Weekly Scoreboard*

Indices

• S&P 500 1,703.20 +.75%

• DJIA 15,237.10 +1.09%

• NASDAQ 3,791.87 -.42%

• Russell 2000 1,084.31 +.56%

• S&P 500 High Beta 27.56 +.45%

• Wilshire 5000 17,929.70 +.57%

• Russell 1000 Growth 791.26 +.11%

• Russell 1000 Value 826.60 +1.10%

• Morgan Stanley Consumer 1,032.53 +1.58%

• Morgan Stanley Cyclical 1,324.11 +.23%

• Morgan Stanley Technology 825.74 -.48%

• Transports 6,648.41 +.58%

• Utilities 491.68 +2.43%

• Bloomberg European Bank/Financial Services 105.30 +2.24%

• MSCI Emerging Markets 42.46 +1.57%

• HFRX Equity Hedge 1,122.47 -.08%

• HFRX Equity Market Neutral 935.90 +.29%

Sentiment/Internals

• NYSE Cumulative A/D Line 190,387 -.04%

• Bloomberg New Highs-Lows Index 208 -47

• Bloomberg Crude Oil % Bulls 42.42 +112.1%

• CFTC Oil Net Speculative Position 320,758 n/a

• CFTC Oil Total Open Interest 1,881,081 n/a

• Total Put/Call .96 +10.34%

• OEX Put/Call 1.31 +50.57%

• ISE Sentiment 81.0 -11.96%

• NYSE Arms 1.24 +67.57%

• Volatility(VIX) 15.72 -6.09%

• S&P 500 Implied Correlation 44.24 -11.04%

• G7 Currency Volatility (VXY) 8.31 -3.49%

• Emerging Markets Currency Volatility (EM-VXY) 9.14 -6.35%

• Smart Money Flow Index 11,455.09 +.26%

• Money Mkt Mutual Fund Assets $2.666 Trillion -.74%

• AAII % Bulls 41.3 +9.2%

• AAII % Bears 33.6 +11.7%

Futures Spot Prices

• CRB Index 286.6 +.06%

• Crude Oil 102.02 -1.59%

• Reformulated Gasoline 266.81 +2.23%

• Natural Gas 3.78 +7.55%

• Heating Oil 303.49 +1.10%

• Gold 1,268.20 -3.28%

• Bloomberg Base Metals Index 190.88 +.86%

• Copper 326.90 -1.06%

• US No. 1 Heavy Melt Scrap Steel 335.67 USD/Ton unch.

• China Iron Ore Spot 133.10 USD/Ton +1.29%

• Lumber 331.20 -1.87%

• UBS-Bloomberg Agriculture 1,422.76 -.49%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 3.8% -100 basis points

• Philly Fed ADS Real-Time Business Conditions Index -.3118 -5.94%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 118.84 +.12%

• Citi US Economic Surprise Index 35.40 -9.3 points

• Citi Emerging Markets Economic Surprise Index -4.60 -5.4 points

• Fed Fund Futures imply 42.0% chance of no change, 58.0% chance of 25 basis point cut on 10/30

• US Dollar Index 80.36 +.29%

• Euro/Yen Carry Return Index 139.19 +1.02%

• Yield Curve 233.0 +2 basis points

• 10-Year US Treasury Yield 2.69% +5 basis points

• Federal Reserve's Balance Sheet $3.715 Trillion +.31%

• U.S. Sovereign Debt Credit Default Swap 33.74 -17.17%

• Illinois Municipal Debt Credit Default Swap 191.0 +7.50%

• Western Europe Sovereign Debt Credit Default Swap Index 72.31 -12.53%

• Asia Pacific Sovereign Debt Credit Default Swap Index 109.64 -5.10%
  

• Emerging Markets Sovereign Debt CDS Index 220.99 -6.75%
  

• Israel Sovereign Debt Credit Default Swap 114.0 -4.88%

• Egypt Sovereign Debt Credit Default Swap 675.0 +1.02%

• China Blended Corporate Spread Index 370.0 -9 basis points

• 10-Year TIPS Spread 2.21% unch.

