Weekly Outlook

There are a few important economic reports and significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - Leading Indicators
Tues. - Richmond Fed Index, Minutes of Nov.1 FOMC Meeting
Wed. - Initial Jobless Claims, Univ. of Mich. Consumer Confidence
Thur. - US markets closed for Thanksgiving
Fri. - None of note/US markets close at 1 pm EST

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

Mon. - Campbell Soup(CPB), CBRL Group(CBRL), Philips-Van Heusen(PVH)
Tues. - AES Corp.(AES), Albertson’s(ABS), BISYS Group(BSG), Coldwater Creek(CWTR), Deere & Co.(DE), Dollar General(DG), Dollar Tree(DLTR), Eaton Vance(EV), HJ Heinz(HNZ), Michaels Stores(MIK), PETCO Animal Supplies(PETC), Tech Data(TECD)
Wed. - Dana Corp.(DCN), Patterson Companies(PDCO)
Thur. - US markets closed for Thanksgiving
Fri. - None of note/US markets close at 1 pm EST

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

Mon. - None of note
Tue. - None of note
Wed. - None of note
Thur. - US markets closed for Thanksgiving
Fri. - None of note/US markets close at 1 pm EST

BOTTOM LINE: I expect US stocks to finish the week modestly higher on more optimism, lower energy prices and short-covering. My trading indicators are still giving bullish signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,248.27 +1.10%*



Click here for the Weekly Wrap by Briefing.com.

BOTTOM LINE: Overall, last week's market performance was positive considering recent gains, worries over GM and weaker data from the housing sector. The advance/decline line rose, most sectors gained and volume was about average on the week. Measures of investor anxiety were mostly lower. The AAII % Bulls fell for the week, which is a positive, but is still at above average levels. I would only become worried over this gauge on sustained readings above 60. The average 30-year mortgage rate rose to 6.37% which is 116 basis points above all-time lows set in June 2003 and the highest since June of last year. Mortgage rates will likely head lower over the intermediate-term. The benchmark 10-year T-note yield fell 7 basis points on the week as multiple inflation readings decelerated and a report showed international demand for US assets increased to record levels. Tech and cyclicals outperformed on increased optimism over US economic growth and accelerated corporate spending. The US dollar rose slightly on the week as optimism over US economic growth relative to that of other developed nations and increasing demand for US assets more than offset expectations of a European Central Bank rate hike. Gold jumped, notwithstanding the decelerating inflation data, on Middle Eastern diversification out of oil and the euro and into the precious metal. Unleaded Gas futures continued their recent collapse, now falling 50% since September highs even as refinery utilization still remains below normal as a result of the hurricanes. Moreover, natural gas supplies increased again this week even as 36% of daily Gulf of Mexico production remains shut-in. Natural Gas has now dropped 22.6% from recent highs. I continue to believe global energy demand destruction and a substantial increase in supplies into 2006 will continue pushing energy prices substantially lower over the intermediate-term. I also still expect the S&P 500 to end the year strongly, finishing with around a 10% gain. The index is currently up 4.7% for the year.

*5-day % Change

Weekly Scoreboard*

Indices
S&P 500 1,248.27 +1.10%
DJIA 10,766.33 +.75%
NASDAQ 2,227.07 +1.12%
Russell 2000 672.22 +.83%
DJ Wilshire 5000 12,468.99 +1.09%
S&P Equity Long/Short Index 1,066.99 -.17%
S&P Barra Growth 598.17 +1.26%
S&P Barra Value 645.75 +.95%
Morgan Stanley Consumer 593.39 -.25%
Morgan Stanley Cyclical 764.64 +2.72%
Morgan Stanley Technology 526.33 +2.07%
Transports 4,140.69 +1.66%
Utilities 396.46 +2.17%
S&P 500 Cum A/D Line 7,794.00 +2.82%
Bloomberg Crude Oil % Bulls 45.0 +161.6%
Put/Call .62 -7.46%
NYSE Arms .73 -8.75%
Volatility(VIX) 11.12 -6.55%
ISE Sentiment 181.0 +7.74%
AAII % Bulls 53.63 -8.51%
US Dollar 91.93 +.10%
CRB 312.74 -.90%

Futures Spot Prices
Crude Oil 57.21 -2.12%
Unleaded Gasoline 146.20 -1.75%
Natural Gas 11.41 -2.77%
Heating Oil 169.62 -1.95%
Gold 486.70 +3.71%
Base Metals 141.21 +1.01%
Copper 191.70 +3.34%
10-year US Treasury Yield 4.49% -1.75%
Average 30-year Mortgage Rate 6.37% +.16%

Leading Sectors
Papers +8.36%
Oil Service +4.98%
Homebuilders +3.85%

Lagging Sectors
Disk Drives -1.09%
Drugs -1.15%
Software -1.30%

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

*5-Day % Change

Stocks Slightly Higher Mid-day on Merger Activity and another Decline in Energy Prices

