Market Week in Review

S&P 500 1,500.63 -3.92%*

Click here for the Weekly Wrap by Briefing.com.

*5-day % Change

Weekly Scoreboard*

Indices
S&P 500 1,500.63 -3.92%
DJIA 13,522.02 -4.05%
NASDAQ 2,725.16 -2.87%
Russell 2000 798.79 -5.04%
Wilshire 5000 15,105.35 -3.91%
Russell 1000 Growth 614.54 -3.32%
Russell 1000 Value 829.92 -4.46%
Morgan Stanley Consumer 728.55 -3.42%
Morgan Stanley Cyclical 1,038.62 -4.62%
Morgan Stanley Technology 665.26 -3.43%
Transports 4,801.36 -2.82%
Utilities 498.66 -3.99%
MSCI Emerging Markets 154.18 -2.57%

Sentiment/Internals
NYSE Cumulative A/D Line 68,204 -7.01%
Bloomberg New Highs-Lows Index -226 -271.2%
CFTC Oil Large Speculative Longs 251,001 +1.5%
Bloomberg Crude Oil % Bulls 13.8 -39.7%
Total Put/Call 1.13 +48.68%
NYSE Arms 3.52 +255.55%
Volatility(VIX) 22.96 +29.50%
ISE Sentiment 101.0 -38.41%
AAII % Bulls 41.96 -23.21%
AAII % Bears 35.71 +38.57%

Futures Spot Prices
Crude Oil 88.60 +5.84%
Reformulated Gasoline 216.87 +3.82%
Natural Gas 7.04 +.84%
Heating Oil 233.06 +3.67%
Gold 768.40 +1.95%
Base Metals 252.66 -.59%
Copper 355.15 -2.76%

Economy
10-year US Treasury Yield 4.40% -29 basis points
4-Wk MA of Jobless Claims 316,500 +1.9%
Average 30-year Mortgage Rate 6.40% unch.
Weekly Mortgage Applications 656.30 +.66%
Weekly Retail Sales +2.6%
Nationwide Gas $2.81/gallon +.01/gallon
US Cooling Demand Next 7 Days 21.0% above normal
ECRI Weekly Leading Economic Index 139.90 -.36%
US Dollar Index 77.41 -1.04%
CRB Index 340.1 +1.98%

Best Performing Style
Large-Cap Growth -3.32%

Worst Performing Style
Small-cap Value -5.90%

Leading Sectors
Steel +.51%
Road & Rail -.09%
Computer Hardware -.37%
HMOs -.65%
Restaurants -1.20%

Lagging Sectors
Insurance 6.34%
Oil Service -6.74%
Retail -6.75%
Homebuilders -7.12%
I-Banks -7.64%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Lower into Final Hour on Economic Worries

