Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on growing Mideast unrest, global growth concerns, rising eurozone debt angst, more shorting, profit-taking and emerging market inflation fears. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,337.77 -.18%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,337.77 -.18%
  
• DJIA 12,595.70 -.34%
  
• NASDAQ 2,828.47 +.03%
  
• Russell 2000 835.67 +.28%
  
• Wilshire 5000 14,016.80 -.10%
  
• Russell 1000 Growth 616.62 +.09%
  
• Russell 1000 Value 679.15 -.34%
  
• Morgan Stanley Consumer 794.79 +1.70%
  
• Morgan Stanley Cyclical 1,095.75 -1.24%
• Morgan Stanley Technology 691.52 -.08%
  
• Transports 5,383.91 -1.61%
  
• Utilities 436.91 +1.65%
  
• MSCI Emerging Markets 47.47 -1.42%
  
• Lyxor L/S Equity Long Bias Index 1,064.46 +.18%
  
• Lyxor L/S Equity Variable Bias Index 898.28 +.14%
  
• Lyxor L/S Equity Short Bias Index 597.63 +.13%
  

Sentiment/Internals

• NYSE Cumulative A/D Line 127,581 +2.77%
  
• Bloomberg New Highs-Lows Index 93 +187
  
• Bloomberg Crude Oil % Bulls 26.0 -21.21%
  
• CFTC Oil Net Speculative Position 211,514 -13.43%
  
• CFTC Oil Total Open Interest 1,653,799 +1.81%
  
• Total Put/Call .93 -4.12%
  
• OEX Put/Call 1.87 +3.89%
  
• ISE Sentiment 88.0 +15.79%
  
• NYSE Arms 1.72 +97.70%
  
• Volatility(VIX) 17.07 -7.22%
• G7 Currency Volatility (VXY) 11.80 +2.43%
  
• Smart Money Flow Index 10,468.90 +.62%
  
• Money Mkt Mutual Fund Assets $2.751 Trillion +.90%
  
• AAII % Bulls 30.77 -13.23%
  
• AAII % Bears 35.50 +11.39%

Futures Spot Prices

• CRB Index 338.53 +.35%
  
• Crude Oil 99.65 +1.62%
  
• Reformulated Gasoline 307.44 -1.62%
  
• Natural Gas 4.25 -.58%
  
• Heating Oil 294.22 +2.56%
  
• Gold 1,493.60 -.11%
  
• Bloomberg Base Metals 251.88 +1.41%
  
• Copper 398.35 +.36%
  
• US No. 1 Heavy Melt Scrap Steel 410.0 USD/Ton unch.
  
• China Hot Rolled Domestic Steel Sheet 4,874 Yuan/Ton -.61%
  
• UBS-Bloomberg Agriculture 1,580.61 -.38%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate 6.4% -30 basis points
  
• S&P 500 EPS Estimates 1 Year Mean 94.65 +.41%
  
• Citi US Economic Surprise Index -34.4 -3.1 points
  
• Fed Fund Futures imply 42.0% chance of no change, 58.0% chance of 25 basis point cut on 6/22
• US Dollar Index 75.71 +1.16%
  
• Yield Curve 264.0 +4 basis points
  
• 10-Year US Treasury Yield 3.17% +2 basis points
  
• Federal Reserve's Balance Sheet $2.729 Trillion +.96%
  
• U.S. Sovereign Debt Credit Default Swap 42.75 -1.49%
• California Municipal Debt Credit Default Swap 175.20 -3.70%
  
• Western Europe Sovereign Debt Credit Default Swap Index 179.25 -5.45%
• Emerging Markets Sovereign Debt CDS Index 154.54 +1.75%
• Saudi Sovereign Debt Credit Default Swap 115.12 -1.65%
• Iraqi 2028 Government Bonds 92.24 +.10%
• 10-Year TIPS Spread 2.39% -8 basis points
  
• TED Spread 24.0 -2 basis points
  
• N. America Investment Grade Credit Default Swap Index 88.24 -.82%
  
• Euro Financial Sector Credit Default Swap Index 92.25 +5.29%
  
• Emerging Markets Credit Default Swap Index 207.08 +.11%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 158.0 unch.
  
• M1 Money Supply $1.937 Trillion +1.05%
  
• Business Loans 636.10 -.17%
  
• 4-Week Moving Average of Jobless Claims 436,800 +1.0%
  
• Continuing Claims Unemployment Rate 3.0% unch.
  
• Average 30-Year Mortgage Rate 4.63% -8 basis points
  
• Weekly Mortgage Applications 496,300 +8.2%
  
• Bloomberg Consumer Comfort -46.90 -.7 point
  
• Weekly Retail Sales +4.70% -40 basis points
  
• Nationwide Gas $3.98/gallon unch.
  
