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 mixed as rising global growth fears, profit-taking and Eurozone debt angst offsets falling energy prices, better US economic data and short-covering. 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 1,344.90 +2.17%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,344.90 +2.17%
  
• DJIA 12,862.23 +1.59%
  
• NASDAQ 2,905.66 +3.16%
  
• Russell 2000 831.11 +4.04%
  
• Wilshire 5000 14,047.15 +2.44%
  
• Russell 1000 Growth 630.53 +2.35%
  
• Russell 1000 Value 666.55 +2.22%
  
• Morgan Stanley Consumer 785.96 +1.21%
  
• Morgan Stanley Cyclical 1,013.73 +3.54%
• Morgan Stanley Technology 671.09 +4.35%
  
• Transports 5,368.93 +.45%
  
• Utilities 451.36 +.76%
  
• MSCI Emerging Markets 43.34 +3.03%
  
• Lyxor L/S Equity Long Bias Index 997.85 +.18%
  
• Lyxor L/S Equity Variable Bias Index 821.51 +.54%
  
• Lyxor L/S Equity Short Bias Index 563.14 -.60%
  

Sentiment/Internals

• NYSE Cumulative A/D Line 141,064 +2.14%
  
• Bloomberg New Highs-Lows Index 289 +48
  
• Bloomberg Crude Oil % Bulls 35.0 -25.53%
  
• CFTC Oil Net Speculative Position 170,699 -4.02%
  
• CFTC Oil Total Open Interest 1,399,874 +4.33%
  
• Total Put/Call .74 -15.91%
  
• OEX Put/Call .85 -18.27%
  
• ISE Sentiment 141.0 +1.44%
  
• NYSE Arms .59 -66.85%
  
• Volatility(VIX) 17.10 -7.72%
• S&P 500 Implied Correlation 70.88 -3.94%
  
• G7 Currency Volatility (VXY) 10.18 -.39%
  
• Smart Money Flow Index 10,304.86 -.38%
  
• Money Mkt Mutual Fund Assets $2.692 Trillion unch.
  
• AAII % Bulls 43.81 -9.48%
  
• AAII % Bears 25.08 +32.63%

Futures Spot Prices

• CRB Index 314.22 -1.05%
  
• Crude Oil 97.77 -1.97%
  
• Reformulated Gasoline 291.91 -.34%
  
• Natural Gas 2.51 -9.57%
  
• Heating Oil 311.39 +1.23%
  
• Gold 1,728.50 -.72%
  
• Bloomberg Base Metals Index 224.20 -3.62%
  
• Copper 390.55 +.26%
  
• US No. 1 Heavy Melt Scrap Steel 401.67 USD/Ton unch.
  
• China Iron Ore Spot 143.30 USD/Ton +2.50%
  
• Lumber 262.50 +9.29%
  
• UBS-Bloomberg Agriculture 1,525.96 +.43%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate -5.20% +130 basis points
• Philly Fed ADS Real-Time Business Conditions Index .1291 -4.01%
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 106.89 -.24%
  
• Citi US Economic Surprise Index 83.70 +18.3 points
  
• Fed Fund Futures imply 44.0% chance of no change, 56.0% chance of 25 basis point cut on 3/13
  
• US Dollar Index 78.94 +.15%
  
• Yield Curve 169.0 +1 basis point
  
• 10-Year US Treasury Yield 1.92% +3 basis points
  
• Federal Reserve's Balance Sheet $2.907 Trillion +.18%
  
• U.S. Sovereign Debt Credit Default Swap 41.95 -6.82%
  
• Illinois Municipal Debt Credit Default Swap 230.0 +2.33%
  
• Western Europe Sovereign Debt Credit Default Swap Index 332.75 +.42%
• Emerging Markets Sovereign Debt CDS Index 261.83 -3.32%
  
• Saudi Sovereign Debt Credit Default Swap 131.0 -3.36%
• Iraqi 2028 Government Bonds 77.30 -1.68%
• China Blended Corporate Spread Index 680.0 unch.
  
