Weekly Outlook

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 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 1,333.27 -.34%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,333.27 -.34%
  
• DJIA 12,512.04 -.67%
  
• NASDAQ 2,803.32 -.89%
  
• Russell 2000 829.06 -.79%
  
• Wilshire 5000 13,965.90 -.36%
  
• Russell 1000 Growth 613.20 -.55%
  
• Russell 1000 Value 678.42 -.11%
  
• Morgan Stanley Consumer 795.23 +.05%
  
• Morgan Stanley Cyclical 1,078.41 -1.58%
• Morgan Stanley Technology 685.32 -.90%
  
• Transports 5,448.76 +1.21%
  
• Utilities 439.82 +.67%
  
• MSCI Emerging Markets 47.30 -.36%
  
• Lyxor L/S Equity Long Bias Index 1,059.85 -1.57%
  
• Lyxor L/S Equity Variable Bias Index 896.53 -1.39%
  
• Lyxor L/S Equity Short Bias Index 608.06 +1.07%
  

Sentiment/Internals

• NYSE Cumulative A/D Line 126,011 -.20%
  
• Bloomberg New Highs-Lows Index -18 -111
  
• Bloomberg Crude Oil % Bulls 42.0 +61.54%
  
• CFTC Oil Net Speculative Position 203,079 -3.99%
  
• CFTC Oil Total Open Interest 1,582,868 -4.29%
  
• Total Put/Call 1.03 +10.75%
  
• OEX Put/Call 1.55 -17.11%
  
• ISE Sentiment 86.0 -2.27%
  
• NYSE Arms 1.46 -15.12%
  
• Volatility(VIX) 17.43 +2.11%
• G7 Currency Volatility (VXY) 11.40 -2.16%
  
• Smart Money Flow Index 10,466.36 -.02%
  
• Money Mkt Mutual Fund Assets $2.738 Trillion -.50%
  
• AAII % Bulls 26.69 -13.26%
  
• AAII % Bears 41.29 +16.31%

Futures Spot Prices

• CRB Index 341.56 +.89%
  
• Crude Oil 100.10 +.28%
  
• Reformulated Gasoline 293.58 -4.62%
  
• Natural Gas 4.23 -.66%
  
• Heating Oil 291.83 -.77%
  
• Gold 1,508.90 +.98%
  
• Bloomberg Base Metals 248.32 -1.41%
  
• Copper 412.15 +2.91%
  
• US No. 1 Heavy Melt Scrap Steel 410.0 USD/Ton unch.
  
• China Hot Rolled Domestic Steel Sheet 4,873 Yuan/Ton -.02%
  
• UBS-Bloomberg Agriculture 1,643.03 +3.95%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate 5.3% -110 basis points
  
• S&P 500 EPS Estimates 1 Year Mean 95.61 +1.01%
  
• Citi US Economic Surprise Index -49.10 -14.7 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 75.42 -.42%
  
• Yield Curve 263.0 +1 basis point
  
• 10-Year US Treasury Yield 3.15% -2 basis points
  
• Federal Reserve's Balance Sheet $2.742 Trillion +.50%
  
• U.S. Sovereign Debt Credit Default Swap 50.89 +19.04%
• California Municipal Debt Credit Default Swap 163.23 -6.83%
  
• Western Europe Sovereign Debt Credit Default Swap Index 186.50 +4.04%
• Emerging Markets Sovereign Debt CDS Index 153.87 -.43%
• Saudi Sovereign Debt Credit Default Swap 103.25 -10.31%
• Iraqi 2028 Government Bonds 92.91 +.24%
• 10-Year TIPS Spread 2.30% -9 basis points
  
• TED Spread 22.0 -2 basis points
  
• N. America Investment Grade Credit Default Swap Index 90.0 +1.99%
  
• Euro Financial Sector Credit Default Swap Index 100.23 +8.65%
  
• Emerging Markets Credit Default Swap Index 207.02 -.03%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 158.0 unch.
  
• M1 Money Supply $1.915 Trillion -1.16%
  
• Business Loans 639.50 +.53%
  
• 4-Week Moving Average of Jobless Claims 439,000 +.3%
  
• Continuing Claims Unemployment Rate 3.0% unch.
  
