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 US debt ceiling concerns, global growth fears, China-Japan/Mideast tensions, Eurozone debt angst, profit-taking, earnings disappointments, technical selling and more shorting. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Market Week in Review

S&P 500 1,502.96 +1.49%*




The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,502.96 +1.49%

• DJIA 13,895.98 +2.21%

• NASDAQ 3,149.71 +.44%

• Russell 2000 905.24 +1.67%

• Value Line Geometric(broad market) 392.84 +1.92%

• Russell 1000 Growth 688.76 +1.08%

• Russell 1000 Value 763.98 +2.05%

• Morgan Stanley Consumer 889.97 +1.85%

• Morgan Stanley Cyclical 1,126.08 +1.44%

• Morgan Stanley Technology 732.74 +1.62%

• Transports 5,870.05 +3.32%

• Utilities 470.05 +2.50%

• Bloomberg European Bank/Financial Services 97.94 +.41%

• MSCI Emerging Markets 44.11 -.58%

• Lyxor L/S Equity Long Bias 1,106.64 +.34%

• Lyxor L/S Equity Variable Bias 824.18 +.74%

Sentiment/Internals

• NYSE Cumulative A/D Line 170,606 +1.38%

• Bloomberg New Highs-Lows Index 1,073 +114

• Bloomberg Crude Oil % Bulls 50.0 +28.6%

• CFTC Oil Net Speculative Position 246,103 +8.5%

• CFTC Oil Total Open Interest 1,491,867 -.22%

• Total Put/Call .87 +17.57%

• OEX Put/Call .72 -28.0%

• ISE Sentiment 123.0 -22.6%

• NYSE Arms .60 -59.46%

• Volatility(VIX) 12.89 -5.01%

• S&P 500 Implied Correlation 61.41 -1.95%

• G7 Currency Volatility (VXY) 8.81 -3.7%

• Smart Money Flow Index 11,317.63 +.89%

• Money Mkt Mutual Fund Assets $2.696 Trillion -.20%

• AAII % Bulls 52.3 +19.1%

• AAII % Bears 24.3 -11.2%

Futures Spot Prices

• CRB Index 300.42 +.03%

• Crude Oil 96.01 +.84%

• Reformulated Gasoline 287.54 +3.94%

• Natural Gas 3.45 -.80%

• Heating Oil 306.30 +1.18%

• Gold 1,658.40 -1.71%

• Bloomberg Base Metals Index 216.27 +.43%

• Copper 365.70 -.08%

• US No. 1 Heavy Melt Scrap Steel 349.33 USD/Ton unch.

• China Iron Ore Spot 148.60 USD/Ton +2.41%

• Lumber 358.30 -3.16%

• UBS-Bloomberg Agriculture 1,571.68 -.56%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 7.2% +110 basis points

• Philly Fed ADS Real-Time Business Conditions Index .3537 -5.2%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 112.52 -.29%

• Citi US Economic Surprise Index -2.0 -4.2 points

• Fed Fund Futures imply 56.0% chance of no change, 44.0% chance of 25 basis point cut on 1/30

• US Dollar Index 79.73 +.06%

• Yield Curve 167.0 +8 basis points

• 10-Year US Treasury Yield 1.95% +11 basis points

• Federal Reserve's Balance Sheet $2.994 Trillion +1.61%

• U.S. Sovereign Debt Credit Default Swap 43.59 -.93%

• Illinois Municipal Debt Credit Default Swap 162.0 -4.18%

• Western Europe Sovereign Debt Credit Default Swap Index 98.67 +1.02%
  

• Emerging Markets Sovereign Debt CDS Index 157.84 -3.38%
  

• Israel Sovereign Debt Credit Default Swap 120.31 -2.85%

• Iraq Sovereign Debt Credit Default Swap 470.59 +7.86%

• China Blended Corporate Spread Index 379.0 +11 basis points

• 10-Year TIPS Spread 2.52% -1 basis point

• TED Spread 23.0 unch.

• 2-Year Swap Spread 16.25 +2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -12.75 +4.75 basis points

• N. America Investment Grade Credit Default Swap Index 85.0 -3.86%
  

• European Financial Sector Credit Default Swap Index 136.11 +.07%
  

• Emerging Markets Credit Default Swap Index 213.03 -1.06%
  

• CMBS Super Senior AAA 10-Year Treasury Spread 90.0 unch.