• 10-Year TIPS Spread 2.16% +6 basis points
  
• TED Spread 46.0 -4 basis points
  
• 3-Month Euribor/OIS Spread 76.0 -2 basis points
  
• 3-Month EUR/USD Cross-Currency Basis Swap -70.75 +2 basis points
  
• N. America Investment Grade Credit Default Swap Index 94.93 -6.13%
  
• Euro Financial Sector Credit Default Swap Index 161.11 -8.96%
  
• Emerging Markets Credit Default Swap Index 256.08 -3.56%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 202.0 -18 basis points
  
• M1 Money Supply $2.233 Trillion +.59%
  
• Commercial Paper Outstanding 972.20 +.10%
  
• 4-Week Moving Average of Jobless Claims 375,800 -.50%
  
• Continuing Claims Unemployment Rate 2.7% -10 basis points
  
• Average 30-Year Mortgage Rate 3.87% -11 basis point
  
• Weekly Mortgage Applications 753.30 -2.88%
  
• Bloomberg Consumer Comfort -44.8 +1.6 points
  
• Weekly Retail Sales +2.70% -20 basis points
  
• Nationwide Gas $3.47/gallon +.08/gallon
  
• U.S. Heating Demand Next 7 Days 21.0% below normal
• Baltic Dry Index 651.0 -13.55%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 32.50 -7.14%
  
• Rail Freight Carloads 235,028 +6.97%
  

Best Performing Style

• Small-Cap Growth +4.12%

Worst Performing Style

• Large-Cap Value +2.22%

Leading Sectors

• Disk Drives +10.11%
  
• Airlines +8.36%
  
• Computer Hardware +6.84%
• I-Banking +5.49%
• Networking +5.44%

Lagging Sectors

• Utilities +.76%
• Drugs +.64%
  
• Retail +.44%
• Oil Tankers -.21%
• Gold & Silver -1.15%

Weekly High-Volume Stock Gainers (26)

• AMLN, SOA, MGAM, ZNGA, PBY, CPHD, TNB, PRXL, CYT, KAR, CMCO, AZPN, LQDT, ABD, TMS, IACI, EMN, MSTR, SYNA, CVLT, ABMD, TROX, RTEC, CTWS, RDEN and AROW
  

Weekly High-Volume Stock Losers (10)

• OMCL, GDOT, UIS, NEU, IXYS, GNTX, JDAS, BCO, RVBD and PPO
  

Weekly Charts
ETFs

• High-Volume Gainers
• High-Volume Losers

Stocks

• High-Volume Gainers
• High-Volume Losers
  

*5-Day Change

Stocks Rising Into Final Hour on Better US Economic Data, More Tech/Financial Sector Optimism, Short-Covering, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Around Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.21 -4.28%
  
• ISE Sentiment Index 152.0 +53.54%
  
• Total Put/Call .74 -14.94%
  
• NYSE Arms .70 -28.38%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.94 -4.96%
  
• European Financial Sector CDS Index 161.35 -4.87%
  
• Western Europe Sovereign Debt CDS Index 332.88 +.81%
  
• Emerging Market CDS Index 256.42 -1.75%
  
• 2-Year Swap Spread 27.0 +1 bp
  
• TED Spread 46.0 +1 bp
  
• 3-Month EUR/USD Cross-Currency Basis Swap -71.75 -2.75 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .07% -1 bp
  
• Yield Curve 170.0 +10 bps
  
• China Import Iron Ore Spot $143.30/Metric Tonne +.14%
• Citi US Economic Surprise Index 83.70 +34.3 points
  
• 10-Year TIPS Spread 2.16 +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +104 open in Japan
• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Higher: On gains in my Biotech, Retail, Medical and Tech sector longs
  
