Weekly Outlook

There are several important economic reports and some significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - Empire Manufacturing, Net Foreign Security Purchases, NAHB Housing Market Index
Tues. - CPI, Housing Starts, Industrial Production, Capacity Utilization
Wed. - PPI
Thur. - Initial Jobless Claims, Leading Indicators, Philly Fed.
Fri. - None of Note

A few of the more noteworthy companies that release quarterly earnings this week are:

Mon. - Agilent Technologies(A), Lowe’s(LOW)
Tues. - Abercrombie & Fitch(ANF), American Eagle Outfitters(AEOS), Applied Materials(AMAT), Deere & Co.(DE), Estee Lauder(EL), Hewlett Packard(HPQ), Home Depot(HD), JC Penney(JCP), Nordstrom(JWN), Staples(SPLS), TJX(TJX), Wal-Mart Stores(WMT)
Wed. - BEA Systems(BEAS), Medtronic(MDT), Network Appliance(NTAP)
Thur. - Aeropostale(ARO), Autodesk(ADSK), Barnes & Noble(BKS), GameStop(GME), Gap Inc.(GPS), Limited Brands(LTD), Marvell Technology(MRVL)
Fri. - AnnTaylor Stores(ANN)

Other events that have market-moving potential this week include:

Mon. - None of note
Tue. - None of note
Wed. - None of note
Thur. - Semi Book-to-Bill
Fri. - None of note

BOTTOM LINE: I expect US stocks to finish the week mixed-to-lower on energy fears and Retail sector earnings worries. The Retail sector may come under pressure this week on disappointing earnings and high gas prices. However, record homes sales, soaring auto sales and very hot weather in many parts of the country were the main culprits behind any downturn in clothing sales in recent weeks. I would use any temporary weakness in retailers to accumulate select shares ahead of a strong fourth quarter. I continue to believe we are in a consolidation phase within a significant intermediate-term move higher in the major averages. My trading indicators are still giving bullish signals and the Portfolio is 50% net long heading into the week.

Economic Week in Review

Canceled this week due to technical problems.

Market Week in Review

S&P 500 1,230.39 +.32%*



Click here for the Weekly Wrap by Briefing.com.

BOTTOM LINE: Overall, last week's market performance was positive considering the rise in energy prices, uninspiring earnings reports in the tech sector and 10th straight Fed rate hike. The advance/decline line fell slightly, sector performance was mixed and volume was slightly below average on the week. Measures of investor anxiety were higher. The AAII % Bulls fell again for the week and is now modestly below average levels. The average 30-year mortgage rate rose to 5.89%, but is still only 68 basis points above all-time lows set in June 2003 and below April 2005 highs of 6.04%. Moreover, the benchmark 10-year T-note yield fell 15 basis points on the week, which will send mortgage back down. Dollar weakness, as a result of some better economic data from Europe and Japan, again led to underperformance by US small-cap stocks. As well, technology shares underperformed as earnings reports from Dell and Cisco disappointed investors. Finally, crude oil hit another inflation-unadjusted record as worries over Iran intensified and some refinery glitches further spurred fears of a fourth quarter supply shortfall.

*5-day % Change

Weekly Scoreboard*

Indices
S&P 500 1,230.39 +.32%
DJIA 10,600.31 +.40%
NASDAQ 2,156.90 -.96%
Russell 2000 660.00 -.96%
DJ Wilshire 5000 12,260.13 +.23%
S&P Equity Long/Short Index 1,056.15 +.07%
S&P Barra Growth 589.69 +.13%
S&P Barra Value 636.34 +.51%
Morgan Stanley Consumer 588.53 +.61%
Morgan Stanley Cyclical 756.76 +.54%
Morgan Stanley Technology 500.10 -.41%
Transports 3,747.81 +.43%
Utilities 396.06 +.04%
S&P 500 Cum A/D Line 8,296.00 -.60%
Bloomberg Crude Oil % Bulls 56.0 +61.76%
Put/Call 1.28 +10.34%
NYSE Arms 1.39 +28.70%
Volatility(VIX) 12.74 +2.08%
ISE Sentiment 140.00 -32.04%
AAII % Bulls 39.74 -16.91%
US Dollar 86.98 -1.16%
CRB 322.96 +1.99%