• U.S. Heating Demand Next 7 Days 17.0% above normal
• Baltic Dry Index 1,320 +.46%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 37.50 unch.
  
• Rail Freight Carloads 232,178 +1.09%
  

Best Performing Style

• Mid-Cap Growth +.68%

Worst Performing Style

• Large-Cap Value -.34%

Leading Sectors

• Education +4.97%
• Retail +2.46%
  
• Biotech +2.21%
• Gaming +2.16%
• Restaurants +2.10%

Lagging Sectors

• Road & Rail -2.54%
• Steel -2.85%
• Agriculture -2.92%
  
• Gold & Silver -3.43%
  
• Coal -5.60%

Weekly High-Volume Stock Gainers (29)

• SREV, MED, ROVI, LXU, PRO, ALKS, SAPE, ELON, PTRY, DTG, ROSE, GCOM, FOSL, PLOW, SYY, TYPE, FEIC, NUAN, NPO, PEGA, DF, RST, SNHY, CVLT, IPAR, WTW, VSH, MG and ZEUS
  

Weekly High-Volume Stock Losers (14)

• XEC, WRC, BID, HRB, LINC, IILG, PANL, MFLX, CPTS, PETS, ZOLT, USNA, IL and STEC
  

Weekly Charts
ETFs

• High-Volume Gainers
• High-Volume Losers

Stocks

• High-Volume Gainers
• High-Volume Losers
  

*5-Day Change

Stocks Falling into Final Hour on Global Growth Concerns, Emerging Market Inflation Fears, Financial Sector Pessimism, Eurozone Debt Worries

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Almost Every Sector Declining
  
• Volume: Around Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 17.14 +6.92%
  
• ISE Sentiment Index 88.0 -19.27%
  
• Total Put/Call .95 +13.10%
  
• NYSE Arms 2.09 +61.31%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 88.24 -.80%
  
• European Financial Sector CDS Index 93.17 +.23%
  
• Western Europe Sovereign Debt CDS Index 179.25 -2.45%
  
• Emerging Market CDS Index 207.63 +1.0%
  
• 2-Year Swap Spread 19.0 +1 bp
  
• TED Spread 24.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .02% unch.
  
• Yield Curve 261.0 unch.
  
• China Import Iron Ore Spot $178.80/Metric Tonne -.11%
  
• Citi US Economic Surprise Index -34.40 +.9 point
  
• 10-Year TIPS Spread 2.37% -7 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -53 open in Japan
• DAX Futures: Indicating -14 open in Germany

Portfolio:

• Slightly Lower: On losses in my Biotech, Medical and Tech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered some of them
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades near session lows despite falling food/energy prices, a strong US dollar, mostly positive economic data and falling long-term rates. On the positive side, HMO, Restaurant and Gaming shares are rising on the day. The Belgium sovereign cds is falling -3.12% to 135.22 bps, the Ireland sovereign cds is falling -2.06% to 630.57 bps and the Spain sovereign cds is declining -2.66% to 235.83 bps. The US dollar continues to trade very well, which is a short-term negative and a large long-term positive. Gold is down -.61%, Lumber is rising +1.1%, copper is gaining +.86% and the UBS-Bloomberg Ag Spot Index is down -.75%. The 10-year TIPS spread has broken down technically. The 10-year yield is falling -4 bps to 3.19%. On the negative side, Airline, Road & Rail, Construction, Hospital, I-Banking, Bank, Paper, Steel, Alt Energy and Coal shares are under significant pressure, falling more than -1.75%. Small-cap and cyclical shares are underperforming again. (XLF) has been heavy throughout the day. Tech and transport shares are also relatively weak. The US price for a gallon of gas is unch. today at $3.98/gallon. It is up .84/gallon in 86 days. Oil is rising +.3%. The Emerging Markets Sovereign CDS Index is gaining +1.76% to 154.54 bps, the Russia sovereign cds is rising +1.32% to 136.14 bps, the Japan sovereign cds is gaining +2.48% to 82.5 bps and the US Muni CDS Index is rising +2.9% to 124.34 bps. The Nikkei looks like it is rolling over again. Spain's Ibex 35 looks like a technical breakdown is in the offing. Moreover, Brazil's Bovespa continues to trade very poorly, falling another -1.1% today and is now down -8.7% for the year. A number of key US stocks continue to trade poorly, as well. Commodities continue to trade as if further downside is in store. The last time the 10-year TIPS spread broke down technically, which is a longer-term positive, the S&P 500 began a -15% correction in early May 2010. I expect US stocks to trade mixed-to-lower into the close from current levels on technical selling, more shorting, eurozone debt worries, rising Mideast unrest, rising energy prices, global growth concerns, emerging market inflation fears and profit-taking.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-1.12%)