• Disclosed Trades: Covered all of my (IWM), (QQQ) hedges and some of my (EEM) short, then added some back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is very bullish, as the S&P 500 breaks above last week's high on more financial/tech sector optimism, strong US economic data, short-covering, technical buying and gains in overseas equities. On the positive side, Alt Energy, Steel, Disk Drive, Networking, Bank, I-Banking, Hospital, Homebuilding and Airline shares are especially strong, rising more than +2.5%. Cyclical and small-cap shares are relatively strong. Financial and Tech shares are also outperforming again. Copper is jumping +3.32%, Gold is falling -1.9% and Lumber is jumping +3.76%. Oil continues to trade poorly, despite today's +.9% gain, given the stock rally, euro rally, rising interest from speculators, falling euro debt angst, subsiding emerging market hard-landing fears, improving US data and Mid-east tensions. Major Asian indices were mixed overnight with a +.77% gain in Shanghai offsetting a -.6% loss in South Korean shares. Major European indices rose around +1.25% with the Bloomberg European Bank/Financial Services Index posting a +2.45% gain despite ongoing Greece talks and stress in Portugal. The Japan sovereign cds is down -3.85% to 128.25 bps, the UK sovereign cds is down -3.95% to 74.17 bps and the Saudi sovereign cds is down -3.36% to 131.0 bps. Moreover, the European Investment Grade CDS Index is falling -4.2% to 117.28 bps. On the negative side, HMO, Gaming, Drug and Utility shares are flat-to-lower on the day. The Portugal sovereign cds is up +19.3% in 15 days. Lumber has declined -3.9% since its Dec. 29th high despite the better US economic data, more dovish Fed commentary, improving sentiment towards homebuilders, equity rally and decline in eurozone debt angst. Moreover, the Baltic Dry Index has plunged over -60.0% from its Oct. 14th high and is now down over -50.0% ytd. The 10Y T-Note Yield is jumping +11 bps today to 1.93%, but remains a concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data. The Philly Fed’s ADS Real-Time Business Conditions Index has stalled over the last 3 weeks after showing meaningful improvement from mid-Nov. through year-end. The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. The TED spread, 2Y Euro Swap Spread, 3M Euribor-OIS spread and Libor-OIS spread have improved, but are still at stressed levels. China Iron Ore Spot has plunged -21.0% since Sept. 7th of last year. Shanghai Copper Inventories are up +471.0% ytd to the highest level since March of last year and approaching their April 2010 record. The strength of today’s economic reports has not yet been confirmed in other data, however it was impressive nonetheless. Last night, FINalternatives reported that the Credit Suisse Liquid Alternative Beta Index rose just +1.34% in January. This conflicts with a number of investor sentiment gauges that have been registering too much complacency. I had expected a pullback around current levels in the major indices, however with today’s break above last week’s high the S&P 500 looks poised to test 1,350 over the coming days after a brief pause to digest recent gains. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, subsiding hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-higher into the close from current levels on more tech/financial sector optimism, short-covering, strong US economic data and technical buying.

Today's Headlines

Bloomberg:

• Greece Talks Enter 'Final Phase' on Second Bailout to Secure Place in Euro. Greece may conclude a seven-month effort to wrap up its second bailout in the coming days with the country’s stability hanging in the balance. A plan that’s been in the works since July may emerge from parallel talks among caretaker Prime Minister Lucas Papademos’s coalition members; international monitors and Greek officials; and Greece’s government and its creditors, as well as tussles involving European central bankers and political leaders. “We are in the final phase of this very critical process to shape a new financing program for Greece and to complete the loan agreement which will lighten the burden of public debt and ensure funding for years to come,” Papademos said in a statement today in Athens. The plan will help “restore fiscal stability, improve competitiveness, revive the economy and increase employment.” The rescue blueprint includes a loss of more than 70 percent for bondholders in a voluntary debt exchange and loans likely to exceed the 130 billion euros ($171 billion) now on the table. Open questions involve how much more aid Greece needs, how much more austerity is required, and how to involve the European Central Bank in the debt swap.
  