• TED Spread 18.75 -3.5 basis points

• 2-Year Swap Spread 13.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -7.50 -1.5 basis points

• N. America Investment Grade Credit Default Swap Index 77.29 -3.07%
  

• European Financial Sector Credit Default Swap Index 128.01 -5.81%
  

• Emerging Markets Credit Default Swap Index 275.81 -3.58%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 114.0 unch.

• M1 Money Supply $2.600 Trillion +1.15%

• Commercial Paper Outstanding 1,065.70 +1.0%

• 4-Week Moving Average of Jobless Claims 325,000 +20,000

• Continuing Claims Unemployment Rate 2.2% -10 basis points

• Average 30-Year Mortgage Rate 4.23% +1 basis point

• Weekly Mortgage Applications 455.90 +1.27%

• Bloomberg Consumer Comfort -29.7 -.3 point

• Weekly Retail Sales +3.70% -20 basis points

• Nationwide Gas $3.34/gallon -.03/gallon

• Baltic Dry Index 1,985 -4.75%

• China (Export) Containerized Freight Index 1,039.72 -4.67%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 25.0 unch.

• Rail Freight Carloads 266,580 -1.21%

Best Performing Style

• Small-Cap Value +1.6%

Worst Performing Style

• Mid-Cap Growth -.7%

Leading Sectors

• Coal +3.3%

• Tobacco +3.0%

• REITs +2.9%

• Utilities +2.4%

• Medical Equipment +2.2%

Lagging Sectors

• Internet -1.6% 

• Retail -1.7%

• Networking -1.9%

• Gold & Silver -4.0%

• Biotech -5.4%

Weekly High-Volume Stock Gainers (10)

• MW, CALD, PICO, BDE, JOSB, LCI, DRI, MG, STEL and CMTL

Weekly High-Volume Stock Losers (16)

• ALGN, YUM, ADTN, WWWW, VSTM, INSY, HUBG, BKE, CTB, APFC, EXAS, CTXS, LQDT, PBYI, ACAD and LRN

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Higher into Final Hour on Diminishing US Debt Ceiling/Shutdown Worries, Falling Eurozone/Emerging Markets Debt Angst, Short-Covering, Homebuilding/Gaming Sector Strength

Click Here for Today's Market Take.

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 15.96 -2.85%

• Euro/Yen Carry Return Index 139.10 +.51%

• Emerging Markets Currency Volatility(VXY) 9.15 -1.82%

• S&P 500 Implied Correlation 45.93 -1.61%

• ISE Sentiment Index 84.0 +3.70%

• Total Put/Call .94 -1.05%

• NYSE Arms 1.33 +196.60% 

Credit Investor Angst:

• North American Investment Grade CDS Index 77.13 -1.83%

• European Financial Sector CDS Index 128.02 -1.97%

• Western Europe Sovereign Debt CDS Index 72.31 -7.6%

• Emerging Market CDS Index 275.78 -.90%

• 2-Year Swap Spread 13.25 unch.

• TED Spread 17.75 -2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -7.50 +1.0 basis points

Economic Gauges:

• 3-Month T-Bill Yield .07% +2 basis points

• Yield Curve 234.0 unch.

• China Import Iron Ore Spot $133.10/Metric Tonne +.08%

• Citi US Economic Surprise Index 35.40 -.5 points

• Citi Emerging Markets Economic Surprise Index -4.60 -3.7 points

• 10-Year TIPS Spread 2.21 unch.

Overseas Futures:

• Nikkei Futures: Indicating +140 open in Japan

• DAX Futures: Indicating +16 open in Germany

Portfolio: 

• Higher: On gains in my medical/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

Today's Headlines

Bloomberg:

• Senators Say Obama Open to Health Law Changes as Talks Continue. Senate Republicans after a meeting at the White House said President Barack Obama is open to changing a tax on medical devices in the future as talks continue about ending a partial government shutdown and raising the debt limit. Obama didn’t rule out repealing the tax, which was included in the Patient Protection and Affordable Care Act, said Senator Orrin Hatch of Utah, an advocate of the tax’s repeal. The president said he was encouraged by Senate Republicans’ efforts on a debt-limit plan, said Senator John McCain. Obama has insisted that any health-law changes occur after the shutdown ends and the debt limit is raised.