S&P 500 1,244.52 +.14%
DJIA 10,724.63 +.04%
NASDAQ 2,225.58 +.23%
Russell 2000 671.21 +.61%
DJ Wilshire 5000 12,434.39 +.15%
S&P Barra Growth 596.63 +.19%
S&P Barra Value 643.37 +.05%
Morgan Stanley Consumer 592.28 -.11%
Morgan Stanley Cyclical 761.60 +.50%
Morgan Stanley Technology 526.22 +.18%
Transports 4,133.85 +1.26%
Utilities 395.32 -.56%
Put/Call .62 -12.68%
NYSE Arms .84 +25.04%
Volatility(VIX) 11.48 +2.04%
ISE Sentiment 173.00 -4.95%
US Dollar 91.93 +.08%
CRB 311.96 -.38%

Futures Spot Prices
Crude Oil 55.50 -1.49%
Unleaded Gasoline 145.20 -.51%
Natural Gas 11.43 -4.29%
Heating Oil 169.00 -.14%
Gold 486.00 -.18%
Base Metals 141.21 +1.58%
Copper 191.30 +1.81%
10-year US Treasury Yield 4.47% +.52%

Leading Sectors
Semis +2.19%
Broadcasting +1.18%
Telecom +.89%

Lagging Sectors
Coal -.87%
Gold & Silver -1.13%
Airlines -1.60%

BOTTOM LINE: The Portfolio is slightly higher mid-day on gains in my Semi longs, Computer longs, Steel shorts and Energy-related shorts. I have not traded this morning, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is heavy. Measures of investor anxiety are mostly higher. Overall, today’s market action is neutral considering the fall in energy prices and merger activity. Beazer Homes (BZH) is making an all-time high today. This is significant. Beazer has more ARMs exposure than any other major homebuilder, as well as significant exposure to many of the perceived "overheated" markets. This stock has been targeted by the shorts as the most exposed to the coming housing collapse they have been forecasting for a several years. 27.3% of the float is short. I continue to believe housing is slowing to more sustainable healthy levels, not collapsing. A slowing housing market is a big positive for U.S. stocks, in my opinion. I expect US stocks to trade modestly higher from current levels into the close on short-covering and falling energy prices.

Today's Headlines

Bloomberg:
- Swiss Reinsurance agreed to buy GE’s reinsurance business for $6.8 billion in cash and stock, in the company’s biggest acquisition ever.
- Liz Claiborne offered to buy women’s apparel retailer J. Jill Group for $365.9 million after an earlier offer was rejected and said it may consider a hostile bid.
- European Central Bank President Jean-Claude Trichet said the bank is ready to raise interest rates to stem inflation in the 12 nations sharing the euro.
- Cisco Systems agreed to buy Scientific-Atlanta for $6.9 billion, adding the second-largest US maker of set-top boxes for cable television and tapping into the growing market for Internet TV.
- Alltel, the fifth-largest US mobile-phone services company, agreed to buy Midwest Wireless for $1.08 billion, adding 400,000 customers in Minnesota, Iowa and Wisconsin.
- Crude oil is falling to a five-month low in NY on speculation that fuel stockpiles are adequate to meet global demand.
- The dollar is approaching its highest level against the euro and yen since 2003 on speculation the gap between US economic growth and other developed nations will widen further.

Wall Street Journal:
- US drugmakers are fining cholesterol-lowering drugs such as statins so effective that the companies are having trouble finding improved treatments for preventing heart attacks and strokes.
- The US Financial Accounting Standards Board may change guidelines to restrict companies from keeping lease costs out of financial statements.
- China is broadening its effort to win friends and influence people in the US to maintain its economic growth, reduce poverty, and become a global power.
- Global copper and aluminum prices are at or near the peaks of their current cycle and may fall next year, China’s top planning agency said.

Business Week:
- Intel co-founder Gordon E. Moore and his wife, Betty, are among the top US individual philanthropists.
- Billionaire investor Carl Icahn is forming a group of possible directors to replace Time Warner board members during a proxy fight that may include the ouster of CEO Parsons.
- Microsoft may begin shipments of its new Windows Vista software to manufacturers on Aug. 31.

USA Today:
- Some US states may cut taxes in 2006 as revenues have climbed 7.2% so far this year, the most since 1990, as economic growth surged past expectations.

NY Times:
- Some US hospitals are trying to get doctors to cut costs by sharing the savings with them.

NY Post:
- New Yorkers constitute one-fifth of the 157,252 Americans infected with the HIV virus in the last four years, citing a new federal Centers for Disease Control report.

The Deal:
- Goldman Sachs Group is in discussions to buy a stake in the Chicago Stock Exchange.

San Francisco Chronicle:
- Home sales in the San Francisco Bay Area declined in October for a seventh straight month.

Denver Post:
- The Hyatt Regency Denver set a record for the hotel chain’s pre-opening sales with $100 million in business booked through 2012.

Economic Releases

- None of note