• Average 30-Year Mortgage Rate 4.61% -2 basis points
  
• Weekly Mortgage Applications 534.80 +7.76%
  
• Bloomberg Consumer Comfort -49.4 -2.5 points
  
• Weekly Retail Sales +4.30% -40 basis points
  
• Nationwide Gas $3.89/gallon -.09/gallon
  
• U.S. Heating Demand Next 7 Days 25.0% below normal
• Baltic Dry Index 1,349 +3.29%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 37.50 unch.
  
• Rail Freight Carloads 231,875 -.13%
  

Best Performing Style

• Mid-Cap Value +.25%

Worst Performing Style

• Small-Cap Growth -.88%

Leading Sectors

• Airlines +2.30%
• Gold & Silver +2.06%
  
• Tobacco +2.04%
• Road & Rail +1.85%
• Restaurants +1.79%

Lagging Sectors

• Computer Hardware -1.92%
• Retail -1.92%
• Networking -2.37%
  
• Alternative Energy -2.42%
  
• Education -4.20%

Weekly High-Volume Stock Gainers (7)

• MAKO, MDMD, DAR, DDS, TTWO, ENOC and FLT
  

Weekly High-Volume Stock Losers (17)

• PLOW, SEMG, CHS, BRC, WSM, AAP, KELYA, WRLD, DKS, BKE, HPQ, CXW, NYX, SPLS, CTRN, RMBS and FRP
  

Weekly Charts
ETFs

• High-Volume Gainers
• High-Volume Losers

Stocks

• High-Volume Gainers
• High-Volume Losers
  

*5-Day Change

Stocks Lower into Final Hour on Rising Eurozone Debt Worries, Emerging Markets Inflation Fears, Mideast Unrest, Rising Food/Energy Prices

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 16.68 +7.41%
  
• ISE Sentiment Index 89.0 -21.24%
  
• Total Put/Call 1.03 +5.1%
  
• NYSE Arms 1.20 -.04%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 90.0 +1.42%
  
• European Financial Sector CDS Index 99.25 +2.93%
  
• Western Europe Sovereign Debt CDS Index 186.50 +3.32%
  
• Emerging Market CDS Index 207.74 +1.67%
  
• 2-Year Swap Spread 19.0 unch.
  
• TED Spread 22.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.
  
• Yield Curve 263.0 -1 bp
  
• China Import Iron Ore Spot $174.50/Metric Tonne -.46%
  
• Citi US Economic Surprise Index -49.10 -.1 point
  
• 10-Year TIPS Spread 2.29% -2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -57 open in Japan
• DAX Futures: Indicating -6 open in Germany

Portfolio:

• Slightly Lower: On losses in my Retail and Medical sector longs
  
• Disclosed Trades: Added (IWM)/(QQQ) hedges, added to my (EEM) short, added to my (SODA) long
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 trades modestly lower despite rising eurozone debt worries, rising food/energy prices, emerging markets inflation fears, rising Mideast unrest and global growth concerns. On the positive side, Utility, Energy, Oil Service, Semi, Disk Drive, Computer Service, Biotech, Homebuilding and Food shares are higher on the day. Tech shares, in general, are outperforming. (XHB) has traded very well throughout the day. The euro looks like it is rolling over again at its 50-day moving average. Copper is rising +1.37%. The Saudi sovereign cds is falling -3.72% to 103.25 bps and the Japan sovereign cds is falling -1.3% to 82.82 bps. On the negative side, Education, Retail, REIT, Hospital, I-Banking, Bank, Steel and Alt Energy shares are under pressure, falling more than -1.0%. (XLF) has been heavy throughout the day. The US price for a gallon of gas is falling -.02/gallon today to $3.89/gallon. It is up .75/gallon in 93 days. The Spain sovereign cds is surging +7.17% to 259.88 bps, the Italy sovereign cds is gaining +4.06% to 158.87 bps, the UK sovereign cds is rising +3.7% to 59.17 bps, the Belgium sovereign cds is rising +3.83% to 146.42 bps and the US sovereign cds is rising +7.04% to 50.50 bps. Brazil's Bovespa and India's Sensex, which had been two of the world's worst performers, both had upside reversal's today. As well, the reversals higher in many commodities today are noteworthy given euro weakness and global growth worries. US stocks remain resilient despite a number of potential negative catalysts. However, the rising eurozone debt angst is a large negative. I added to one of my small long positions, (SODA), today. The stock has homerun potential over the longer-term, in my opinion. The fundamentals are strong, market opportunities are huge, valuation isn't too high, management is savvy and investor skepticism is high. The stock has a float of 8.8 million shares of which 3.36 million are sold short. I plan to build up my long position in this stock on any meaningful market-related decline in the shares from current levels. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, buyout speculation and earnings optimism.

