley Consumer 747.84 +1.46%
  
• Morgan Stanley Cyclical 902.39 +.33%
• Morgan Stanley Technology 614.92 +.50%
  
• Transports 4,957.02 +.21%
  
• Utilities 446.93 +.74%
  
• MSCI Emerging Markets 38.91 -2.42%
  
• Lyxor L/S Equity Long Bias Index 979.81 +3.05%
  
• Lyxor L/S Equity Variable Bias Index 830.81 -.07%
  
• Lyxor L/S Equity Short Bias Index 591.21 -2.34%
  

Sentiment/Internals

• NYSE Cumulative A/D Line 126,951 +1.46%
  
• Bloomberg New Highs-Lows Index -268 -132
  
• Bloomberg Crude Oil % Bulls 33.0 -13.2%
  
• CFTC Oil Net Speculative Position 155,804 -.43%
  
• CFTC Oil Total Open Interest 1,332,544 +2.31%
  
• Total Put/Call 1.19 +21.43%
  
• OEX Put/Call 1.88 +29.66%
  
• ISE Sentiment 153.0 +93.67%
  
• NYSE Arms .52 -52.29%
  
• Volatility(VIX) 26.38 -4.14%
• S&P 500 Implied Correlation 78.93 +1.35%
  
• G7 Currency Volatility (VXY) 12.87 +.23%
  
• Smart Money Flow Index 10,291.53 -1.74%
  
• Money Mkt Mutual Fund Assets $2.678 Trillion +1.0%
  
• AAII % Bulls 38.57 +16.74%
  
• AAII % Bears 34.76 -11.82%

Futures Spot Prices

• CRB Index 306.43 -2.27%
  
• Crude Oil 99.41 -1.70%
  
• Reformulated Gasoline 259.61 -1.33%
  
• Natural Gas 3.32 -7.50%
  
• Heating Oil 291.25 -2.84%
  
• Gold 1,716.80 -1.85%
  
• Bloomberg Base Metals 209.52 -1.10%
  
• Copper 355.75 -.78%
  
• US No. 1 Heavy Melt Scrap Steel 401.67 USD/Ton unch.
  
• China Iron Ore Spot 139.50 USD/Ton +.50%
  
• UBS-Bloomberg Agriculture 1,430.56 -1.82%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate -7.6% +20 basis points
• Philly Fed ADS Real-Time Business Conditions Index -.0053 +69.36%
  
• S&P 500 EPS Estimates (FY 2012 Mean) 108.89 -.06%
  
• Citi US Economic Surprise Index 78.0 -7.7 points
  
• Fed Fund Futures imply 32.0% chance of no change, 68.0% chance of 25 basis point cut on 12/13
• US Dollar Index 78.63 -.06%
  
• Yield Curve 183.0 +5 basis points
  
• 10-Year US Treasury Yield 2.06% +3 basis points
  
• Federal Reserve's Balance Sheet $2.803 Trillion +.22%
  
• U.S. Sovereign Debt Credit Default Swap 52.41 +3.65%
  
• Illinois Municipal Debt Credit Default Swap 269.0 -3.14%
  
• Western Europe Sovereign Debt Credit Default Swap Index 367.34 +8.20%
• Emerging Markets Sovereign Debt CDS Index 292.67 +1.62%
  
• Saudi Sovereign Debt Credit Default Swap 127.64 +.50%
• Iraqi 2028 Government Bonds 82.93 +.50%
• China Blended Corporate Spread Index 764.0 +10 basis points
  
• 10-Year TIPS Spread 2.03% -3 basis points
  
• TED Spread 54.0 +1 basis point
  
• 3-Month Euribor/OIS Spread 96.0 -3 basis points
• 3-Month EUR/USD Cross-Currency Basis Swap -122.0 +4 basis points
  
• N. America Investment Grade Credit Default Swap Index 122.59 -1.32%
  
• Euro Financial Sector Credit Default Swap Index 282.22 +4.36%
  
• Emerging Markets Credit Default Swap Index 295.05 -1.01%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 276.0 unch.
  
• M1 Money Supply $2.151 Trillion +.72%
  
• Commercial Paper Outstanding 997.30 -.50%
  
• 4-Week Moving Average of Jobless Claims 393,300 -.80%
  
• Continuing Claims Unemployment Rate 2.8% -20 basis points
  
• Average 30-Year Mortgage Rate 3.99% -1 basis point
  
• Weekly Mortgage Applications 650.40 +12.84%
  
• Bloomberg Consumer Comfort -50.3 -.1 point
  
• Weekly Retail Sales +3.20% -70 basis points
  
• Nationwide Gas $3.29/gallon unch.
  
• U.S. Heating Demand Next 7 Days 12.0% below normal
• Baltic Dry Index 1,922 +3.0%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 37.50 unch.
  
