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, less US economic optimism, Eurozone debt angst and high energy prices offset short-covering, mostly positive earnings reports and investor performance angst. My intermediate-term trading indicators are giving mostly bullish signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,403.36 +1.80%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,403.36 +1.80%
  
• DJIA 13.228.31 +1.53%
  
• NASDAQ 3,069.20 +2.29%
  
• Russell 2000 825.47 +2.66%
  
• Value Line Geometric(broad market) 366.64 +2.03%
  
• Russell 1000 Growth 665.50 +1.99%
  
• Russell 1000 Value 685.58 +1.67%
  
• Morgan Stanley Consumer 811.02 +.78%
  
• Morgan Stanley Cyclical 990.60 +1.50%
• Morgan Stanley Technology 706.21 +2.44%
  
• Transports 5,267.39 +.63%
  
• Utilities 469.46 +1.89%
• Bloomberg European Bank/Financial Services 76.56 +1.12%
  
• MSCI Emerging Markets 42.24 -.23%
  
• Lyxor L/S Equity Long Bias 1,021.44 -.88%
  
• Lyxor L/S Equity Variable Bias 814.66 -.61%
  
• Lyxor L/S Equity Short Bias 539.09 unch.
  

Sentiment/Internals

• NYSE Cumulative A/D Line 146,525 +2.32%
  
• Bloomberg New Highs-Lows Index 189 +219
  
• Bloomberg Crude Oil % Bulls 32.0 +39.1%
  
• CFTC Oil Net Speculative Position 212,386 -.55%
  
• CFTC Oil Total Open Interest 1,539,257 -1.99%
  
• Total Put/Call .84 -3.45%
  
• OEX Put/Call 2.01 +74.78%
  
• ISE Sentiment 77.0 -31.86%
  
• NYSE Arms 1.39 -1.42%
  
• Volatility(VIX) 16.32 -6.42%
• S&P 500 Implied Correlation 63.0 -4.54%
  
• G7 Currency Volatility (VXY) 8.87 -8.84%
  
• Smart Money Flow Index 11,147.93 +1.19%
  
• Money Mkt Mutual Fund Assets $2.582 Trillion unch.
  
• AAII % Bulls 27.64 -11.35%
  
• AAII % Bears 37.40 +10.52%

Futures Spot Prices

• CRB Index 305.51 +1.43%
  
• Crude Oil 104.93 +.86%
  
• Reformulated Gasoline 320.62 +1.68%
  
• Natural Gas 2.19 +8.38%
  
• Heating Oil 318.07 +1.33%
  
• Gold 1,664.80 +1.31%
  
• Bloomberg Base Metals Index 219.63 +3.09%
  
• Copper 382.50 +3.43%
  
• US No. 1 Heavy Melt Scrap Steel 402.67 USD/Ton unch.
  
• China Iron Ore Spot 145.40 USD/Ton -2.02%
  
• Lumber 284.70 +3.53%
  
• UBS-Bloomberg Agriculture 1,513.14 +.79%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate .60% -60 basis points
  
• Philly Fed ADS Real-Time Business Conditions Index -.3179 +6.14%
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 110.33 +.49%
  
• Citi US Economic Surprise Index -8.0 -13.0 points
  
• Fed Fund Futures imply 58.0% chance of no change, 42.0% chance of 25 basis point cut on 6/20
  
• US Dollar Index 78.71 -.55%
  
• Yield Curve 168.0 -1 basis point
  
• 10-Year US Treasury Yield 1.93% -3 basis points
  
• Federal Reserve's Balance Sheet $2.849 Trillion -.31%
  
• U.S. Sovereign Debt Credit Default Swap 37.0 +21.2%
  
• Illinois Municipal Debt Credit Default Swap 215.0 -.85%
  
• Western Europe Sovereign Debt Credit Default Swap Index 275.31 -2.56%
  
• Emerging Markets Sovereign Debt CDS Index 286.94 -1.56%
  
• Saudi Sovereign Debt Credit Default Swap 120.50 +1.26%
• Iraqi 2028 Government Bonds 83.41 -.55%
• China Blended Corporate Spread Index 628.0 -19 basis points
  
• 10-Year TIPS Spread 2.27% +2 basis points
  
• TED Spread 38.0 -2.0 basis points
  
• 2-Year Swap Spread 30.25 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -45.0 +2.5 basis points
  
• N. America Investment Grade Credit Default Swap Index 94.76 -3.91%
  
• Euro Financial Sector Credit Default Swap Index 242.17 -4.99%
  
• Emerging Markets Credit Default Swap Index 253.42 -4.47%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 162.0 -25 basis points
  
• M1 Money Supply $2.248 Trillion +.40%
  
• Commercial Paper Outstanding 925.90 -.70%
  
• 4-Week Moving Average of Jobless Claims 381,800 +7,000
  
• Continuing Claims Unemployment Rate 2.6% unch.
  