Futures Spot Prices
Crude Oil 66.86 +7.10%
Unleaded Gasoline 200.48 +9.25%
Natural Gas 9.59 +9.58%
Heating Oil 190.55 +9.95%
Gold 451.50 +2.57%
Base Metals 130.20 +1.79%
Copper 167.80 +1.82%
10-year US Treasury Yield 4.24% -1.85%
Average 30-year Mortgage Rate 5.89% +1.20%

Leading Sectors
Gold & Silver +5.36%
Steel +4.21%
I-Banks +2.89%

Lagging Sectors
Semis -1.77%
Broadcasting -1.96%
Airlines -2.37%

One-Week High-Volume Gainers
One-Week High-Volume Losers

*5-Day % Change

Stocks Sharply Lower Mid-day on Dell Report and Disappointing Economic Data

Indices
S&P 500 1,228.12 -.78%
DJIA 10,583.41 -.96%
NASDAQ 2,148.40 -1.19%
Russell 2000 656.93 -1.42%
DJ Wilshire 5000 12,228.65 -.81%
S&P Barra Growth 588.47 -.86%
S&P Barra Value 635.15 -.73%
Morgan Stanley Consumer 587.97 -.71%
Morgan Stanley Cyclical 754.28 -.62%
Morgan Stanley Technology 498.39 -1.06%
Transports 3,735.46 -.73%
Utilities 394.97 -.56%
Put/Call .93 +1.09%
NYSE Arms 1.36 +95.28%
Volatility(VIX) 12.95 +4.27%
ISE Sentiment 157.00 +30.83%
US Dollar 86.99 +.13%
CRB 322.81 +.09%

Futures Spot Prices
Crude Oil 66.70 +1.37%
Unleaded Gasoline 199.60 +2.37%
Natural Gas 9.55 +2.68%
Heating Oil 191.50 +.87%
Gold 451.70 +.18%
Base Metals 130.20 +2.09%
Copper 167.60 +1.76%
10-year US Treasury Yield 4.25% -1.31%

Leading Sectors
Broadcasting -.13%
Retail -.19%
HMOs -.20%

Lagging Sectors
Gaming -1.74%
Semis -1.90%
Restaurants -2.40%

BOTTOM LINE: The Portfolio is slightly higher mid-day on gains in my Oil Tanker and Computer shorts. I added to my IWM and QQQQ shorts this morning, thus leaving the Portfolio 25% net long. The tone of the market is negative as the advance/decline line is substantially lower, every sector is lower and volume is below average. Measures of investor anxiety are mostly higher. Today’s overall market action is negative considering the fall in long-term rates. Apple Computer (AAPL), one of my long positions, is breaking out today on decent volume with the rest of tech getting smacked. It is a beneficiary of Dell’s woes. The stock is approaching highs of $45.44 reached on Feb. 17, 2005. I expect US stocks to trade modestly higher from current levels into the close on lower long-term rates.

Today's Headlines

Bloomberg:
- Texas Instruments CEO Templeton said he expects “strong” demand for cell phones as the largest handset makers fill rising orders for the newest models.
- The French economy grew .1% in the three months through June, lagging behind the dozen nations sharing the euro for a second quarter as consumer spending was damped by surging oil prices and concern about job losses.
- Shares of Fannie Mae fell to a four-month low amid investor concerns the company will need a year to complete an earnings restatement that may total as much as $10.8 billion.
- Oil is rising to another record for a fifth straight day, touching $66.95/bbl. in NY on speculation that increased fuel demand may outpace production capacity.
- The US dollar is gaining against the euro after the US reported a trade deficit for June that was better than some traders expected.

Wall Street Journal:
- According to a recent WSJ Online poll, 54% of the economists surveyed believed the Fed’s Open Market Committee will go too far in raising rates whilst 46% were concerned it will keep them too low.
- Billionaire investor Carl Icahn’s alliance with hedge funds to get Time Warner to sell assets and boost a buyback gives him a new platform to go after some of the biggest US corporations.
- DKT International, a non-profit US AIDS-prevention group, sued the US government in federal court for refusing the group federal funding because it won’t endorse President Bush’s policies against prostitution.

NY Times:
- The FBI said there is the potential for terrorist attacks in New York, LA and Chicago around the Sept. 11 anniversary.

NY Post:
- Employees at investment banks, asset management companies and securities brokerages in the US may see as much as a 10% boost in bonuses this year.

Reuters:
- Maytag’s board of directors is set to back Whirlpool’s takeover offer of about $1.7B, or $21 a share.

Il Giornale:
- The European Central Bank must cut interest rates to spur growth in Europe, Deputy Finance Minister Baldassarri said.