• Rail Freight Carloads 243,997 +27.84%
  

Best Performing Style

• Small-Cap Growth +1.47%

Worst Performing Style

• Mid-Cap Growth -.18%

Leading Sectors

• Airlines +5.08%
  
• Computer Services +2.28%
  
• Tobacco +2.34%
• I-Banks +2.27%
• Drugs +2.03%

Lagging Sectors

• Gaming -1.28%
• Alternative Energy -1.28%
  
• Oil Service -1.91%
• Agriculture -2.46%
• Coal -3.55%

Weekly High-Volume Stock Gainers (17)

• DMAN, SFSF, GIII, MIND, ZUMZ, TLEO, MW, MPWR, GCI, AMRC, CSOD, KNXA, RATE, OXM, BAH, CPMK and TRGP
  

Weekly High-Volume Stock Losers (7)

• ATO, UVV, WABC, TEA, DRI, GTY and IVC
  

Weekly Charts
ETFs

• High-Volume Gainers
• High-Volume Losers

Stocks

• High-Volume Gainers
• High-Volume Losers
  

*5-Day Change

Stocks Higher into Final Hour on Euro Bounce, Short-Covering, Less Financial Sector Pessimism, Seasonality

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Every Sector Rising
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 27.06 -11.54%
  
• ISE Sentiment Index 160.0 +58.42%
  
• Total Put/Call 1.27 +32.29%
  
• NYSE Arms .58 -89.29%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 122.59 -1.74%
  
• European Financial Sector CDS Index 286.01 +2.69%
  
• Western Europe Sovereign Debt CDS Index 368.17 +2.77%
  
• Emerging Market CDS Index 293.60 -2.45%
  
• 2-Year Swap Spread 43.0 +1 bp
  
• TED Spread 54.0 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -125.50 -9.0 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 183.0 +8 bps
  
• China Import Iron Ore Spot $139.50/Metric Tonne +.07%
  
• Citi US Economic Surprise Index 78.0 +1.9 points
  
• 10-Year TIPS Spread 2.03 +5 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +91 open in Japan
• DAX Futures: Indicating +13 open in Germany

Portfolio:

• Higher: On gains in my tech, retail, biotech and medical sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added some back
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 rebounds back near its 200-day moving average despite rising Eurozone debt angst, rising global growth fears, some earnings jitters and rising energy prices. On the positive side, Coal, Disk Drive, Homebuilding, Networking and Steel shares are especially strong, rising more than +2.75%. Small-caps are outperforming. (XLF) has traded well throughout the day. The UBS-Bloomberg Ag Spot Index is falling -1.9%, Lumber is rising +2.88% and Copper is gaining +2.4%. The 10-year Yield is rising +8 bps to 2.05%. Major European stock indices rose 1-3% today. The Germany sovereign cds is falling -4.79% to 99.0 bps, the Belgium sovereign cds is falling -2.28% to 315.67 bps and the France sovereign cds is falling -1.98% to 209.33 bps. On the negative side, Ag, Telecom and Retail shares are flat-to-slightly higher on the day. Oil is rising +1.62% and Gold is rising +.44%. The Italy sovereign cds is rising +1.82% to 532.50 bps, the China sovereign cds is gaining +1.68% to 139.41 bps, the Japan sovereign cds is jumping +6.7% to 128.04 bps, the Russia sovereign cds is gaining +3.78% to 263.0 bps, the Israel sovereign cds is climbing +3.6% to 200.35 bps and the Brazil sovereign cds is gaining +4.4% to 150.28 bps. The TED spread continues to trend higher and is at the highest since June 2009. The 2Y Euro Swap Spread is near the highest since Nov. 2008. The 3M Euribor-OIS spread is the highest since February 2009. The 3M EUR/USD Cross-Currency Basis Swap is falling -7.73% to -125.50 bps. The Libor-OIS spread is very near the widest since May 2009, which is also noteworthy considering the equity surge off the recent lows. China Iron Ore Spot has plunged -27.3% since February 16th and -22.9% since Sept. 7th. Asian indices shrugged off the European news as it trickled out overnight and finished materially lower. Hong Kong shares closed near session lows despite the better China CPI/PPI data, falling -2.7%, and are now down -19.3% ytd. There are a number of red flags today. European credit gauges are performing very poorly given that the European debt crisis “can-kicking” solution is supposedly at hand. As well, equity index volume is light and leadership is mostly found in lower-quality stocks. While I still think equities can build on today's gains over the short-term, I still suspect this rally will be less robust and sustainable than many expect due to excess bullish sentiment and the ongoing deterioration in the global economy. I expect US stocks to trade mixed-to-higher into the close from current levels on a bounce in the euro, less financial sector pessimism, short-covering, seasonality, better US economic data and investor performance angst.

Bear Radar

Style Underperformer:

• Large-Cap Growth (+1.06%)

Sector Underperformers:

• 1) Agriculture -.60% 2) Semis +.29% 3) Retail +.48%

Stocks Falling on Unusual Volume:

• DD, SFLY, POT, ALB, MBT, PCYC, SPPI, FURX, PEET, ALTR, SHLD, CMTL, STMP, YNDX, SGA, NYC, TXN, BTH and IVR
  

Stocks With Unusual Put Option Activity:

• 1) LDK 2) ERTS 3) DD 4) TXN 5) ADBE
  

Stocks With Most Negative News Mentions:

• 1) PCYC 2) COST 3) MOS 4) DD 5) BK
  

Charts:

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