Weekly Outlook

Click here for the Wall St. Week Ahead by Reuters.

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

There are a few 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. – Weekly retail sales reports, Richmond Fed Manufacturing Index

Wed. – Weekly MBA Mortgage Applications report, weekly EIA energy inventory data, Existing Home Sales

Thur. – Durable Goods Orders, Initial Jobless Claims, New Home Sales

Fri. – Univ. of Mich. Consumer Confidence report

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

Mon. – Halliburton(HAL), Hasbro(HAS), Merck(MRK), Schering-Plough(SGP), American Express(AXP), Apple Inc.(AAPL), Kimberly-Clark(KMB), Royal Carribean(RCL), Texas Instruments(TXN)

Tues. – Biogen Idec(BIIB), Brinker Intl.(EAT), Burlington Northern(BNI), Coach Inc.(COH), Smith International(SII), Whirlpool(WHR), United Parcel Service(UPS), AT&T(T), Altera Corp.(ALTR), Aflac(AFL), Broadcom(BRCM), Centex Corp.(CTX), Chubb Corp.(CB), Illumina Inc.(ILMN), Juniper Networks(JNPR), Microchip Tech(MCHP), Nabors Industries(NBR), Panera Bread(PNRA), Riverbed Tech(RVBD), Amazon.com(AMZN), CDW Corp.(CDWC), Cheesecake Factory(CAKE), Lexmark Intl(LXK), Lockheed Martin(LMT), Novellus Systems(NVLS), TD Ameritrade(AMTD)

Wed. – Autonation(AN), Carlisle Cos(CSL), CME Group(CME), Corning Inc.(GLW), Freeport-McMoRan(FCX), Moody’s Corp.(MCO), Northrop Grumman(NOC), Stanley Works(SWK), Tribune(TRB), Legg Mason(LM), PF Chang’s(PFCB), Boeing(BA), Norfolk Southern(NSC), Express Scipts(ESRX), Business Objects(BOB), Alcon(ACL), Amgen Inc.(AMGN), Monster Worldwide(MNST), Pulte Homes(PHM), Ryland Group(RYL), Akamai Technologies(AKAM), Anheuser-Busch(BUD), Conoco Philips(COP), F5 Networks(FFIV), General Dynamics(GD), Genzyme Corp.(GENZ), Lam Research(LRCX), Linens ‘n Things(LIN), Merrill Lynch(MER), Ryder System(R), Symantec Corp.(SYMC), Taser Intl.(TASR), VMware(VMW)

Thur. – Apache Corp.(APA), Black & Decker(BDK), Comcast Corp.(CMCSA), Goodrich Corp.(GR), Intercontinental Exchange(ICE), L-3 Communications(LLL), Starwood Hotels(HOT), XM Satellite Radio(XMSR), Zimmer Holdings(ZMH), Aetna Inc.(AET), Motorola Inc.(MOT), Raytheon(RTN), Southern Co.(SO), Kla-Tencor(KLAC), Baidu.com(BIDU), Ingram Micro(IM), Kenneth Cole(KCP), McAfee Inc.(MFE), Microsoft Corp.(MSFT), CB Richard Ellis(CBG), Celegene(CELG), Cummins Inc.(CMI), Deckers Outdoor(DECK), Diamond Offshore(DO), Dow Chemical(DOW), EMC Corp.(EMC), Estee Lauder(EL), General Motors(GM), Harrah’s Entertainment(HET), ImClone Sytems(IMCL), MBIA Inc.(MBI), Sybase Inc.(SY), Wendy’s International(WEN)

Fri. – Baker Hughes(BHI), Countrywide Financial(CFC), Tidewater Inc.(TDW), BearingPoint(BE), Fortune Brands(FO), Ingersoll-Rand(IR), ITT Corp.(ITT), Southern Copper(PCU)

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

Mon. – Fed’s Kroszner speaking, (WSO) analyst meeting, (NCI) Investor Day

Tue. – (BSX) analyst meeting, (WMT) analyst meeting

Wed. – (ARTC) analyst meeting, (EW) analyst lunch, (GOOG) analyst day

Thur. – None of note

Fri. – None of note

BOTTOM LINE: I expect US stocks to finish the week modestly higher on better-than-expected earnings reports, bargain-hunting, rising Fed rate cut odds and short-covering. My trading indicators are giving mostly bullish signals and the Portfolio is 75% net long heading into the week.

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

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