Weekly Scoreboard*

Indices

• S&P 500 1,356.78 +.15%
  
• DJIA 12,777.0 +.04%
  
• NASDAQ 2,908.47 -.98%
  
• Russell 2000 800.99 -.76%
  
• Value Line Geometric(broad market) 343.11 -1.03%
  
• Russell 1000 Growth 632.07 -.37%
  
• Russell 1000 Value 668.93 +.44%
  
• Morgan Stanley Consumer 796.32 +.05%
  
• Morgan Stanley Cyclical 898.98 -1.70%
• Morgan Stanley Technology 620.24 -1.59%
  
• Transports 5,191.65 -.13%
  
• Utilities 485.67 +1.51%
• Bloomberg European Bank/Financial Services 71.86 -.26%
  
• MSCI Emerging Markets 38.32 -2.13%
  
• Lyxor L/S Equity Long Bias 1,013.08 -.51%
  
• Lyxor L/S Equity Variable Bias 796.91 +.02%
  
• Lyxor L/S Equity Short Bias 539.37 unch.
  

Sentiment/Internals

• NYSE Cumulative A/D Line 147,196 +.02%
  
• Bloomberg New Highs-Lows Index -159 -367
  
• Bloomberg Crude Oil % Bulls 35.0 -26.0%
  
• CFTC Oil Net Speculative Position 138,572 +5.31%
  
• CFTC Oil Total Open Interest 1,413,415 -1.37%
  
• Total Put/Call 1.0 -8.26%
  
• OEX Put/Call 1.32 -21.43%
  
• ISE Sentiment 94.0 -13.76%
  
• NYSE Arms .61 -70.39%
  
• Volatility(VIX) 16.74 -2.10%
• S&P 500 Implied Correlation 65.40 -.92%
  
• G7 Currency Volatility (VXY) 9.20 -3.48%
  
• Smart Money Flow Index 11,099.65 -.92%
  
• Money Mkt Mutual Fund Assets $2.551 Trillion +.70%
  
• AAII % Bulls 30.23 -7.38%
  
• AAII % Bears 34.73 +4.20%

Futures Spot Prices

• CRB Index 293.96 +2.45%
  
• Crude Oil 87.10 +3.54%
  
• Reformulated Gasoline 281.61 +3.72%
  
• Natural Gas 2.87 +3.01%
  
• Heating Oil 278.82 +3.12%
  
• Gold 1,592.0 +.59%
  
• Bloomberg Base Metals Index 197.92 +.20%
  
• Copper 350.40 +2.65%
  
• US No. 1 Heavy Melt Scrap Steel 347.67 USD/Ton unch.
  
• China Iron Ore Spot 132.80 USD/Ton -1.70%
  
• Lumber 291.10 +1.46%
  
• UBS-Bloomberg Agriculture 1,697.35 +3.49%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate -2.20% +70 basis points
  
• Philly Fed ADS Real-Time Business Conditions Index -.0518 +26.1%
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 110.77 -.37%
  
• Citi US Economic Surprise Index -61.60 +.9 point
  
• Fed Fund Futures imply 64.0% chance of no change, 36.0% chance of 25 basis point cut on 8/1
  
• US Dollar Index 83.35 +.08%
  
• Yield Curve 125.0 -3 basis points
  
• 10-Year US Treasury Yield 1.49% -6 basis points
  
• Federal Reserve's Balance Sheet $2.849 Trillion +.03%
  
• U.S. Sovereign Debt Credit Default Swap 49.25 +6.97%
  
• Illinois Municipal Debt Credit Default Swap 232.0 +17.37%
  
• Western Europe Sovereign Debt Credit Default Swap Index 273.11 -3.69%
  
• Emerging Markets Sovereign Debt CDS Index 273.94 -5.49%
  
• Saudi Sovereign Debt Credit Default Swap 117.83 -4.97%
• Iraq Sovereign Debt Credit Default Swap 425.0 +.01%
  