• ECB Considers Using Bond Holdings for Greece. The European Central Bank is considering using its bond holdings to bolster Greece’s next rescue program and support efforts to contain the sovereign debt crisis, three euro-region officials said. Under one plan, the ECB could sell its Greek bonds to the European Financial Stability Facility at the price it paid for them rather than accept a loss along with private creditors, two of the people said. The EFSF is against that proposal because it may stretch its capacity, the officials said. Another plan is for euro-area central banks to give up profits or take losses on Greek bonds in their investment portfolios. Several options are under informal consideration and none have gained traction so far, two of the officials said. Spokespeople for the ECB and the EFSF declined to comment.
• Payrolls Jump Casts Doubt on Fed Rate Pledge. The U.S. jobless rate unexpectedly fell in January to the lowest in three years as payrolls climbed more than forecast, casting doubt on the Federal Reserve’s plan to keep interest rates low until late 2014. The unemployment rate dropped to 8.3 percent, the lowest since February 2009, Labor Department figures showed today in Washington. The 243,000 increase in jobs was the biggest in nine months and exceeded the most optimistic forecast in a Bloomberg News survey. Service industries grew by the most in a year, according to a separate report. The median projection in the Bloomberg survey called for payrolls to rise by 140,000. Estimates of the 89 economists ranged from increases of 95,000 to 225,000. Revisions added a total of 60,000 jobs to payrolls in November and December. Sustained increases of around 200,000 jobs a month are needed to bring the unemployment rate down one percentage point over a year, according to Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. The unemployment rate, derived from a separate survey of households, was forecast to stay at 8.5 percent, according to the survey median. The drop in the jobless rate reflected a 381,000 decrease in unemployment at the same time 250,000 Americans entered the labor force. The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- decreased to 15.1 percent from 15.2 percent. The number of unemployed Americans dropped to 12.8 million, the lowest since January 2009, from 13.1 million in December. Still, the number of those who have been unemployed for 27 weeks or more -- a source of concern for the Fed -- was little changed at 5.52 million and accounted for almost 43 percent of the total.
• Falcone's Harbinger Hedge Fund Lost 47% in '11. Phil Falcone’s Harbinger Capital Partners LLC lost 47 percent for investors in his main hedge fund last year as he was forced to slash the value of his troubled wireless venture by more than half, according to a person familiar with the results.
• Lawyers Rank Third on Obama Donor List Even With Lobbying Ties. President Barack Obama’s top sources of campaign funds include employees at law firms that made $20 million last year trying to influence Washington. Obama, who has raised $128 million toward his re-election, doesn’t accept contributions from registered lobbyists, a policy that doesn’t apply to others who work in their firms. The restriction hasn’t affected his fundraising, as 6 of the president’s 20 biggest sources of money were law firms that lobby for companies such as Google Inc. (GOOG), AT&T Inc. (T), and MasterCard Inc. (MA), and he received more money from lawyers and others at law firms than any other presidential candidate last year, according to the Center for Responsive Politics, a Washington-based group that tracks political giving. “Basically, they’re not taking money from the messenger boys but they are taking money from the people sending the message,” said Bill Allison, editorial director at the Sunlight Foundation, a Washington-based advocacy group.
• BofA(BAC) JPM Chase(JPM) Sued by New York Over MERS. Bank of America Corp., Wells Fargo & Co.(WFC) and JPMorgan Chase & Co. were sued by New York Attorney General Eric Schneiderman over the creation and use of a mortgage database. The banks’ use of the database, known as MERS, has led to deceptive and fraudulent foreclosure filings in New York state and federal courts, Schneiderman said in a statement today.

Wall Street Journal:

• Rosler Opposes ECB Write-Down on Greece. A German cabinet minister rejected demands to involve the European Central Bank directly in efforts to reduce Greece's debt as international pressure is growing on the ECB to make a significant contribution to restructuring Athens' debt by accepting a haircut on its huge cache of Greek bonds. "This is not currently an issue for us," said German Economy Minister Philipp Rösler in an exclusive interview with Dow Jones Newswires and The Wall Street Journal, when asked whether the ECB should be involved in Greece's debt restructuring.
• Copper Jumps on Jobs Data. The most-actively traded contract, for March delivery, was recently up 9.05 cents, or 2.4%, at $3.8715 a pound on the Comex division of the New York Mercantile Exchange. Copper touched an intraday high of $3.8740, but is still off the year's high of $3.9390 set Jan. 27.

