Weekly Outlook

Click here for Wall St. Week Ahead by Reuters.

Click here for US Equity Preview for Monday by Bloomberg.

There are a number of economic reports of note and just a few significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. – Chicago Fed Nat Activity Index, Dallas Fed Manufacturing Activity Index

Tues. – Weekly Retail Sales reports, S&P/CaseShiller Home Price Index, Chicago Purchasing Manager, Consumer Confidence, NAPM-Milwaukee

Wed. – Weekly EIA energy inventory report, weekly MBA mortgage applications report, Challenger Job Cuts, ADP Employment Change, ISM Manufacturing, ISM Prices, Paid, Construction Spending, Pending Home Sales, Total Vehicle Sales

Thur. – Change in Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings, Initial Jobless Claims, Factory Orders

Fri. – US Markets Closed

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

Mon. – Apollo Group(APOL), H&R Block(HRB)

Tues. – Schnitzer Steel(SCHN)

Wed. – Constellation Brands(STZ), General Mills(GIS)

Thur. – Acuity Brands(AYI)

Fri. – US Markets Closed

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

Mon. – The Fed’s Rosengren speaking

Tue. – The Fed’s Bullard speaking, Fed’s Hoenig speaking, Fed’s Yellen speaking, Goldman Sachs Data Center Conference, (TDG) analyst meeting, (BBBY) shareholders meeting, (PBH) shareholders meeting

Wed. – The Fed’s Evans speaking

Thur. – (DDUP) shareholders meeting

Fri. – US Markets Closed

BOTTOM LINE: I expect US stocks to finish the week modestly higher on diminishing financial sector pessimism, short-covering, diminishing credit market angst, quarter-end window dressing, investment manager performance anxiety, lower long-term rates and declining energy prices. My trading indicators are giving mixed signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 918.90 -.25%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices
S&P 500 918.90 -.25%
DJIA 8,438.39 -1.19%
NASDAQ 1,838.22 +.59%
Russell 2000 513.22 +.10%
Wilshire 5000 9,335.23 -.14%
Russell 1000 Growth 410.30 -.04%
Russell 1000 Value 464.0 -.32%
Morgan Stanley Consumer 558.35 -.10%
Morgan Stanley Cyclical 552.53 -.10%
Morgan Stanley Technology 451.81 +.20%
Transports 3,263.07 +1.35%
Utilities 355.79 +1.18%
MSCI Emerging Markets 32.29 +1.25%

Sentiment/Internals
NYSE Cumulative A/D Line 34,397 +3.70%
Bloomberg New Highs-Lows Index +71 +273.17%
Bloomberg Crude Oil % Bulls 21.0 +31.2%
CFTC Oil Large Speculative Longs 201,463 +.05%
Total Put/Call .81 -8.99%
OEX Put/Call .77 -22.22%
ISE Sentiment 98.0 -16.24%
NYSE Arms 1.37 +47.31%
Volatility(VIX) 25.93 -7.36%
G7 Currency Volatility (VXY) 14.31 -.21%
Smart Money Flow Index 8,129.74 -1.10%
AAII % Bulls 28.0 -15.99%
AAII % Bears 48.80 +5.10%

Futures Spot Prices
Crude Oil 69.16 -1.23%
Reformulated Gasoline 187.41 -2.64%
Natural Gas 4.10 -2.75%
Heating Oil 173.03 -3.47%
Gold 941.0 +.70%
Base Metals 153.41 +1.43%
Copper 230.90 +2.78%
Agriculture 315.36 -1.36%

Economy
10-year US Treasury Yield 3.54% -24 basis points

U.S. Sovereign Debt Credit Default Swap 42.0 -4.54%

10-year TIPS Spread 1.69% -24 basis points
TED Spread 43.0 -1 basis point
N. Amer. Investment Grade Credit Default Swap Index 141.20 +1.68%
Emerging Markets Credit Default Swap Index 409.68 -.29%
Citi US Economic Surprise Index +51.90 -4.77%
Fed Fund Futures imply 88.2% chance of no change, 11.8% chance of 25 basis point cut on 8/12
Iraqi 2028 Govt Bonds 64.53 -2.22%
4-Wk MA of Jobless Claims 617,300 +.10%
Average 30-year Mortgage Rate 5.42% +4 basis points
Weekly Mortgage Applications 548,200 +6.57%
Weekly Retail Sales -4.50%
Nationwide Gas $2.66/gallon -.03/gallon
US Cooling Demand Next 7 Days 10.0% above normal
ECRI Weekly Leading Economic Index 117.60 +.51%
US Dollar Index 79.88 -.48%
Baltic Dry Index 3,703 -9.02%
CRB Index 251.31 -.59%

Best Performing Style
Small-cap Growth +.22%

Worst Performing Style
Large-cap Value -.32%

Leading Sectors
Telecom +3.12%
Computer Hardware +2.94%
Education +2.66%
Biotech +2.36%
Medical Equipment +2.30%

Lagging Sectors
Oil Service -2.40%
Banks -2.44%
Defense -3.78%
Coal -4.26%
Oil Tankers -4.72%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Lower on Profit-Taking, Tax Increase Worries

BOTTOM LINE: The Portfolio is higher on gains in my Technology longs, Medical longs, Financial longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is slightly higher, sector performance is mixed and volume is about average. Investor anxiety is very high. Today’s overall market action is mildly bullish. The VIX is falling .04% and is high at 26.34. The ISE Sentiment Index is low at 98.0 and the total put/call is about average at .80. Finally, the NYSE Arms has been running very high most of the day, hitting 1.91 at its intraday peak, and is currently 1.40. The Euro Financial Sector Credit Default Swap Index is falling .50% today to 113.67 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is rising .31% to 141.20 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling 4.35% to 42 basis points. The TED spread is now down 422 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is plunging 9.35% to 35.75 basis points. The Libor-OIS spread is rising .33% to 38 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 8 basis points to 1.69%, which is down 95 basis points since July 7th. The 3-month T-Bill is yielding .18%, which is up 2 basis points today. Market-leading stocks are substantially outperforming the broad market today. Tech stocks continue to display strong relative strength. As I said at the beginning of the year, I expect this trend to continue over the intermediate-term. It is noteworthy that oil is down today despite dollar weakness, Iran concerns and Nigerian pipeline attacks. The commodity appears to be rolling over again. It is a large positive to see long-term rates and inflation expectations down again today despite better-than-expected economic data. I plan to maintain my market exposure into the close, barring any significant changes. Nikkei futures indicate an +43 open in Japan and DAX futures indicate an +14 open in Germany on Monday. I expect US stocks to trade modestly higher into the close from current levels on lower long-term rates, short-covering, diminishing financial sector pessimism, declining credit market angst, lower energy prices, quarter-end window dressing, less economic angst and investment manager performance anxiety.

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In Play

Bull Radar

Style Outperformer:
Small-cap Growth (-.16%)

Sector Outperformers:
Computer Hardware (+2.01%), Steel (+1.46%) and I-Banks (+.36%)

Stocks Rising on Unusual Volume:
HDB, AKS, STLD, LOW, SOHU, AMLN, NOVN, AVAV, STO, BWEN, PALM, RBCN, SMSC, AIPC, KIRK, FUQI, NWPX, LLTC, COMV, PWRD, MPWR, SPWRA, SNDA, STRL, LOGI, FFIV, TNDM, ASR, CMN, MR, AMN and BSX

Stocks With Unusual Call Option Activity:
1) EDU 2) ACN 3) NKE 4) TWX 5) CTXS

Links of Interest

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