Today's Headlines

Bloomberg:

• Greece's Extension of Bond Maturities Would Amount to Default, Fitch Says. Greece’s credit rating was cut three levels by Fitch Ratings, which said that even a voluntary extension of its bond maturities being studied by European Union policy makers would be considered a default. Fitch cut its rating to B+, four levels below investment grade, from BB+ and said that the country could face a further reduction in its creditworthiness. The yield on Greek 10-year bonds rose 57 basis points to 16.6 percent, more than twice the level of a year ago when Greece accepted an EU-led bailout. “The rating downgrade reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery, Fitch said in an e- mailed statement.
• Payrolls Climb in 42 States, Led by NY, Texas. Payrolls grew in 42 U.S. states, while the unemployment rate fell in 39, indicating broad-based strengthening in the labor market. New York led the nation with a 45,700 increase in employment, followed by Texas with 32,900 more jobs. Joblessness decreased most in Nevada, even as it remained the state with the highest rate in the country at 12.5 percent, figures from the Labor Department showed today in Washington. The report signals the 244,000 workers added in April, as shown in the government’s May 6 report, were dispersed throughout the country. The data also suggest the unexpected increase in the unemployment rate nationally last month was limited in scope. “The job gains are now filtering through most sectors of the economy,” Eric Green, chief market economist at TD Securities Inc. in New York, said before the report. “You’re beginning to see small- and medium-sized businesses moving more firmly into hiring, which is driven by rising sales expectations and stronger domestic demand pulling consumption higher.
• Syrian Security Forces Kill Eight Protesters, Arabiya Says. Syrian security forces fired on anti- government protesters, killing eight people in cities including Homs, Daraa and al-Sanamin, Al Arabiya television said, citing witnesses.
  
• North Korean Leader Kim Jong Il, Not Son, in China, Chosun Says. North Korean leader Kim Jong Il visited China today, the Chosun Ilbo reported after saying earlier that it was his son and heir-apparent, Kim Jong Un, on the trip.
• Democrats who fail to back union positions may lose political support from the AFL-CIO, the nation's largest labor federation, President Richard Trumka said. "It doesn't matter if candidates and parties are controlling the wrecking ball or simply standing aside - the outcome is the same either way," Trumka said. Workers won't support lawmakers who aren't blocking efforts to roll back union rights, he said.
• LinkedIn(LNKD) Surges on Second Day After IPO. LinkedIn Corp. soared on its second trading day, after more than doubling yesterday in a show of strong demand for social-media stock and a comeback in venture- capital backed initial public offerings. LinkedIn, the largest professional-networking website, rose as much as 14 percent to $107 on the New York Stock Exchange, adding to a 109 percent surge yesterday.
  

Wall Street Journal:

• Obama: Differences With Israel Remain. President Barack Obama conceded that he has differences with Israeli Prime Minister Benjamin Netanyahu on a future state for Palestinians but that such disagreements happen "between friends."
  

MarketWatch:

• Salesforce.com(CRM) Shares Top New High on Results. Analysts remain bullish on cloud software maker despite valuation.

CNBC.com:

• Banks Are Winning the War Against Regulators. Europe’s banking regulator will unveil the results of a third round of stress tests of its banks in June, but analysts have little hope that the latest tests will calm investors’ nerves and believe banks are winning the battle with regulators over financial reforms.
• PBOC's Vicious Circle on Policy Means More RRR Hikes. China's central bank is caught in a vicious circle, one that means there will be no let up in its fight to keep sucking funds out of the banking system via further increases in already record high reserve requirements.
• Is Goldman's(GS) Lloyd Blankfein Being Investigated for Perjury?
  

Business Insider:

• Silicon Valley Guru Steve Blank Welcomes The New Bubble and Says Microsoft(MSFT) is Doomed.
• Netanyahu Officially Tells Obama That a Return to 1967 Borders Isn't Going to Happen.
• Chart of the Day: Netflix(NFLX) Now Has More Subscribers Than Comcast(CMCSA) and Every Other Cable Company.
• JPMorgan(JPM): Here's 3 Reasons Why Investors Should Relax About The End of QE2.
  