• India Factory Output Misses Estimates as Domestic Demand Falters. India’s industrial output rose less than economists estimated in August as consumer spending moderated, adding pressure on Prime Minister Manmohan Singh’s government to intensify efforts to revive the economy. Output at factories, utilities and mines advanced 0.6 percent from a year earlier after a revised 2.75 percent climb in the previous month, the Statistics Ministry said in a statement in New Delhi today. The median of 33 estimates in a Bloomberg News survey was for a 2 percent gain. 

• Europe Stocks Post Weekly Gain Amid U.S. Debt-Deal Signs. European stocks posted a weekly gain, snapping two weeks of losses, as concern over a potential default by the U.S government faded and the nomination of Janet Yellen as the next Federal Reserve chairman signaled the continuation of stimulus. Celesio AG surged 19 percent as McKesson Corp. was said to be in talks to buy a majority stake in the drug wholesaler. Persimmon Plc and Taylor Wimpey Plc led house builders higher as British property prices surged to an 11-year high and Goldman Sachs Groups Inc. predicted further growth. TGS Nopec Geophysical Co. slumped 16 percent after reducing its sales forecast because of delays in getting permits for new surveys. The Stoxx Europe 600 Index added 0.6 percent to 311.61 this week, after slipping 1.4 percent in the previous two weeks.

• Comex Suspended Gold Trading for 10 Seconds After Price Slump. CME Group Inc.’s Comex halted trading in December gold futures for about 10 seconds today at 8:42 a.m. New York time, said Damon Leavell, a spokesman for the exchange. The December contract fell about $20 within a minute before trading was suspended, data compiled by Bloomberg show. Leavell declined to comment on the size of the trade that led to the halt. The “stop-logic” mechanism gives traders the opportunity to provide additional liquidity and prevent excessive price movements.

• IEA Sees Oil Supplies Outside OPEC Rising Most Since 1970s. The International Energy Agency estimates that non-OPEC oil producers led by the U.S., Canada and Kazakhstan will bolster supplies next year by the most since the 1970s, undermining the need for OPEC’s crude. Producers outside the Organization of Petroleum Exporting Countries will increase 2014 output by a near-record 1.7 million barrels a day to 56.4 million, the IEA said, boosting its forecasts from a month ago by 300,000 barrels a day. Supply losses in OPEC members Libya and Iraq, which reduced the group’s output to a two-year low, are preventing the new shipments from calming oil prices, the Paris-based adviser to energy-consuming nations said.

Wall Street Journal:

• Noonan: Now Is the Time to Delay ObamaCare. It's not what Americans were promised—or even what Congress enacted.

Fox News:

• Cruz rallies conservatives against ObamaCare ahead of White House talks. Republican Sen. Ted Cruz rallied conservatives to keep up the fight to unravel ObamaCare, ahead of a White House meeting where his colleagues were expected to dial back their demands for changes to the health law as part of a possible deal to end the partial government shutdown.

CNBC:

• JPMorgan(JPM) sees some ugly firsts with earnings. (video)

• The president has become too powerful: Jack Welch. (video)

Zero Hedge:

• Wells(WFC) Crippled By Mortgage Pipeline Shutdown: Net Interest Margin Slides, Reserve Release Soars.

• Consumer Confidence Misses Expectations; Slumps To Lowest Since January. (graph)

• The "Hard" Data Doesn't Lie.

• US And European Regulators Probing FX Market Rigging. 

• If We Are In An Economic Recovery, Why Are Major Corporations Firing Thousands?

Business Insider:

• JP Morgan's(JPM) Earnings Confirm That The US Housing Recovery Is In Danger.