Sector Underperformers:

• 1) Coal -3.02% 2) Steel -2.37% 3) Road & Rail -2.27%

Stocks Falling on Unusual Volume:

• CA, UBS, TNE, RDS/A, E, RMBS, GNET, YHOO, BODY , SHPGY, SINA, VELT, NVDA, SNDA, SOHU, TLEO, BIDU, KFRC, REDF, FMCN, IACI, LFUS, LQDT, RDEA, SHG, MRX, TKC, SHOR, JNS, EPB, BTU, ATK and ISTA
  

Stocks With Unusual Put Option Activity:

• 1) RMBS 2) LOW 3) TYC 4) A 5) SINA
  

Stocks With Most Negative News Mentions:

• 1) DIS 2) ANR 3) BBBY 4) GSIC 5) GS
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Today's Headlines

Bloomberg:

• Europe's Donor Nations Demand Tougher Greece Measures to Justify Extra Aid. Europe’s donor nations said Greece will need to meet tougher conditions than last year to win new aid that would avert a debt restructuring and cover almost 30 billion euros ($42 billion) of financing needs next year. Euro-region finance ministers will meet in Brussels on May 16 to discuss more support for Greece beyond the 110 billion- euro rescue granted a year ago, Luxembourg’s Jean-Claude Juncker, who leads the group, said today in Mainz, Germany. The yield on Greece’s 10-year bond has more than doubled since the bailout to 15.6 percent, complicating its return to market.
• Wholesale Prices Rise, Led by Food, Energy. Wholesale costs in the U.S. rose more than forecast in April, led by higher prices for food and fuel. The 0.8 percent increase in the producer-price index compares with the 0.6 percent median estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. The core measure, which excludes volatile food and energy costs, climbed 0.3 percent, more than projected. Compared with a year earlier, companies paid 6.8 percent more for goods last month, the most since September 2008, after a 5.8 percent rise in March. Core wholesale prices climbed 2.1 percent in the 12 months ended in April, the most since August 2009. Expenses for intermediate goods rose 1.3 percent from the prior month, while prices of crude goods increased 4 percent.
• Retail Sales in U.S. Rise on Fuel, Food. Retail sales rose in April at the slowest pace in nine months and consumer sentiment declined last week, highlighting the risks that rising gasoline prices pose for the U.S. economy. Purchases increased 0.5 percent, the smallest gain since July, after a 0.9 percent March advance that was more than double the previous estimate, Commerce Department figures showed today in Washington.
• Consumer Comfort Declines as Gas Prices Climb. Consumer confidence fell to a six- week low as the costliest gasoline in almost three years worsened Americans’ perceptions of their finances. The Bloomberg Consumer Comfort Index dropped to minus 46.9 in the period to May 8, the worst reading since March, from the prior week’s minus 46.2. Across regions, sentiment suffered the most in the West, where fuel prices exceed the national average. Households paid almost $4 a gallon at the pump last week, the most since July 2008.
• Crude Oil Advances as U.S. Equities Increase, Dollar Declines Against Euro. Crude oil rose as U.S. equities increased and the dollar dropped against the euro, bolstering the appeal of raw materials to investors. Crude oil for June delivery advanced $1.02, or 1 percent, to $99.23 a barrel at 1:23 p.m. on the New York Mercantile Exchange. The contract dropped as much as 3 percent to $95.25 today. Prices are up 31 percent from a year ago.
• U.S. Mortgage Rates Fall to Five-Month Low. The average rate for a 30-year loan dropped to 4.63 percent in the week ended today from 4.71 percent, according to Freddie Mac. That is the lowest since the week ended Dec. 9. The 15-year rate slipped to 3.82 percent from 3.89 percent a week ago, the McLean, Virginia-based mortgage-finance company said.
• Japan Reactor-Core Damage Worse Than Thought. Tokyo Electric Power Co. said one of the reactor cores at its stricken Fukushima Dai-Ichi nuclear plant is more seriously damaged than previously thought, setting back the utility’s plan to resolve the crisis. Fuel rods in the core of the No. 1 reactor are fully exposed, with the water level 1 meter (3.3 feet) below the base of the fuel assembly, Junichi Matsumoto, a general manager at the utility known as Tepco, told reporters at a briefing in Tokyo. Melted fuel has dropped to the bottom of the pressure vessel and is still being cooled, Matsumoto said. “What this means is this is probably going to be a much more difficult cleanup than they originally planned for,” said Paul Padley, a particle physicist at Rice University in Houston. The government and Tepco “have consistently appeared to be underestimating the severity of the situation.”
• Oil, Agriculture ETFs Lure Biggest Investments. The U.S. Oil Fund and Market Vectors Agribusiness ETF attracted more money than any other U.S. exchange-traded fund in the past week following the biggest retreat in commodity prices in more than two years.