Zero Hedge:

• Goldman(GS) Warns That Spanish Bonds, EUR Poised for Technical Breakdown.

ABC News:

• On Arab Spring, Obama Spoke Too Soon.

AppleInsider:

• iPad 2 Constraints 'Significantly Improved' as Apple's(AAPL) Supply Woes Ease. Wu also increased his estimated iPhone sales to 17 million, up from 16 million. He said iPhone demand appears to be holding up better than expected, thanks to strong adoption of the white iPhone 4 and strong sales on Verizon. Wu also increased his projected Mac sales to 3.9 million from the quarter, up from 3.83 million. He is also assuming a new, higher gross margin of 39 percent, increased from 38.3 percent, due to improved iPad yields and higher iPhone sales. Finally, he's also increased Sterne Agee's 12-month price target for AAPL stock to $460, up from the previous prediction of $445.

Denver Post:

• U.S. Justice Department Weighs Investigation of Denver Law Enforcement. The U.S. Department of Justice is in the "threshold stage" of deciding whether to investigate Denver's law enforcement agencies for civil-rights violations.

Digital Journal:

• Enjoy The Crisp Taste of Soda Stream(SODA) Fountain Sodas at Home and Save.

Boy Genius Report:

• RIM's(RIMM) BlackBerry Playbook Sales Miss Targets by Over 90% at Major Retailer, 'Much Higher' Return Rate Than XOOM.

Politico:

• Republican 2012 Hopefuls Blast President Obama on Israel. Republican presidential hopefuls were quick to criticize President Barack Obama's speech on the Middle East Thursday, accusing him of betraying America's closest ally in the region with his call for a two-state solution to the Israeli-Palestinian conflict. Their condemnations came hot on the heels of Obama's late-morning speech, in which he advocated borders "on the 1967 lines with mutually agreed swaps."

Rasmussen Reports:

• 71% Say Middle East Peace Agreement Must Recognize Israel's Right to Exist. The latest Rasmussen Reports national telephone survey shows that 71% of Likely U.S. Voters believe that Palestinian leaders should be required to acknowledge Israel’s right to exist as a Jewish state. Just eight percent (8%) disagree and say this is not essential for a Middle Eastern peace agreement.

Reuters:

• SEC Taps Vanderbilt Professor for Top Economic Post. The U.S. Securities and Exchange Commission has tapped Vanderbilt University professor Craig Lewis as its new chief economist and head of the Risk, Strategy and Financial Innovation division.

Der Standard:

• French Finance Minister Christine Lagarde said Greece risks a default if it doesn't step up consolidation efforts. "Greece risks a sovereign default and finance ministers have expressed strong doubts about the sluggish progress," Lagarde said. Both issues "should be enough for now to stimulate the government in Athens to start privatizations." Lagarde said privatization efforts "too slow." At the same time there won't be a restructuring or a reprofiling of Greek debt.

Handelsblatt:

• Greece would recover more quickly from its debt crisis if it stopped using the euro and returned to its own currency, Hans-Werner Sinn, head of the Munich-based Ifo economic institute, was quoted as saying. Ditching the euro would open the way for Greece to have a devalued currency, and the European Union shou8ld let the Greek government take this step if it wants to, Sinn said.

China National Radio:

• China's inflation will remain at a high level in May on higher food prices, citing Yao Jingyuan, chief economist of the National Bureau of Statistics, in an interview. China needs to continue to take measures to curb inflation pressures, Yao said.

Bear Radar

Style Underperformer:

• Large-Cap Value (-.37%)

Sector Underperformers:

• 1) Banks -1.25% 2) Alt Energy -.94% 3) Steel -.90%

Stocks Falling on Unusual Volume:

• GPS, ARO, IMGN, ARUN, KIRK, NDSN, PLCE, ADSK, CCIH, LEAP, CYD and RL
  

Stocks With Unusual Put Option Activity:

• 1) BCS 2) ADSK 3) NBG 4) ANN 5) YGE
  

Stocks With Most Negative News Mentions:

• 1) TLB 2) PDCO 3) GS 4) SO 5) MEE
  

Charts:

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