• China Blended Corporate Spread Index 472.0 -3 basis points
  
• 10-Year TIPS Spread 2.07% -1 basis point
  
• TED Spread 37.5 -1.25 basis points
  
• 2-Year Swap Spread 23.0 -2.25 basis points
  
• 3-Month EUR/USD Cross-Currency Basis Swap -49.50 +9.5 basis points
  
• N. America Investment Grade Credit Default Swap Index 112.88 +.33%
  
• European Financial Sector Credit Default Swap Index 273.14 -3.44%
  
• Emerging Markets Credit Default Swap Index 258.34 -7.46%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 167.0 unch.
  
• M1 Money Supply $2.270 Trillion +.96%
  
• Commercial Paper Outstanding 981.90 +1.0%
  
• 4-Week Moving Average of Jobless Claims 376,500 -9,300
  
• Continuing Claims Unemployment Rate 2.6% unch.
  
• Average 30-Year Mortgage Rate 3.56% -6 basis points
  
• Weekly Mortgage Applications 799.90 -2.06%
  
• Bloomberg Consumer Comfort -37.5 unch.
  
• Weekly Retail Sales +2.2% unch.
  
• Nationwide Gas $3.39/gallon +.03/gallon
  
• U.S. Cooling Demand Next 7 Days 18.0% above normal
• Baltic Dry Index 1,110 -4.06%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 25.0 unch.
  
• Rail Freight Carloads 203,362 -19.78%
  

Best Performing Style

• Large-Cap Value +.44%
  

Worst Performing Style

• Small-Cap Growth -.95%

Leading Sectors

• HMOs +11.1%
  
• Restaurants +2.1%
• Papers +1.7%
• Banks +1.6%
• Utilities +1.5%

Lagging Sectors

• Semis -5.1%
• Networking -5.2%
  
• Coal -5.9%
• Education -10.4%
• Disk Drives -11.2%

Weekly High-Volume Stock Gainers (4)

• FX, AGP, BAH and TXI
  

Weekly High-Volume Stock Losers (9)

• PSEC, INFA, ANSS, OSUR, CMI, QCOR, LMNX, ADTN and MAKO
  

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 Short-Covering, Euro Bounce, Bargain-Hunting, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Light
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 17.06 -6.93%
  
• ISE Sentiment Index 94.0 unch.
  
• Total Put/Call 1.01 +3.06%
  
• NYSE Arms .93 -36.88%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 112.03 -1.1%
  
• European Financial Sector CDS Index 273.13 bps -1.8%
  
• Western Europe Sovereign Debt CDS Index 272.43 -.57%
  
• Emerging Market CDS Index 259.09 -2.60%
  
• 2-Year Swap Spread 23.0 +1.25 basis points
  
• TED Spread 35.75 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -49.50 +1.5 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .09% -1 basis point
  
• Yield Curve 125.0 +4 basis points
  
• China Import Iron Ore Spot $132.80/Metric Tonne -.67%
  
• Citi US Economic Surprise Index -61.60 -.2 point
  
• 10-Year TIPS Spread 2.08 +3 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating +92 open in Japan
• DAX Futures: Indicating +12 open in Germany
  

Portfolio:

• Higher: On gains in my biotech, retail, medical and tech sector longs
  
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
  
• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value +1.09%

Sector Underperformers:

• 1) Computer Hardware -1.21% 2) Education -.62% 3) Disk Drives -.07%

Stocks Falling on Unusual Volume:

• DB, LXK, SIGM, XRX, APOL, BBY, VIV, CCOI, CSTR, QCOR, IDXX, GMCR, PCYC, DECK and DF
  

Stocks With Unusual Put Option Activity:

• 1) XLNX 2) GCI 3) KGC 4) PBI 5) HOG
  

Stocks With Most Negative News Mentions:

• 1) F 2) SKS 3) JPM 4) LVS 5) XOM
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +1.17%

Sector Outperformers:

• 1) Homebuilders +2.37% 2) Banks +2.22% 3) HMOs +1.45%

Stocks Rising on Unusual Volume:

• FTE, PBR, JPM, SKYW, AFFY, CYT, CFX, VHC and BKD
  

Stocks With Unusual Call Option Activity:

• 1) LCC 2) ELN 3) KGC 4) PG 5) CSTR
  

Stocks With Most Positive News Mentions:

• 1) BA 2) FLY 3) K 4) KMI 5) CMS
  

Charts:

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

Friday Watch

Evening Headlines
Bloomberg:

• Italy’s Bond Rating Cut by Moody’s on Contagion, Funding Risks. Italy’s bond rating was cut and its negative outlook reiterated by Moody’s Investors Service as the euro area’s third-biggest economy faces higher funding costs and contagion risk from Greece and Spain. The ratings company lowered Italy’s government bond rating by two steps to Baa2 from A3, citing a greater risk of a Greek exit from the euro and the Spanish banking system experiencing greater credit losses, according to a statement released in Frankfurt today. That makes Italy’s rating the same as those of Kazakhstan, Bulgaria and Brazil, according to data compiled by Bloomberg. “Italy’s near-term economic outlook has deteriorated, as manifest in both weaker growth and higher unemployment, which creates risk of failure to meet fiscal consolidation targets,” Moody’s said. “Failure to meet fiscal targets in turn could weaken market confidence further, raising the risk of a sudden stop in market funding.”
• Italy Exits Before Greece in BofA Game Theory: Cutting Research. Italy and Ireland have more incentive to quit the euro than Greece, while Germany may have limited room to prevent departures from the currency union, according to Bank of America Merrill Lynch. Using cost-benefit analysis and game theory, BofA Merrill Lynch foreign exchange strategists David Woo and Athanasios Vamvakidis concluded in a July 10 report that investors “may be underpricing the voluntary exit of one or more countries” from the bloc. “Our analysis produces a few surprising results that even readers who may disagree with our conclusion are likely to find interesting,” the strategists wrote. Italy, the euro area’s third-largest economy, would enjoy a higher chance of achieving an orderly exit than others and would stand to benefit from improvements in competitiveness, economic growth and balance sheets, they said.
• Spain Threatens Deficit-Troubled Regions, Offers Help. Spain’s government threatened regions that are having trouble meeting deficit goals while offering to help them regain access to bond markets at a time when the nation is trying to restore investor confidence. Several Spanish regions risk missing their budget-deficit target of 1.5 percent of gross domestic product this year and have been given one week to take corrective measures, Budget Minister Cristobal Montoro said in Madrid late yesterday after a meeting with regional finance chiefs. The Cabinet will examine today a mechanism to provide exceptional assistance with bond redemptions to regional governments that are shut out of markets, he said. The aid will be conditional on additional budget cuts.
• Hollande’s Pledge to Block Firings Defied by Peugeot’s Reality. PSA Peugeot Citroen (UG)’s plan to close a factory in France for the first time in two decades represents the biggest challenge to Socialist President Francois Hollande’s promise to prevent a wave of job cuts. For Hollande, who pledged during his campaign to block what he called an expected “parade of firings,” the cuts by France's largest carmaker leave him squeezed between businesses seeking measures to spur growth and demands of his union supporters. Peugeot, whose announcement yesterday brought its job cuts to 14,000, is hardly alone.