Wall Street Journal:

• Syrian Forces Detail Professionals. Syrian security forces conducted detentions across at least six cities Thursday that activists said appeared to focus on not only opposition activists but lawyers, doctors, intellectuals and educated professionals.
  
• AIDS Study Makes Prevention Breakthrough. Treating AIDS patients with antiretroviral drugs makes them strikingly less infectious, researchers said Thursday, in a landmark finding that is likely to reinvigorate efforts to slow the pandemic. The results were so overwhelming that an independent panel monitoring the research recommended the results be released four years before the large, multi-country study had been scheduled to end.
• Indian Real-Estate Firms Turn to Non Banks for Capital. Real-estate firms are approaching non-banking finance companies for loans to pay for land, construction and pre-development of projects, now that most banks have shut their doors on this sector.
  
• Ratings Firms Notch Legal Victory. Ratings firms won another victory against legal claims that they should be held responsible for billions of dollars in losses suffered by investors during the financial crisis. A three-judge panel of the U.S. Court of Appeals for the Second Circuit ruled that Moody's Corp., Standard & Poor's, and Fitch Ratings can't be held liable for their ratings of mortgage-backed securities.
• Web Porn Was Error, Sears(SHLD) Says. Sears Holdings Corp. has apologized to customers after a religious group discovered that pornographic movies could be purchased by minors and others through the Sears.com website.
  

MarketWatch:

• Oil Rises Back Above $100; IEA Trims Demand Forecast. Oil had fallen in European trading after the International Energy Agency, in its monthly oil report released Thursday, said preliminary March data suggest near-zero annual growth in global oil demand for the first time since the summer of 2009. “While March estimates are probably distorted by exceptional events in Japan and the timing of Easter holidays, nonetheless $4-a-gallon gasoline is likely to yield an anemic U.S. driving season,” the IEA said. “This is the main change to our demand forecast — a weaker 2011 profile in North America.”
• Kohl's(KSS) Profit Rises, Outlook Cheers Investors.
• US Treasury In No Big Hurry To Sell GM(GM) Shares.
  

Business Insider:

• 11 Weird Rumors Going Around About Goldman Sachs(GS).
• Howard Schultz: The Commodity Rally Is Fake. He said it several month ago he’s saying it again – the commodity rally is all speculators and has nothing to do with fundamentals.
• More Bove on Goldman(GS): This Is The Andrew Mellon Story All Over Again.
• The Clusterstock 50: The 50 Most Valuable Players On Wall Street.
• Jim O'Neill: China is Slowing More Than People Realize - And That's Bad News for Commodities.
  

Zero Hedge:

• Chinese Frauds Account for 80% of Nasdaq Permanent Trading Halts.

Steelguru:

• U.S. is gaining popularity with European buyers, citing a report from Montel, an energy news service. Europe imported about 29.8 million metric tons from the U.S. last year, up more than 20% compared with 2009. That made the U.S. the second-biggest coal supplier to Europe after Russia, it added.

The Daily Beast:

• Facebook Busted in Clumsy Smear on Google(GOOG). The social network secretly hired a PR firm to plant negative stories about the search giant, The Daily Beast's Dan Lyons reveals—a caper that is blowing up in their face, and escalating their war.

Reuters:

• US Has Spent About $750 Million on Libya Conflict - Gates.
• IMF Warns Latin America's Boom Could End in Crisis. Nicolas Eyzaguirre, the IMF's director for the western hemisphere, said that Latin America's economic fundamentals appear to be in good shape. Yet he urged policymakers to take steps to keep their economies from overheating by trimming public spending, maintaining sound monetary policy and setting aside as much of the windfall from the current boom as possible.

Xinhua:

• Beijing police may buy drone aircraft at an anti-terrorism equipment show in the city this month, citing Jia Shengwen, a Beijing Municipal Public Security Bureau official. The police will use the drones for aerial surveillance, to "monitor trafffic and accidents, and to help with rescue operations."
• China's northern city of Shijiazhuang is planning to confiscate illegally build homes and turn them into housing for low-income residents, citing the local government. Residential buildings built without the approval of construction authorities and those that violate city plans will be seized, with ownership transferred to the government.
  

Securities Times:

• Beijing housing-sales volume fell 32% in the first four months of 2011 from a year earlier, citing the city statistics bureau.