10News: 

• Memo uncovered in 10 News Investigation causes concern from terrorism experts. There is heightened concern terrorists may be planning another 9/11 type of attack- even using airplanes again. The 10 News Investigators recently obtained an internal memo that security experts of the U.S. Airline Pilots Association and Federal Air Marshals believe details a terrorist "dry-run" that happened just six weeks ago on a flight from Reagan National Airport to Orlando International Airport.

The Street:

• Greenberg: Fleckenstein to Restart Short Fund. From the looks of this market, you might think Bill Fleckenstein needs to have his head examined for what he's about to do: Restart his short-selling fund, which he shut four years ago. As it turns out, he's one of several ex-short-sellers I've talked to in recent weeks who have said they think the time is right to return. So far, Fleckenstein, who made his name shorting mostly tech companies, but who quit in 2009 to start an opportunistic long-only fund, is the first to go public with his plans.

Reuters:

• Exclusive: U.S. CFTC finishing new, tougher commodity limits rule - sources. The U.S. derivatives market regulator is nearing completion of a new rule for position limits in commodity markets that is in parts tougher than the previous proposal, two sources with direct knowledge of the plan said. Commodity Futures Trading Commission Chairman Gary Gensler is rushing to get a revamped rule out before he leaves office in December, said the sources, even while agency lawyers are still preparing to defend the original position limits regulations that were knocked back by a U.S. court last year.

• Fed's Powell-Policy to be highly accommodative for quite a while. The U.S. Federal Reserve will maintain its ultra-easy monetary policy for quite a while longer, regardless of what decision it takes on when to change the level of its monthly bond buying campaign, a senior u.S. central banker said on Friday. 

• Stock funds worldwide have $6.5 bln outflow - BofA. Investors in funds worldwide pulled $6.5 billion out of stock funds in the latest week, marking the largest such outflows in five weeks, data from a Bank of America Merrill Lynch Global Research report showed Friday. 

• Copper up on U.S. after biggest weekly loss in a month. Copper rose on Friday, tracking equities markets as improved prospects of a deal in Washington to solve a fiscal deadlock boosted riskier assets, but the metal staged its biggest weekly loss in a month.

The Guardian:

• Skype under investigation in Luxembourg over link to NSA. Ten years ago, the calling service had a reputation as a tool for evading surveillance but now it is under scrutiny for covertly passing data to government agencies.

Bear Radar

Style Underperformer:

• Large-Cap Value +.42%

Sector Underperformers:

• 1) Gold & Silver -1.91% 2) Oil Tankers -.59% 3) Retail -.45%

Stocks Falling on Unusual Volume:

• EOPN, SGI, GPS, ECYT, NPSP, CRAY, ETH, MYGN, MU, DAR, SYNA, INSY, NSM, ACAD, LTD, CPHD, MMS, PLCE, FRAN, CLDX, NMFC, ACAD and ETH

Stocks With Unusual Put Option Activity:

• 1) LOW 2) ANF 3) URI 4) NFX 5) EA
  

Stocks With Most Negative News Mentions:

• 1) ESV 2) CF 3) POT 4) JPM 5) TSLA
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +.23%

Sector Outperformers:

• 1) Coal +1.65% 2) Alt Energy +1.38% 3) Gaming +1.25%
  

Stocks Rising on Unusual Volume:

• ENV, BPL, SSW, SCTY, IGTE, FXCM, SAVE, SWY, VVUS, PCYC, INFY, DK, TSO, CTSH, CVRR, OSIR, IMPV, BLOX and ALJ

Stocks With Unusual Call Option Activity:

• 1) CNX 2) SCTY 3) EDC 4) VNDA 5) HUM

Stocks With Most Positive News Mentions:

• 1) AUXL 2) ISCA 3) SWY 4) JNJ 5) AMZN
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg: 

• China Export Gains Understated on Fake-Data Distortions: Economy. China is poised to post its first slowdown in export growth in three months, a result that may understate the strength of demand after fake reports inflated figures in the year-earlier period. Growth from last month through April 2014 will be “depressed” because of a high basis for comparison, Credit Agricole CIB says. Overseas shipments probably grew 5.5 percent in September from a year earlier, according to a Bloomberg News survey ahead of tomorrow’s customs-administration report in Beijing, down from August’s 7.2 percent and 9.8 percent in September 2012. The comparisons will complicate investors’ ability to gauge the strength of any economic rebound after two manufacturing gauges trailed projections in September, limiting a recovery that began earlier in the quarter. Additional skepticism over trade figures builds on broader questions about the quality of Chinese data from gross domestic product to jobs. 