Barron's:

• Apple(AAPL): Gardner Offers 'Key Points' of Cook, Oppenheimer Meeting. Citigroup’s Richard Gardner this morning reiterates a Buy rating on shares of Apple (AAPL) and a $600 price target after hosting a meeting on Thursday with chief executive Tim Cook and CFO Peter Oppenheimer on Apple’s campus.

CNBC.com:

• Jobs Growth Raises Questions About GDP Forecasts, Fed.
• Jobs Up, But Small Business Survey Reports Little Gain.
• Apple(AAPL) iTV Coming Late This Year: Munster.
  

Business Insider:

• This Greek Newspaper Has The Most Depressing Twitter Feed In Europe.
• Micron's(MU) CEO Steve Appleton Has Died In A Plane Crash.
• New Data Suggests North Korea Has Much Bigger Atomic Bombs Than Anyone Thought.
• Frenzy! Facebook's(FB) Now Trading At A $95 Billion Valuation In The Private Markets.
  

Zero Hedge:

• Record 1.2 Million People Fall Out Of Labor Force In One Month, Labor Force Participation Rate Tumbles To Fresh 30-Year Low. (graph)
• Greece Draws The Line As Unity Government Leaders Refuse To Cede To Further Troika Austerity Demands.

New York Times:

• SEC Consistently Treats Biggest Banks With Light Hand. Even as the Securities and Exchange Commission has stepped up its investigations of Wall Street in the last decade, the agency has repeatedly allowed the biggest firms to avoid punishments specifically meant to apply to fraud cases.

Washington Post:

• U.S. Officials Concerned by Israel Statements on Iran Threat, Possible Strike. Israeli leaders on Thursday delivered one of the bluntest warnings to date of possible airstrikes against Iranian nuclear sites, adding to the anxiety in Western capitals that a surprise attack by Israel could spark a broader military conflict in the Middle East.

Reuters:

• Goldman(GS) to Face Mortgage Debt Class-Action Lawsuit. Goldman Sachs Group Inc was ordered by a federal judge to face a securities class-action lawsuit accusing it of defrauding investors about a 2006 offering of securities backed by risky mortgage loans from a now-defunct lender. U.S. District Judge Harold Baer in Manhattan certified a class-action lawsuit by investors led by the Public Employees' Retirement System of Mississippi.
  

Financial Times:

• The Preferred, Puzzling, ESM.

Financial Times Deutschland:

• Euro-area central banks may be prepared to take losses on the Greek bonds they hold that aren't part of the European Central Bank's asset-purchase program, citing "euro sources".

China Economic Times:

• China should pay attention to the risk that some local governments may default on their debt, Meng Chun, researcher at the State Council's Development Research Center wrote today.
• China's increase in energy demand may slow this year as economic growth slows, Deng Yusong, a researcher at the State Council's Development Research Center wrote today. Growth of exports, real estate investment and manufacturing investment may decline "substantially" this year from 2011, Deng writes.
  

Bear Radar

Style Underperformer:

• Large-Cap Value +1.19%

Sector Underperformers:

• 1) HMOs -1.39% 2) Gold & Silver -.88% 3) Gaming +.01%

Stocks Falling on Unusual Volume:

• HNT, WYNN, IGT, EGO, RGLD, EL, CNQR, SIMO, IDIX, AMLN, VRTX, ACHN, MOD, KEX, CNW and EW
  

Stocks With Unusual Put Option Activity:

• 1) ZNGA 2) APKT 3) RIO 4) NOV 5) HYG
  

Stocks With Most Negative News Mentions:

• 1) APKT 2) VRTX 3) N 4) MRO 5) WYNN
  

Charts:

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