• China Economic Data Questioned as Electricity Use Slows. The figures that go into China’s gross domestic product are “man-made” and “for reference only,” Li Keqiang, then a regional Communist Party head, said in 2007. The comments by Li, now a vice premier who’s expected to become premier next spring, were revealed in a diplomatic cable published by WikiLeaks in late 2010. Li’s remarks are especially relevant as China announced today that the economy expanded 7.6 percent last quarter from a year earlier, the slowest pace in three years.
• Most Chinese Stocks Drop as Second-Quarter Economic Growth Slows. Most Chinese stocks fell after a government report today showed the nation’s economy grew at the slowest quarterly pace in three years in the second quarter. Jiangxi Copper Co. (600362) led declines for commodity companies after a statistics bureau report showed the economy expanded 7.6 percent, trailing analysts’ estimate for 7.7 percent. China Shenhua Energy Co., the biggest coal producer, slid 1.2 percent after Sanford C. Bernstein cut its 2013 price forecast for thermal coal. Industrial & Commercial Bank of China Ltd. and China Minsheng Banking Corp. advanced after new lending exceeded estimates last month.
• Singapore GDP Unexpectedly Shrinks as Europe Crimps Exports. Singapore’s economy unexpectedly contracted last quarter as manufacturing fell, adding to signs of a deepening slowdown in Asian expansion as Europe’s debt crisis curbs demand for the region’s goods. Gross domestic product fell an annualized 1.1 percent in the three months through June from the previous quarter, when it climbed a revised 9.4 percent, the Trade Ministry said in an e- mailed statement today. The median of 14 estimates in a Bloomberg News survey was for a 0.6 percent gain. The economy expanded 1.9 percent from a year earlier. “The outlook on the growth side looks dim,” said Chua Hak Bin, a Singapore-based economist at Bank of America, who accurately predicted today’s GDP contraction. “If a technical recession does occur, chances are the Monetary Authority of Singapore may have to ease policy come October.”
• Copper Traders Most Bearish in Six Weeks on Demand: Commodities. Copper traders are the most bearish in six weeks on concern demand will slow in China, Europe and the U.S. at a time when hedge funds are betting on lower prices. Thirteen analysts surveyed by Bloomberg said they expect prices to drop next week and nine were bullish. A further six were neutral, making the proportion of bears the highest since June 1. Speculators have been wagering on a price drop since May and held a net-short position of 1,749 contacts on July 3, U.S. Commodity Futures Trading Commission data show. More than $1.2 trillion has been wiped from the value of global equities since early July amid concern growth is stalling.
• Fed’s Williams Sees 8% Unemployment Into 2013. Federal Reserve Bank of San Francisco President John Williams said he expects the unemployment rate to remain at or above 8 percent into next year as the economy enters a period of slower job growth.“Progress on bringing down the unemployment rate has probably slowed to a snail’s pace and perhaps even stalled,” Williams said today in the text of a speech in Portland, Oregon.
• Goldman Sachs(GS) Said to Hire Former Geithner Aide Williams. Goldman Sachs Group Inc. (GS), the fifth- biggest U.S. bank by assets, hired Andrew Williams, a former U.S. Treasury Department spokesman, for its corporate communications unit, said two people familiar with the matter.