• Average 30-Year Mortgage Rate 3.88% -2 basis points
  
• Weekly Mortgage Applications 697.70 -3.82%
  
• Bloomberg Consumer Comfort -35.8 -4.4 points
  
• Weekly Retail Sales +3.30% -30 basis points
  
• Nationwide Gas $3.82/gallon -.06/gallon
  
• U.S. Cooling Demand Next 7 Days 38.0% above normal
• Baltic Dry Index 1,156 +8.34%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 40.0 +6.67%
  
• Rail Freight Carloads 239,276 +2.19%
  

Best Performing Style

• Small-Cap Growth +2.84%
  

Worst Performing Style

• Large-Cap Value +1.67%

Leading Sectors

• Homebuilders +6.46%
  
• Road & Rail +4.69%
• Internet +4.51%
• Education +3.99%
• Oil Tankers +3.90%

Lagging Sectors

• Papers +.01%
• Coal -.21%
  
• Gaming -.32%
• Steel -1.57%
• HMOs -6.80%

Weekly High-Volume Stock Gainers (29)

• CRAY, RDEA, CRUS, HZO, EXPE, SKX, GEOI, INCY, HK, HTWR, NEU, ABMD, ALGN, TKR, DFT, JJSF, TCBI, CSL, ARBA, ONXX, HVB, WPI, USNA, UMBF, ETH, PH, CGI, STMP and AVEO
  

Weekly High-Volume Stock Losers (31)

• WMT, WAT, ODFL, MSM, CR, VAR, HES, K, N, LXK, INFA, HURN, VCI, CROX, ICON, ZIP, HSTM, CHRW, AKAM, NANO, RSG, IDCC, CTCT, SLAB, BIG, CRDN, NFLX, DECK, IPHI, NIHD and MDRX
  

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 Earnings Optimism, Euro Bounce, Short-Covering

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Mixed
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 15.98 -1.60%
  
• ISE Sentiment Index 74.0 -28.16%
  
• Total Put/Call .84 +2.44%
  
• NYSE Arms 1.23 +27.48%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.02 -2.22%
  
• European Financial Sector CDS Index 242.23 -2.12%
  
• Western Europe Sovereign Debt CDS Index 275.25 +.46%
  
• Emerging Market CDS Index 253.02 -1.05%
  
• 2-Year Swap Spread 30.25 +.5 basis point
  
• TED Spread 38.0 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -45.0 -.5 basis point
  

Economic Gauges:

• 3-Month T-Bill Yield .09% unch.
  
• Yield Curve 167.0 -2 basis points
  
• China Import Iron Ore Spot $145.40/Metric Tonne +1.11%
  
• Citi US Economic Surprise Index -8.0 -6.0 points
  
• 10-Year TIPS Spread 2.27 -2 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating a +19 open in Japan
• DAX Futures: Indicating +14 open in Germany
  

Portfolio:

• Higher: On gains in my Tech, Medical, Biotech and Retail sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite Eurozone debt angst, high energy prices, rising global growth fears and less US economic optimism. On the positive side, Internet, Construction, Medical, Biotech, Retail, Homebuilding and Airline shares are especially strong, rising more than +1.0%. Tech shares have traded well throughout the day. Small-caps are outperforming. Lumber is rising +2.0% and Copper is gaining +1.4%. Major European Indices are rising around +1.0%, led by a +1.9% gain in Italy. The Bloomberg European Bank/Financial Services Index is rising +1.3%. The Germany sovereign cds is down -4.0% to 83.20 bps. Moreover, the European Investment Grade CDS Index is down -3.9% to 137.51 bps. On the negative side, Coal, Oil Service, Steel, Computer, Disk Drive and HMO shares are under meaningful pressure, falling more than -1.0%. Financial shares have lagged throughout the day again. Oil is rising +.4%, Gold is gaining +.3% and the UBS-Bloomberg Ag Spot Index is rising +.6%. Major Asian indices were mixed overnight as a +.58% gain in Korea was offset by a -.43% decline in Japan. The yen’s reaction to the BOJ’s activities overnight is a negative. The Spain sovereign cds is gaining +.6% to 475.42 bps, the China sovereign cds is rising +1.7% to 113.41 bps, the Japan sovereign cds is gaining +.97% to 95.17 bps and the Saudi sovereign cds is up +.74% to 120.5 bps. US Rail Traffic continues to soften. The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak despite investor perceptions that the US economy is accelerating. Moreover, the Citi US Economic Surprise Index has fallen back to early-Oct. levels. Lumber is -3.0% since its Dec. 29th high despite the better US economic data, improving sentiment towards homebuilders and the broad equity rally. Moreover, the weekly MBA Home Purchase Applications Index has been around the same level since May 2010 despite expectations for a strong spring home selling season. The Baltic Dry Index has plunged around -50.0% from its Oct. 14th high and is now down around -35.0% ytd. China Iron Ore Spot has plunged -19.7% since Sept. 7th of last year. Shanghai Copper Inventories are still near their recent all-time high and have risen +634.0% ytd. China's March refined-copper imports fell -8.0% on the month. Singapore Electronics exports decelerated to a gain of +2.8% in March from a +23.3% gain in February. The 10Y T-Note continues to trade too well, despite the big surge in the US sovereign credit default swap, and the euro currency can't sustain a bounce. The equity market seems even more inefficient than usual of late. The huge moves higher in certain key large-cap stocks on earnings reports that were good, but not that surprising, are a big psychological plus for the bulls. US stocks remain extraordinarily resilient, however breadth and volume remain lackluster. Despite a +1.6% gain for the S&P 500 for the week, Coal, Alt Energy, Steel, Paper, Networking, HMO, Gaming, Airline, Restaurant and Software shares were flat-to-lower on the week. As well, Asian stocks have not participated in recent US gains, which is another red flag. In my opinion, the Fed's QE has been a major reason that the US “recovery” has been very sluggish. However, most investors are convinced otherwise and continue to believe that another round is just around the corner. There remains a fairly high level of complacency among US investors regarding the rapidly deteriorating situation in Europe, in my opinion. As I have been warning for a couple of weeks, I still believe more European bank/sovereign downgrades are on the horizon. As long as Europe can hold off another disorderly decline in credit/economic growth, Asia remains stable and until the US “fiscal cliff” begins to be a focus of investors, select US stocks will likely work higher. However, in the second half of the year these issues will likely be of intense focus. One of my longs, (TFM), is testing its recent record high. I still see substantial outperformance for the shares over the intermediate-term.For the recent equity advance to regain traction, I would 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 Eurozone debt angst, less US economic optimism, high energy prices, rising global growth fears, weakness in some key market leaders and less financial sector optimism.

Bear Radar

Style Underperformer:

• Mid-Cap Value +.01%

Sector Underperformers:

• 1) Disk Drives -2.92% 2) HMOs -2.91% 3) Coal -2.05%

Stocks Falling on Unusual Volume:

• WDC, KEG, NUS, STX, WCG, CNC, PG, PTEN, MXWL, NANO, SIMO, DECK, HMSY, CTCT, ITMN, ABFS, BJRI, INFA, SBUX, SYNA, VPRT, HBHC, QLIK, RSG, NVO, LEG, CVH, GT, FPO, IDCC, AET, WM, AXL, PFG, N, SYNA and RSG
  

Stocks With Unusual Put Option Activity:

• 1) DECK 2) ALL 3) LO 4) DNKN 5) CALL
  

Stocks With Most Negative News Mentions:

• 1) MDRX 2) DECK 3) LEG 4) SBUX 5) GT
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.35%

Sector Outperformers:

• 1) Internet +2.32% 2) Communications +1.12% 3) Homebuilding +1.10%

Stocks Rising on Unusual Volume:

• AMZN, CRAY, NWL, ORLY, EXPE, CRBC, JAZZ, CPTS, WCRX, SAIA, WOOF, CPSI, CALL, ARBA, CERN, TRIP, SWKS, MOG, MAG, AEM, RMD, CODE, OIS, SHFL, MXIM, VCI, TRW, SPN, RNF, LL, ASGN and RYL
  

Stocks With Unusual Call Option Activity:

• 1) XCO 2) DECK 3) GNW 4) AMZN 5) CSTR
  

Stocks With Most Positive News Mentions:

• 1) MXIM 2) EXPE 3) UPS 4) AMZN 5) PG
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume