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 profit-taking, global growth fears, Eurozone debt angst, technical selling, more shorting and rising energy prices. 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 1,369.63 +.29%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,369.63 +.29%
  
• DJIA 12,977.50 -.04%
  
• NASDAQ 2,976.19 +.42%
  
• Russell 2000 802.42 -2.96%
  
• Wilshire 5000 14,238.0 -.05%
  
• Russell 1000 Growth 645.27 +.25%
  
• Russell 1000 Value 674.44 +.14%
  
• Morgan Stanley Consumer 783.07 +.20%
  
• Morgan Stanley Cyclical 1,019.30 +.82%
• Morgan Stanley Technology 685.83 -.97%
  
• Transports 5,160.13 +.41%
  
• Utilities 453.75 +.09%
  
• MSCI Emerging Markets 44.51 +1.22%
  
• Lyxor L/S Equity Long Bias Index 1,030.76 +.80%
  
• Lyxor L/S Equity Variable Bias Index 832.76 +.68%
  
• Lyxor L/S Equity Short Bias Index 538.76 -1.31%
  

Sentiment/Internals

• NYSE Cumulative A/D Line 144,871 +.25%
  
• Bloomberg New Highs-Lows Index 220 +31
  
• Bloomberg Crude Oil % Bulls 56.0 +30.2%
  
• CFTC Oil Net Speculative Position 254,559 +11.56%
  
• CFTC Oil Total Open Interest 1,517,833 +5.29%
  
• Total Put/Call .91 -16.51%
  
• OEX Put/Call 1.41 +18.49%
  
• ISE Sentiment 95.0 +46.15%
  
• NYSE Arms .99 -11.61%
  
• Volatility(VIX) 17.29 -.12%
• S&P 500 Implied Correlation 70.67 -1.0%
  
• G7 Currency Volatility (VXY) 10.14 +4.43%
  
• Smart Money Flow Index 10,801.42 +.90%
  
• Money Mkt Mutual Fund Assets $2.666 Trillion +.2%
  
• AAII % Bulls 44.51 +1.88%
  
• AAII % Bears 26.83 -2.47%

Futures Spot Prices

• CRB Index 321.17 -1.45%
  
• Crude Oil 106.70 -2.79%
  
• Reformulated Gasoline 327.2 -1.21%
  
• Natural Gas 2.48 -7.95%
  
• Heating Oil 320.18 -2.93%
  
• Gold 1,709.80 -3.50%
  
• Bloomberg Base Metals Index 229.04 +.92%
  
• Copper 390.30 +1.05%
  
• US No. 1 Heavy Melt Scrap Steel 404.67 USD/Ton +.75%
  
• China Iron Ore Spot 143.20 USD/Ton +3.02%
  
• Lumber 280.10 -.89%
  
• UBS-Bloomberg Agriculture 1,557.52 +1.59%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate -3.0% +50 basis points
• Philly Fed ADS Real-Time Business Conditions Index .1064 -5.09%
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 107.56 +.23%
  
• Citi US Economic Surprise Index 45.10 -12.9 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 79.40 +1.32%
  
• Yield Curve 170.0 +3 basis points
  
• 10-Year US Treasury Yield 1.97% -1 basis point
  
• Federal Reserve's Balance Sheet $2.908 Trillion -.22%
  
• U.S. Sovereign Debt Credit Default Swap 34.70 -3.0%
  
• Illinois Municipal Debt Credit Default Swap 227.0 -4.79%
  
• Western Europe Sovereign Debt Credit Default Swap Index 346.38 +.06%
• Emerging Markets Sovereign Debt CDS Index 214.0 -6.96%
  
• Saudi Sovereign Debt Credit Default Swap 132.66 -6.98%
• Iraqi 2028 Government Bonds 81.10 +4.13%
• China Blended Corporate Spread Index 605.0 -22 basis points
  
• 10-Year TIPS Spread 2.24% -4 basis points
  
• TED Spread 41.50 +1.5 basis points
  
• 3-Month Euribor/OIS Spread 61.0 -4.5 basis points
  
• 3-Month EUR/USD Cross-Currency Basis Swap -72.50 -.5 basis point
  
• N. America Investment Grade Credit Default Swap Index 94.20 -1.66%
  
• Euro Financial Sector Credit Default Swap Index 161.69 -7.81%
  
• Emerging Markets Credit Default Swap Index 237.81 -5.79%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 177.0 -7 basis points
  
• M1 Money Supply $2.222 Trillion -.31%
  
• Commercial Paper Outstanding 927.20 -1.10%
  
• 4-Week Moving Average of Jobless Claims 354,000 -1.50%
  
• Continuing Claims Unemployment Rate 2.7% unch.
  
• Average 30-Year Mortgage Rate 3.90% -5 basis points
  
• Weekly Mortgage Applications 763.60 -.33%
  
• Bloomberg Consumer Comfort -38.8 -.4 point
  
• Weekly Retail Sales +2.90% +20 basis points
  
• Nationwide Gas $3.74/gallon +.09/gallon
  
• U.S. Heating Demand Next 7 Days 17.0% below normal
• Baltic Dry Index 763.0 +8.07%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 32.50 unch.
  
• Rail Freight Carloads 214,402 -2.99%
  

Best Performing Style

• Large-Cap Growth +.25%
  

Worst Performing Style

• Small-Cap Value -3.0%

Leading Sectors

• Airlines +2.23%
  
• Banks +1.99%
  
• I-Banks +1.43%
• Gaming +1.33%
• Software +1.18%

Lagging Sectors

• Gold & Silver -3.0%
• Networking -4.96%
  
• Alternative Energy -5.32%
• Coal -8.92%
• Education -14.91%

Weekly High-Volume Stock Gainers (23)

• PEGA, KCP, VVUS, CCO, DPZ, LXU, KNOL, CRI, ZAGG, AMED, LIZ, CPRT, NDSN, CYBX, CLGX, CTB, Y, TESO, HEES, ITT, KDN, SZYM and TRH
  

Weekly High-Volume Stock Losers (33)

• OPLK, GXP, EBS, MKTG, RPM, AMSF, GPRE, DY, FRC, MMSI, GNTX, PCS, FNSR, BMI, FCN, FPO, TTEC, EIG, DUF, APEI, CVC, LAYN, HSII, FDP, GRC, GIFI, DECK, INT, APOL, KND, SYKE, BCPC and VOCS
  

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 Rising Eurozone Debt Angst, High Energy Prices, Global Growth Fears, Technical Selling

Broad Market Tone:

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

Equity Investor Angst:

• VIX 17.49 +1.33%
  
• ISE Sentiment Index 97.0 -15.65%
  
• Total Put/Call .92 -8.91%
  
• NYSE Arms .90 +8.55%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.20 +1.30%
  
• European Financial Sector CDS Index 161.62 +.45%
  
• Western Europe Sovereign Debt CDS Index 346.0 +1.47%
  
• Emerging Market CDS Index 238.07 -1.91%
  
• 2-Year Swap Spread 25.0 -1.25 bps
  
• TED Spread 41.50 +.5 bp
  
• 3-Month EUR/USD Cross-Currency Basis Swap -72.50 -.25 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .06% -1 bp
  
• Yield Curve 171.0 -2 bps
  
• China Import Iron Ore Spot $143.20/Metric Tonne unch.
  
• Citi US Economic Surprise Index 45.10 unch.
  
• 10-Year TIPS Spread 2.24 -4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +13 open in Japan
• DAX Futures: Indicating -5 open in Germany

Portfolio:

• Slightly Higher: On gains in my Retail sector longs and index hedges
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish, as the S&P 500 trades lower on rising Eurozone debt angst, high energy prices, global growth fears, technical selling and profit-taking. On the positive side, Utility, Computer Service and Retail shares are slightly higher on the day. Oil is falling -2.3%. Major Asian indices rose around +.75% overnight, led by a +1.4% gain in Shanghai despite reports that China will stem any new property easing by local governments and some talk of Asian central bank tightening before year-end. Major European indices were mixed today, with the Bloomberg European Financial Services/Bank Index rising +.60%. The Brazil sovereign cds is falling -2.6% to 133.40 bps, the Saudi sovereign cds is down -3.9% to 132.66 bps and the Japan sovereign cds is down -2.78% to 116.94 bps. On the negative side, Education, Road & Rail, HMO, Hospital, Oil Service, Coal, Alt Energy, Construction, I-Banking, Networking, Semi, Energy and Oil Tanker shares are under pressure, falling more than -1.0%. Small-caps are relatively weak again. Copper is falling -.50%. The 10Y T-Note Yield at 1.98%, remains a concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data. Despite the recent positive US economic data, the Philly Fed/ADS Real-Time Business Conditions Index has declined -5.08% over the last 5 days and continues to trend lower from its peak in mid-December. Lumber is -4.0% 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 weekly MBA Purchase Applications Index has been around the same level since May 2010. The Baltic Dry Index has plunged over -60.0% from its Oct. 14th high and is now down over -50.0% ytd. The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. Overall, credit gauge improvement has stalled over the last few weeks and these gauges are still at stressed levels. China Iron Ore Spot has plunged -21.0% since Sept. 7th of last year. Shanghai Copper Inventories are up +707.0% ytd and are still very near their recent all-time high. I still think this is more of a red flag for falling demand rather than the intentional hoarding, which many suggest. The euro currency has traded poorly over the last 3 days. Shares of Yelp(YELP) are soaring +65% today, giving the company a $1.5B market cap. I would not be a buyer anywhere near current levels and this stock’s performance today is another red flag regarding investor sentiment, in my opinion. The Transports, while underperforming today, have outperformed for the week, rising +.97%. However the MS Tech Index underperformed for the week, falling -.63%, despite a +4.6% gain in Apple(AAPL) shares. Stocks are short-term overbought and still near intermediate-term resistance. I would become more aggressive on the long-side after further sideways action and then a convincing break above DJIA 13K and Naz 3K. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, a further subsiding of 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-lower into the close from current levels on rising Eurozone debt angst, high energy prices, global growth fears, technical selling and profit-taking.

Today's Headlines

Bloomberg:

• ECB Says Overnight Deposits Surge to Record. The European Central Bank said overnight deposits soared to a record after its second allocation of three-year loans. Financial institutions parked 776.9 billion euros ($1.03 trillion) with the Frankfurt-based ECB. That’s the most since the euro was founded in 1999 and up from 475.2 billion euros a day earlier. Banks get 0.25 percent on the deposits. The ECB this week lent banks 529.5 billion euros for three years in the biggest single refinancing operation in its history, taking total long-term lending above 1 trillion euros. Banks received the funds yesterday and pay the average of the ECB’s benchmark rate -- currently 1 percent -- over the period of the loans. The ECB said 800 financial institutions, more than a third of the 2,267 registered to borrow from it, took part in the operation.
  
• Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments gained two basis points to 339 at 8:30 a.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased four basis points to 562.5, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 0.75 basis point to 127.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased two basis points to 201 and the subordinated index climbed 3.5 to 343.5.
• Troika to Have Permanent Presence in Greece, Wieser Tells Format. The “troika” of the European Commission, International Monetary Fund and European Central Bank will have a permanent presence in Greece, Eurogroup Working Group head Thomas Wieser told Austria’s Format magazine. “A permanent presence of the troika on site to monitor the reforms will definitely be the case for several years,” Wieser was cited as saying. Wieser also told the Vienna-based magazine that he is “optimistic” that the Greek economy will grow again in 2013, “be it at a slow pace.” From the middle of the century, growth will “speed up,” he said according to the report.
  
• EIB Privileges in Greek Debt Plan Spur Complaints From Private Investors. Investors are complaining that the European Investment Bank doesn’t deserve the same exemption from losses on its Greek bond holdings as the euro region’s central bank because it didn’t buy the notes to support monetary policy.
• China to Grow Less Than World Bank Estimates, Dow Jones Reports. China’s economic growth will probably be slower than the World Bank estimates, Dow Jones reported, citing Bert Hofman, the Washington-based lender’s chief economist for East Asia and Pacific. The slowdown in China is happening more rapidly than the World Bank expected and expansion may be less than the 8.4 percent the development lender has projected, according to the report published on the website of the Wall Street Journal, citing Hofman in Singapore today.
• Copper Falls as China's Inventories Rise to Highest Since 2003. Copper futures fell on signs of ample supplies as inventories rose to the highest in at least nine years in China, the world’s biggest consumer of industrial metals. Stockpiles monitored by the Shanghai Futures Exchange climbed 2.5 percent to 221,487 metric tons, the highest since at least January 2003, weekly data showed. The dollar’s rally against a basket of major currencies eroded the appeal of raw materials as alternative investment. “Any sign that China is slowing is certainly going to weigh on commodities across the board,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “The stronger dollar is also a factor.” “Builds in Chinese stocks reflect what is still a weak spot market currently, with consumers keeping buying to an absolute minimum due to uncertainty over future demand levels,” Gayle Berry, an analyst at Barclays Capital, said in a report.
• Crude Drops for First Time in Three Days. Oil fell the most since December as President Barack Obama said a pre-emptive strike on Iran might generate “sympathy” for the Persian Gulf country, easing concern that an attack would take place. Prices fell as much as 2.8 percent after Obama said in an interview with The Atlantic magazine that a strike without warning might allow Iran to portray itself as a victim. Oil for April delivery fell $2.76, or 2.5 percent, to $106.08 a barrel at 1:28 p.m. on the New York Mercantile Exchange. Earlier, prices touched $105.80 a barrel in the largest intraday decline since Dec. 14. Prices are down 3.4 percent this week, the biggest drop since Dec. 16. Brent oil for April settlement slipped $2.41, or 1.9 percent, to $123.79 a barrel on the London-based ICE Futures Europe exchange. It surged to $128.40 yesterday, the highest intraday price since July 2008.
• Buffett's Insurance Growth Engine May Stall. Warren Buffett, the former hedge fund manager who built Berkshire Hathaway Inc. into a $195 billion company by gaining leverage through insurance premiums, said this traditional source of new funds is drying up.
• Yelp(YELP) Surges as Much as 73% in Trade Debut. Yelp Inc. (YELP), the site that lets users review businesses ranging from diners to dentists, surged as much as 73 percent in its first day of trading after selling shares for more than planned in an initial public offering. The stock climbed 64 percent to $24.60 at 11:06 a.m. in New York, after soaring to $26, giving Yelp a market valuation of $1.56 billion. That price is about 19 times Yelp’s annual revenue.