Wall Street Journal:

• Spaniards Feel Sting of Big Budget Cuts. When Spain's government announced €65 billion ($79.7 billion) in planned budget cuts on Wednesday, it didn't take long for local Mazda salesman Sergio Junquera to feel the impact.
• U.S. Concerned as Syria Moves Chemical Stockpile. Syria has begun moving parts of its vast arsenal of chemical weapons out of storage facilities, U.S. officials said, in a development that has alarmed many in Washington. The country's undeclared stockpiles of sarin nerve agent, mustard gas and cyanide have long worried U.S. officials and their allies in the region, who have watched anxiously amid the conflict in Syria for any change in the status or location of the weapons. American officials are divided on the meaning of the latest moves by members of President Bashar al-Assad's regime.
• At J.P. Morgan(JPM), Whale & Co. Go. Three London-based employees at the center of J.P. Morgan Chase & Co.'s multibillion-dollar trading blunder, including one known as the "London whale," have left the bank, according to people familiar with the company. Achilles Macris, Javier Martin-Artajo and Bruno Iksil are the latest casualties of an episode that already has cost the bank $25 billion in market value and tarred the reputation of Chief Executive James Dimon as Wall Street's savviest risk manager.

Barron's:

• Odds Are Macau Gambling Estimates Too High. Sterne, Agee trimmed back on Las Vegas Sands, Wynn and Melco. Sterne, Agee & Leach. We believe second-quarter consensus is too high in the wake of earnings season for Macau names, potentially delaying more positive sentiment for individual securities with exposure to the Island/the Macau sector in general.

Business Insider:

• Here's Jeff Gundlach's New Epic Presentation On 'Financial Expressionism' And The State of The Economy.
• Here Are 4 Triggers That Could Cause A Meltdown In China's Enormous Shadow Banking System.
• The London Olympics Security Situation Is Looking Like A Complete Disaster.

Zero Hedge:

• Clarifying The Entirely Unremarkable Shift In ECB Deposits.
• Moody's Downgrades Italy's To Baa2 From A3, Negative Outlook - Full Text.
• Forget China's Goal-Seeked GDP Tonight; This Is The Chart That Keeps The PBOC Up At Night.

CNBC:

• China Logs Slowest Quarterly Growth Since 2009.
• Pew! Pew! US Videogame Sales Fall for 7th Month.
• Banks’ Libor Costs May Hit $22 Billion. Twelve global banks that have been publicly linked to the Libor rate-rigging scandal face as much as $22bn in combined regulatory penalties and damages to investors and counterparties, according to Morgan Stanley estimates.
• 'Bad News' for Commodities Regardless of China GDP: Trader.

Time Moneyland:

• Is Subprime Lending Fueling the Auto Surge? New research shows that lenders are loosening their standards for auto loans for people with damaged credit, but this is better news for lenders than it is for borrowers — or auto companies. In a quarterly study, credit scoring company FICO found that just over half of lenders say the biggest increase in subprime lending will be for car loans, a jump that comes as the new-car market regains its bearings and picks up steam again.
  

Washington Post:

• Geithner drawn into Libor scandal. While president of the Federal Reserve Bank of New York, Timothy F. Geithner pressed British regulators to reform the way it calculated a critical global benchmark called the London interbank offered rate, or Libor, according to a June 1, 2008 e-mail obtained by The Washington Post. Writing to the head of the Bank of England, among others, Geithner made six recommendations, which included eliminating incentives that could encourage banks to manipulate the rate and to establish a “credible reporting procedure.”

Forbes:

• California Cities Go Bankrupt, But Bullet Train Barrels On.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows Mitt Romney attracting 46% of the vote, while President Obama earns support from 45%. Five percent (5%) prefer some other candidate, and three percent (3%) are undecided.

Reuters:

• Syrian govt forces kill over 200 in village attack: activists. More than 200 people, mostly civilians, were massacred in a Syrian army and militia onslaught on a village in the rebellious province of Hama on Thursday, opposition activists said.
• San Bernardino under investigation, mulls bankruptcy move. Authorities are investigating financially troubled San Bernardino, California, where the city council voted this week to approve a bankruptcy filing amid a claim by the city attorney that fraudulent accounting may have contributed to the city's problems.
• FBI probes China's ZTE over Iran tech deals-report. The FBI has opened a criminal investigation into Chinese telecoms gear maker ZTE Corp's sale of banned U.S. computer equipment to Iran and its alleged attempts to cover it up and obstruct a Department of Commerce probe, the Smoking Gun website reported.
• Lexmark(LXK) slashes 2nd-qtr outlook on weak European demand. Printer maker Lexmark International Inc cut its second quarter outlook, hurt by the impact of exchange rates and weaker-than-expected demand in Europe, sending shares down nearly 10 percent in after market trading. The company expects second quarter adjusted earnings in the range of 87 cents to 89 cents per share, lower than the previous guidance of 95 cents to $1.05 per share. Lexmark said sales for the current quarter would decline 12 percent, compared with a drop of 7 to 9 percent anticipated earlier. "Looking ahead, the company expects these same factors to impact the second half of 2012," Lexmark said in a statement.
• Institutional investors exit equity funds - Lipper.