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Biotech longs, Semi longs and Retail longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is very negative today as the advance/decline line is substantially lower, every sector is declining and volume is above average. Money market funds reported net cash inflows totaling $20.1 billion, bringing the total net assets invested in the sector to a record $2.87 trillion. Potential bull firepower continues to amass on the sidelines even as the DJIA just hit a new record just one week ago. The dollar-based three-month Libor rate is falling again today and is down 58 basis points from September highs. This is the lowest it has been since May 2006, which is a big positive. The 10-year yield is falling another 10 basis points, to 4.39%. Moreover, the odds of another rate cut at the upcoming month-end meeting have risen to 76% from 70% yesterday and 32% one week ago. It is interesting to note, however, that the odds of a recession beginning next year have plunged on Intrade.com to 31% from 59% in September. There has been a lot of talk once again about recession, especially from some CEOs. I have to wonder though why insider selling is at levels more associated with a meaningful market bottom rather than a top if a recession is imminent. Insiders were selling in droves right before economic growth began plunging in 2000. The U.S. economy had been booming over the last few years and is in the process of slowing to modestly below-trend rates. In my opinion, many CEOs want the Fed to cut much more to get growth back to booming levels. Thus, the constant talk of recession. I think it is wise to look at what insiders are doing rather than what they are saying. I still believe a booming global economy combined with the drag from U.S. housing will produce modestly below-trend growth in the U.S. of around 2% to 2.5% over the intermediate term, which is the perfect backdrop for growth stocks. Oil's $.87 per barrel decline is also noteworthy heading into a weekend with the Turkey/Iraq situation still uncertain. The gasoline crack spread is plunging to a very low $1.56 per barrel, and I still think the refiners make good shorts at current levels. As well, Schlumberger (SLB), the favorite stock in the loved oil service sector, had a good report and is getting pounded. Cyclicals are underperforming today, falling 2.95%. As I said at the beginning of the year, I still believe the most economically sensitive companies will underperform over the intermediate term despite their perceived low valuations. It is interesting to note that the stocks that I consider the "growth" leaders are either higher or down much less than the averages today. They continue to lead during market advances and decline less during pullbacks. Talk of crashes and recessions is spiking once again today. That is a big positive as this usually coincides with market bottoms. In the current U.S. "negativity bubble," this type of talk seems to come sooner and sooner after every surge higher. This is likely the result of the explosion in low/negative correlation U.S. stock strategies since the bursting of the bubble in 2000. Many of these funds badly need a bear market to survive after the S&P 500's recent 110% move higher during what was supposed to be a secular bear. Maybe this is the start of a major bear market, but the odds are substantially against it. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting, rising fed rate cut odds, falling energy prices and short-covering.

Economic Releases

- None of note

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Friday Watch

Late-Night Headlines
Bloomberg:
- The International Monetary Fund(IMF) needs to shore up its finances or risk undermining its credibility with the countries it’s meant to help, according to credit rating agency S&P.

Wall Street Journal:
- Executives of Citigroup(C) say the giant bank has secured funding through year end for the $80 billion in structured investment vehicles it manages after selling $20 billion in assets since the midsummer credit crunch.

MarketWatch.com:
- Google wields its murky mobile plans in plain sight.

CNNMoney.com:
- Private equity firms may have lost their line of cheap financing, but don’t count them out yet.

Reuters:
- Web search leader Google Inc.(GOOG) reported on Thursday a 46% rise in profits that topped analysts’ expectations, as revenues grew 57% and comfortably outpaced expense growth, reassuring investors.

USA Today.com:
- Wal-Mart whacks prices to get holiday shoppers going.

Financial Times:
- Microsoft’s Xbox 360 recorded its best month of the year in September, with 528,000 consoles sold in the US on the back of the success of its Halo 3 video game, NPD, the market research firm, reported on Thursday.

Globe and Mail:
- Global bull market has legs, BCA’s Barnes says.

Economic Daily News:
- Advanced Semiconductor Engineering Inc., the world’s biggest chip packager and tester, expects sale to rise at least 20% next year, outperforming the global semiconductor industry’s 10% growth, citing Chairman Chang.

Nikkei:
- Japan’s government will lower its evaluation of consumer spending for the first time in 11 months in its October economic report.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (FCS), target $26.
- Reiterated Buy on (DST), target raised to $106.
- Reiterated Buy on (HSY), target $51.

Night Trading
Asian Indices are -.75% to +.25% on average.
S&P 500 futures -.32%.
NASDAQ 100 futures -.39%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (MMM)/1.28
- (AT)/.75
- (ACI)/.28
- (BSX)/.09
- (HOG)/1.05
- (HON)/.82
- (MCD)/.83
- (OSTK)/-.37
- (SLB)/1.06
- (FITB)/.69
- (WB)/1.04
- (XRX)/.26
- (CAT)/1.42

Upcoming Splits
- (DCR) 3-for-1
- (UCR) 3-for-1

Economic Releases
- None of note

Other Potential Market Movers
- The Fed’s Bernanke speaking and the Fed’s Poole speaking could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.