Wall Street Journal:

• Spain Raises Budget Deficit Target. Spanish Prime Minister Mariano Rajoy said Friday his government has raised the budget deficit target for this year to 5.8% of gross domestic product, in what he called a "sovereign" decision that may rile up European Union partners. The new estimate contrasts with the 4.4%-of-GDP target set by Spain's previous left-of-center government, in office until December.
• Copper's Problems Pile Up Quietly.
  
• New Report: Seniors Can't Make Ends Meet. A new report released Thursday for all 50 states, called the Elder Economic Security Standard Index, found that people who are over 65 are struggling to cover basic expenses in all 50 states.
  

CNBC.com:

• Geithner Shows Own 'Amnesia' Over Bank Crisis: Bove. Treasury Secretary Timothy Geithner should have done more to stop the financial crisis before it started, rather than try now to impose unnecessary reforms on the banking system, analyst Dick Bove said.

Business Insider:

• Here's The New Restriction Some Hedge Funds Are Putting On Their Employee's Social Media Activity.
• The Horrific Eurozone Youth Unemployment Chart That Makes Everyone Cringe. (graph)
  

Zero Hedge:

• Foodstamp Use Hits Another Record in December. (graph)
• Who Is Most Exposed To The Oil Price Shock? (graph)
• Bank of America(BAC) Joins Goldman(GS) In Cutting Its Q1 GDP Forecast.
  

Reuters:

• Euro Drops for 3rd Day as Spain Defies EU Fiscal Pact. The euro dropped against the dollar for a third straight day on Friday and was on track for its worst week since mid-December after debt-burdened Spain challenged the European Union's new fiscal pact.

Telegraph:

• Euroland Will Pay For This Monetary Madness. The flood of cheap money from the European Central Bank is storing up grave trouble for the future.
• Debt Crisis: Live. Spain defies Brussels on day leaders sign fiscal pact.

RTHK:

• Fund inflows could cause an asset bubble in Hong Kong after a capital injection into the eurozone banking system, HKMA Chief Executive Norman Chan said.

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.50%

Sector Underperformers:

• 1) Coal -3.74% 2) HMOs -2.0% 3) Gold & Silver -2.0%

Stocks Falling on Unusual Volume:

• SKS, TTEC, CIG, WTI, CCJ, FCX, PSMT, USHS, CCMP, GCOM, BANR, TRS, PEGA, MIND, CINF, IPHS, LSTR, MINI, EXLS, CRDN, FNSR, CEVA, EBIX, GIFI, DXPE, SPPI, WOOF, DPM, GNI, CGV, FPO, CNC, FPO, BX, KRA, DGI, BIG, OMG, AH, TPC and QUAD
  

Stocks With Unusual Put Option Activity:

• 1) NYX 2) XME 3) XLU 4) MPEL 5) AIG
  

Stocks With Most Negative News Mentions:

• 1) ITT 2) LSTR 3) TRV 4) CMA 5) BHI
  

Charts:

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