• M1 Money Supply $2.456 Trillion +1.46%

• Commercial Paper Outstanding 1,125.50 -.60%

• 4-Week Moving Average of Jobless Claims 351,800 -7,500

• Continuing Claims Unemployment Rate 2.5% unch.

• Average 30-Year Mortgage Rate 3.42% +4 basis points

• Weekly Mortgage Applications 894.80 +6.97%

• Bloomberg Consumer Comfort -36.4 -.9 point

• Weekly Retail Sales +1.9% -10 basis points

• Nationwide Gas $3.33/gallon +.04/gallon

• Baltic Dry Index 808.0 -3.47%

• China (Export) Containerized Freight Index 1,125.21 unch.

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 20.0-20.0%

• Rail Freight Carloads 249,397 -1.38%

Best Performing Style

• Mid-Cap Value +2.31%

Worst Performing Style

• Large-Cap Growth +1.08%

Leading Sectors

• Disk Drives +6.65%
• Oil Tankers +4.84%
• Internet +4.71%
• Computer Services +4.49%
• Road & Rail +4.22%

Lagging Sectors

• Defense +.72% 
• Semis +.70%
• Gaming +.36%
• Steel -1.63%
• Gold & Silver -6.63%

Weekly High-Volume Stock Gainers (22)

• MAPP, NFLX, SWFT, CREE, SMCI, TZOO, INVN, BOX, OMG, ATNI, ISRG, GY, KBH, OSTK, LIFE, MTRX, CSH, TPX, SRC, RKT, WST and KNX

Weekly High-Volume Stock Losers (9)

• MKC, COF, DBD, VLTR, TCBI, IIVI, CYBX, OSIS and COH

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 Less Eurozone Debt Angst, Diminishing Global Growth Fears, Short-Covering, Tech/Homebuilding Sector Strength

Today's Market Take:

Broad Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• VIX 12.85 +1.26%
  

• ISE Sentiment Index 130.0 +9.2%

• Total Put/Call .88 +1.15%

• NYSE Arms .65 -31.83%

Credit Investor Angst:

• North American Investment Grade CDS Index 85.11 -1.65%

• European Financial Sector CDS Index 136.17 -.75%

• Western Europe Sovereign Debt CDS Index 98.67 -1.55%

• Emerging Market CDS Index 212.52 -.41%

• 2-Year Swap Spread 16.25 +1.0 bp

• TED Spread 23.0 +.5 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -12.75 +1.5 bps

Economic Gauges:

• 3-Month T-Bill Yield .07% -1 bp

• Yield Curve 167.0 +6 bps

• China Import Iron Ore Spot $148.60/Metric Tonne unch.

• Citi US Economic Surprise Index -2.0 -1.4 points

• 10-Year TIPS Spread 2.52 -3 bps

Overseas Futures:

• Nikkei Futures: Indicating +89 open in Japan

• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Slightly Higher: On gains in my medical/biotech/retail/tech sector longs and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• ECB Says Banks to Repay More Than Forecast of 3-Year Loan. The European Central Bank said banks will next week repay more of its emergency three-year loans than economists forecast in another sign the euro region’s debt crisis is abating. Some 278 financial institutions will return 137.2 billion euros ($184.4 billion) on Jan. 30, the first opportunity for early repayment of the initial three-year loan, the Frankfurt- based ECB said in a statement today. That compares with the median forecast of 84 billion euros in a Bloomberg News survey of economists. The ECB’s first loan totalled 489 billion euros and banks can continue to make early repayments in coming weeks.
• China Warns ‘Hot Money’ Inflows Possible on Easing From Abroad. China’s foreign-exchange regulator renewed concerns that the nation will see fresh speculative inflows of money after the U.S. and Japanese central banks said they would pump more funds into their financial systems. “The policies in major economies of monetary easing and low interest rates will boost global liquidity, increase risk preferences in the market and drive speculative funds into China,” the State Administration of Foreign Exchange said in a statement on its website today. A large amount of so-called “hot money” inflows is possible, “but there are many uncertain factors,” SAFE said.
• Assault Weapons Ban Lacks Democratic Votes to Pass Senate. A proposed ban on sales of assault weapons would be defeated in the U.S. Senate today unless some members changed their current views, based on a Bloomberg review of recent lawmaker statements and interviews. At least six of the 55 senators who caucus with Democrats have recently expressed skepticism or outright opposition to a ban, the review found. That means Democrats wouldn’t have a simple 51-vote majority to pass the measure, let alone the 60 votes needed to break a Republican filibuster to bring it to a floor vote.
• Illinois Credit Rating Lowered by S&P as Pension Burden Climbs. Illinois had its debt rating cut one level to A- by Standard & Poor’s, which threatened to downgrade the state again following lawmakers’ failure to bolster the nation’s worst-funded pension system.