Financial Times:

• Honeywell(HON) chief warns on debt gridlock. A prominent US chief executive has urged business leaders to press politicians to agree on a solution to the country’s debt problems as concern rises that gridlock in Washington is damaging the economy.

Telegraph:

• Euro tumbles as Asian funds shun EU chaos. The euro has plunged to multi-year lows against a range of currencies on fears of a deepening slump in Italy and Spain, and ugly disputes between eurozone leaders.
• France’s story of failure should drive our success. A car industry shedding jobs in the thousands after a chronic loss of competitiveness undermined by the dead hand of state aid. Sound familiar?
• Greek unemployment rate at new record of 22%. Greek unemployment hit a record 22.5pc in April and may keep edging higher, with even the key tourism sector unlikely to provide more than fleeting support over the summer as visitors stay away from the recession-hit country.

Chosun Ilbo:

• South Korea may resume purchase of Iran crude as Iran govt offers $1b worth of insurance coverage to tankers carrying crude to South Korea.

Economic Information Daily:

• Large Number of Chinese IPOs in 2H May Hurt Stock Market. The value of IPOs in China in 2H may be around 3 times as much as in 1H, citing a survey of private equity funds by www.simuwang.com.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 168.0 +5.0 basis points.
  
• Asia Pacific Sovereign CDS Index 138.0 +1.5 basis points.
  
• FTSE-100 futures +.35%.
  
• S&P 500 futures +.36%.
  
• NASDAQ 100 futures +.48%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JPM)/.76
• (WFC)/.81
• (WBS)/.44
• (IGTE)/.30
  

Economic Releases
8:30 am EST

• The Producer Price Index for June is estimated to fall -.5% versus a -1.0% decline in May.
• The PPI Ex Food & Energy for June is estimated to rise +.2% versus a +.2% gain in May.
  

9:55 am EST

• Preliminary Univ. of Mich. Consumer Confidence for July is estimated to rise to 73.5 versus 73.2 in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Lockhart speaking and BOJ Monthly Report could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Falling into Final Hour on Rising Global Growth Ffears, Eurozone Debt Angst, Earnings Worries, US Fiscal Cliff Concerns

Broad Market Tone:

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

Equity Investor Angst:

• VIX 18.12 +.98%
  
• ISE Sentiment Index 102.0 +61.90%
  
• Total Put/Call .99 +2.06%
  
• NYSE Arms 1.41 +41.09%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 113.10 +1.40%
  
• European Financial Sector CDS Index 278.38 -.45%
  
• Western Europe Sovereign Debt CDS Index 274.70 +.72%
  
• Emerging Market CDS Index 266.31 -.13%
  
• 2-Year Swap Spread 21.75 -1.75 basis points
  
• TED Spread 35.75 -.75 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -51.0 +3.5 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .10% +1 basis point
  
• Yield Curve 121.0 -4 basis points
  
• China Import Iron Ore Spot $133.70/Metric Tonne -.22%
  
• Citi US Economic Surprise Index -61.40 +3.1 points
  
• 10-Year TIPS Spread 2.05 -3 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating -5 open in Japan
• DAX Futures: Indicating +23 open in Germany
  

Portfolio:

• Slightly Higher: On gains in my biotech sector longs, index hedges and emerging markets shorts
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short, then covered some of them
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades off session lows, after testing its 50-day moving average, on eurozone debt angst, tech/financial sector weakness, US "fiscal cliff" worries, earnings concerns and rising global growth fears. On the positive side, Coal, Biotech, Homebuilding and Restaurant shares are especially strong, rising more than +.75%. Lumber is rising +1.4%. The Germany sovereign cds is falling -1.8% to 89.88 bps, the Portugal sovereign cds is down -1.8% to 826.11 bps and the Brazil sovereign cds is down -1.6% to 147.89 bps. On the negative side, Oil Tanker, Computer, Semi, Disk Drive, Networking, Bank, I-Banking, Gaming, Education and Airline shares are under pressure, falling more than -1.25%. Cyclicals are underperforming again. Tech and financial shares are heavy. Copper is down -.5%. The 10Y T-Note Yld is falling another -4 bps to 1.48%. The Citi Latin America Economic Surprise Index is falling another -1.5 points today to -35.20, which is the lowest since early-Aug. of last year. Major Asian indices fell around -1.5% overnight, led down by a -2.24% decline in South Korea(-4.8% in 5 days). Major European indices fell around -1.25%, led down by a -2.6% decline in Spain(-4.7% in 5 days). The Bloomberg European Bank/Financial Services Index fell -1.8%. The Spain sovereign cds is up +1.7% to 568.47 bps, the Italy sovereign cds is gaining +1.4% to 503.43 bps and the China sovereign cds is gaining +1.1% to 114.37 bps. Moreover, the Italian/German 10Y Yld Spread is rising +2.7% to 466.26 bps. US weekly retail sales have decelerated to a sluggish rate at +2.2%, which is the slowest since the week of April 5th of last year. US Trucking Traffic continues to soften. The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak. Moreover, the Citi US Economic Surprise Index has fallen back to late-Aug. levels. Lumber is -3.0% since its March 1st high despite improving sentiment towards homebuilders and the broad equity rally ytd. 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 -26.0% since Sept. 7th of last year. Shanghai Copper Inventories have risen +134.0% ytd. Oil tanker rates have plunged recently, with the benchmark Middle East-to-US voyage down to 25.0 industry-standard worldscale points, which is the lowest since Oct. 2009. The CRB Commodities Index is now technically in a bear market, having declined -21.2% since May 2nd of last year. Spanish and Italian yields are back in the danger zone. Copper, oil and the euro currency continue to trade poorly and remain in intermediate-term downtrends. The 10Y T-Note continues to trade too well, which remains a big red flag. The AAII % Bulls fell to 30.2 this week, while the % Bears rose to 34.7. I still believe the level of complacency among US investors regarding the rapidly deteriorating situation in Europe is fairly high. Key gauges of credit angst remain technically strong. The Citi Eurozone Economic Surprise Index is at -74.0 points, which is near the lowest since mid-Sept. of last year. Massive tax hikes and spending cuts are still yet to hit in several key eurozone countries that are already in recession. A lack of competitiveness remains unaddressed. Moreover, the “solutions” for the European debt crisis I still hear being bandied about are only bigger kick-the-cans that if implemented will eventually lead to an even bigger catastrophe as Germany is engulfed, in my opinion. The European debt crisis is also really beginning to bite emerging market economies now, which will further pressure exports from the region and further raise the odds of more sovereign/bank downgrades. I continue to believe the bar for additional QE is likely higher than the Fed is letting on. Uncertainty surrounding the effects on business of Obamacare, the "US fiscal cliff " and election outcome uncertainty will likely become more and more of a focus for investors as the year progresses. Finally, the upcoming earnings season could prove more challenging than usual for big multi-nationals given US dollar strength and the precipitous declines in some key parts of the global economy during the quarter. Stocks that miss earnings estimates are being severely punished despite the obvious headwinds. It appears to me that European officials are finally trying actively to devalue their currency now and I don't believe the negative implications of this have been priced into commodities/emerging markets. Today's rally off the lows was likely driven by investor expectations that China economic data will beat lowered estimates tonight and US housing optimism on Buffett's comments. I continue to believe housing has just stabilized after the crash and prices will make new lows during the next recession. I still believe there is too much uncertainty on the horizon to conclude a durable stock market low is in place. For this year's equity advance to regain traction, I would expect to see a resumption in European credit gauge improvement, a subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices, a US "fiscal cliff" solution 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, earnings worries, rising global growth fears, more shorting, tech/financial sector weakness and US "fiscal cliff" concerns.