Weekly Outlook

Click here for The Week Ahead by Reuters.

Click here for Stocks in Focus for Monday by MarketWatch.com.

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

Economic reports for the week include:
Mon. – None of note

Tues. – Non-farm Productivity, Unit Labor Costs, FOMC Rate Decision, Consumer Credit, weekly retail sales

Wed. – Weekly MBA Mortgage Applications, Wholesale Inventories

Thur. – Initial Jobless Claims, ICSC Chain Store Sales

Fri. – Import Price Index, Monthly Budget Statement

Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. – Blue Nile(NILE), BMC Software(BMC), Conseco(CNO), Dun & Bradstreet(DNB), Quiksilver(ZQK), Sina Corp.(SINA), Trident Microsystems(TRID), Wynn Resorts(WYNN)

Tues. – Cisco Systems(CSCO), Dean Foods(DF), Duke Energy(DUK), El Paso(EP), Emerson Electric(EMR), Flour Corp.(FLR), Frontier Oil(FTO), Harrah’s Entertainment(HET), Marsh & McLennan(MMC), Marvel Entertainment(MVL), McDermott Intl.(MDR), Onyx Pharmaceuticals(ONXX), Papa John’s(PZZA), Priceline.com(PCLN), Titanium Metals(TIE), Tyco Intl.(TYC)

Wed. – Advance Auto Parts(AAP), American International Group(AIG), Barr Pharma(BRL), Brightpoint(CELL), Cablevision Systems(CVC), Flowserve(FLS), Georgia Gulf(GGC), Hansen Natural(HANS), Jack in the Box(JBX), News Corp.(NWS/A), Nuance Communications(NUAN), Polo Ralph Lauren(RL), Sprint Nextel(S), Station Casinos(STN)

Thur. – Brinker Intl.(EAT), California Pizza Kitchen(CPKI), Cardinal Health(CAH), Diebold(DBD), Dillard’s(DDS), Dynegy(DYN), Emulex(ELX), Limelight(LLNW), Nvidia Corp.(NVDA), Urban Outfitters(URBN)

Fri. – Bausch & Lomb(BOL), EchoStar Communications(DISH), International Rectifier(IRF), Kohl’s(KSS), Pacific Sunwear(PSUN), Triarc(TRY)

Other events that have market-moving potential this week include:
Mon. – CIBC Enterprise Software Conference, Pacific Crest Tech Forum

Tue. – RBC Tech Conference, CIBC Enterprise Software Conference, Canaccord Adams Global Growth Conference, Pacific Crest Tech Forum

Wed. – CSFB Electrical Equip. & Multi-Industry Conference, Canaccord Adams Global Growth Conference, Pacific Crest Tech Forum

Thur. – CSFB Electrical Equip. & Multi-Industry Conference, RBC Tech Conference, Canaccord Adams Global Growth Conference, (BBY) Investor and Analyst Day

Fri. – None of note

BOTTOM LINE: I expect US stocks to finish the week modestly higher on constructive Fed comments, better-than-expected earnings reports, mostly positive economic data, bargain-hunting, lower energy prices and short-covering. My trading indicators are giving bearish signals and the Portfolio is 50% net long heading into the week.

Market Week in Review

S&P 500 1,433.06 -1.78%*

Click here for The Weekly Wrap by Briefing.com.

*5-day % Change

Weekly Scoreboard*

Indices
S&P 500 1,433.06 -1.78%
DJIA 13,181.91 -.63%
NASDAQ 2,511.25 -1.99%
Russell 2000 755.42 -2.88%
Wilshire 5000 14,389.19 -1.87%
Russell 1000 Growth 579.44 -1.25%
Russell 1000 Value 800.71 -2.27%
Morgan Stanley Consumer 700.95 -.21%
Morgan Stanley Cyclical 1,016.40 -.92%
Morgan Stanley Technology 617.81 -2.49%
Transports 4,873.81 -3.28%
Utilities 476.75 +.41%
MSCI Emerging Markets 130.82 -1.65%

Sentiment/Internals
NYSE Cumulative A/D Line 65,800 -2.09%
Bloomberg New Highs-Lows Index -735 -11.03%
Bloomberg Crude Oil % Bulls 16.0 -65.1%
CFTC Oil Large Speculative Longs 264,395 +4.53%
Total Put/Call 1.43 +10.0%
NYSE Arms 3.52 +156.93%
Volatility(VIX) 25.16 +4.1%
ISE Sentiment 103.0 -21.97%
AAII % Bulls 45.88 +3.78%
AAII % Bears 40.0 +8.58%

Futures Spot Prices
Crude Oil 75.48 -2.04%
Reformulated Gasoline 202.90 -2.65%
Natural Gas 6.09 -2.09%
Heating Oil 203.40 -2.87%
Gold 684.40 +1.86%
Base Metals 255.51 +.73%
Copper 347.90 -1.90%

Economy
10-year US Treasury Yield 4.69% -7 basis points
4-Wk MA of Jobless Claims 305,500 -1.1%
Average 30-year Mortgage Rate 6.68% - 1 basis points
Weekly Mortgage Applications 607.10 -.31%
Weekly Retail Sales +2.8%
Nationwide Gas $3.86/gallon -.06/gallon
US Cooling Demand Next 7 Days 27.0% above normal
ECRI Weekly Leading Economic Index 142.50 -.77%
US Dollar Index 80.18 -.95%
CRB Index 318.17 -.45%

Best Performing Style
Large-Cap Growth -1.25%

Worst Performing Style
Small-Cap Value -3.66%

Leading Sectors
Defense +2.16%
Engineering & Construction +1.81%
Gaming +1.29%
Medical Equipment +1.19%
HMOs +.77%

Lagging Sectors
Insurance -4.28%
Coal -5.41%
Biotech -5.42%
Oil Service -6.4%
I-Banks -7.6%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Falling into Final Hour on Bear Stearns Comments

BOTTOM LINE: The Portfolio is lower into the final hour as losses in my Computer longs and Biotech longs are more than offsetting gains in my commodity shorts and emerging market shorts. I added to my (EEM) short and to my (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 50% net long. The overall tone of the market is very negative today as the advance/decline line is substantially lower, every sector is lower and volume is above average. My intraday gauge of investor angst is at a very elevated level. The major averages and breadth are pushing lower on comments from Bear Stearns (BSC) on a conference call. I didn't think they said anything we didn't already know, but the market's reaction to them was severe. Bank of America is defending BSC, saying its valuation is at a 12-year low and that the decline in the shares is overdone. Trading in the broad market has a sloppy, panicky feel to it again. The CBOE total put/call ratio soared to a very elevated 1.76. It has been higher only nine other times in the last decade. The last time it was this high was March 15, a day after the market had already bottomed. Moreover, the 10-day moving average of the CBOE total put/call is a very elevated 1.25. It has only exceeded this level once in history, which was during the March decline. Only time will tell, but I sense that the market has once again priced in the worst-case scenario rather than the most realistic one with regards to the U.S. economy and stocks. I expect US stocks to trade mixed-to-lower into the close from current levels on credit fears and worries regarding overseas shares Sunday night/Monday morning.

Today's Headlines

Bloomberg:
- Crude oil is falling another $.70/bbl. after OPEC said it pumped the most oil in July since September 2004, excluding Angola’s entry in January.
- Colorado State University forecasters trimmed the number of major hurricanes they expect to form in the Atlantic Ocean this year to four from five forecast in May.
- Bear Stearns(BSC), the manager of two hedge funds that collapsed last month, had its credit-rating outlook cut to negative by S&P on concern declining prices for mortgage-backed securities will reduce earnings.
- President Bush signed legislation today that stiffens requirements for screening air and sea cargo and increases anti-terrorism grants to high-risk states and cities.

Wall Street Journal:
- US recalls of toys contaminated by lead paint may point to a Chinese health problem, because lead is still a typical addition to paint in the country.
- Hayman Capital Partners LP and Balestra Capital Partners are among US hedge funds that profited in July by betting on problems in the subprime mortgage market.
- Cardiologists at the Minneapolis Heart Institute have started airlifting heart-attack patients from as far as 210 miles away to provide them with faster treatment than they would get otherwise.
- Bulgari Spa, Cartier, LVMH Moet Hennessy Louis Vuitton SA and other European jewelry and luxury goods companies are boosting sales of diamond engagement rings as demand for them increases in Europe and China.

NY Times:
- Young working women in major US cities are earning more than their male counterpart, citing an analysis of census data.

Dow Jones:
- Kohlberg Kravis Roberts is looking to buy Beyonics Technology’s hard-disk drive business.

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