Wall Street Journal: 

• Court Rules Obama Recess Appointments Unconstitutional. A federal appeals court on Friday ruled that President Barack Obama violated the Constitution when he bypassed the Senate to fill vacancies on the National Labor Relations Board.

CNBC:

• Whistleblower Says Dreamliner Batteries Could ‘Explode’. Michael Leon is adamant about his fear about the use of lithium-ion batteries on the Boeing(BA) 787 Dreamliner. "These lithium-ion batteries are heat intolerant. Too much heat on those things, they will go into a thermal runaway, they will explode, it will be a nightmare," he said.
• It's Personal! Ackman vs Icahn, Live on CNBC. (video)

Zero Hedge:

• As Euro Banks Return €137 Billion In Cash, Moody's Warns "European Banks Need More Cash". 
• The Case Against QE: "Zombie Banks, Companies, Households, And Governments". 
• The "Undisputed Housing Recovery" Is Unmissable On This New Home Sales Chart. 
• Exposing A Bifurcated Europe. 
• The Visible Hand Of The Fed.

Business Insider:

• Egypt Is Falling Apart On The Anniversary Of The Revolution [PHOTOS]. 
• POLL: More Than Half Of Republicans Think A Government Shutdown Is Fine If It Means More Spending Cuts. 
• SHILLER: All This Housing Optimism Is Way Too Premature.

Reuters:

• French jobless claims stabilise at 15-year high. The number of people out of work in France rose by just 300 in December, marking a pause after 19 straight months of larger jumps but still sticking close to its highest level in almost 15 years. Labour ministry data showed that the number of registered job seekers in mainland France stood at 3.133 million after the marginal increase, leaving the total at what is still the highest point since January 1998. The level versus a year ago is up 10 percent.
• Fitch cuts Cyprus sovereign rating to B citing banking sector. Fitch Ratings on Friday cut euro zone member Cyprus's sovereign credit rating to B from BB-minus, a two-notch downgrade, saying the government probably will have to put more financial support behind the ailing banking sector. 
• China tells U.S. to slow money printing presses. A senior Chinese official said on Friday that the United States should cut back on printing money to stimulate its economy if the world is to have confidence in the dollar. 
• Bank of Italy feels the heat over Monte Paschi scandal. The Bank of Italy scrambled on Friday to deflect charges that it failed to prevent risky derivatives trades by the country's third-largest lender, which took place when ECB chief Mario Draghi headed Italy's central bank.

Telegraph:

• Britain is experiencing 'worse slump than during Great Depression'. Britain's recent economic performance is the worst since records began in the pre-Victorian era, experts said today, apart from the two immediate post-war slumps. 

Bear Radar

Style Underperformer:

• Mid-Cap Value +.15%

Sector Underperformers:

• 1) Gold & Silver -2.43% 2) Education -.61% 3) HMOs -.33%
  

Stocks Falling on Unusual Volume:

• HBHC, LFC, PB, MFC, CYOU, TZOO, CALL, QSII, SCSS, SFL, SCSC, GGC, HAS, ACO, CTRP, ISCA, CYN, AWK, OTEX, PMT, MANU, LRN, ESI, STC, ACT, UAN, JOY, PHI, AAXJ, WY, MKC and KFN

Stocks With Unusual Put Option Activity:

• 1) KEY 2) IYT 3) TPX 4) NFLX 5) CRUS
  

Stocks With Most Negative News Mentions:

• 1) CAT 2) FLEX 3) MON 4) HAS 5) AEM
  

Charts:

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