• Asian Stocks Rise as Bond Risk Falls; Won to Copper Gain. Asian stocks rose a fourth day and bond risk in the region fell as U.S. lawmakers continued talks on raising the nation’s debt limit to avoid a default. Industrial metals climbed with emerging-market currencies. The MSCI Asia Pacific Index added 1.3 percent by 11:17 a.m. in Tokyo, set for the longest rally in a month.

• Rubber Set for 1st Weekly Gain in 3 as Yen Weakens on Debt Talks. Rubber is heading for the first weekly climb in three as optimism grew that U.S. lawmakers will lift the debt ceiling to avert a default, weakening Japan’s currency and boosting the appeal of yen-based futures. The contract for March delivery rose as much as 2.7 percent to 266.3 yen a kilogram ($2,709 a metric ton) on the Tokyo Commodity Exchange, the highest level since Oct. 1. Futures traded at 265.5 yen at 10:17 a.m. and gained 4.4 percent this week, the first rally since five days through Sept. 20.

• Cameron’s Housing-Market Loan Fix Seen as Bad Policy for Britain. Prime Minister David Cameron’s Help to Buy plan to aid home buyers is the wrong policy for Britain, economists said, adding to criticism of an initiative that was ramped up just this week. Two thirds of 31 economists described the measure as “bad,” according to a Bloomberg News survey published today. The prime minister this month accelerated the second phase of the program, which gives people the chance to buy a home with a down payment of as little as 5 percent.

• Twitter Said to Pay 3.25% Bankers’ Fee for Market Debut. Twitter Inc. is seeking to raise more than $1 billion in an initial public offering and plans to pay bankers a fee of about 3.25 percent, people with knowledge of the matter said.

Wall Street Journal: 

• Obama, GOP Open Talks Over Temporary Debt Fix. Republicans, President Still Disagree Over Details. President Barack Obama and House Republicans began discussions Thursday on a GOP proposal to extend the nation's borrowing authority for six weeks, marking a new opening in the budget stalemate that risks a U.S. debt crisis.

• Budget Battle: Streaming Coverage.

• U.S. Rethinks How to Release Sensitive Economic Data. Potential Changes Driven From Unease Over High-Speed Trading Firms. Federal officials are discussing changes to how the government releases sensitive economic data, seeking to bring the system in line with fast-moving financial markets. While the talks are preliminary, officials are driven by their growing concern about leaks and their unease that high-speed trading firms can trade on market-moving numbers before other investors, say people familiar with the discussions.

• J.P. Morgan(JPM), U.S. Far Apart on Mortgage Pact. 

• Strassel: A Crisis of the President's Own Making. Unless Mr. Obama is willing to make a serious deal on spending, he will spend the next three years fighting the same budget wars over and over.

• Andrew Puzder: ObamaCare and the Part-Time Economy. The White House insists that the health-care law has not affected hiring. That's not what the numbers show. There are times when the Obama administration makes statements so disconnected from economic reality that you wonder if any White House official has talked with anyone in business. A case in point: the administration's mantra that ObamaCare's definition of full-time employment as 30 or more hours per week had no effect on employers' hiring practices.

Fox News: 

• Deal or no deal? GOP back to drawing board on debt plan after Obama meeting. Republican lawmakers scrambled back to the drawing board late Thursday to modify their plan for a short-term increase in the debt ceiling, after President Obama apparently pushed back on the proposal during a high-stakes White House meeting. The meeting broke up with no deal announced, despite optimism earlier in the day that the two sides might agree. Senate Democratic Leader Harry Reid also cast doubt on House Speaker John Boehner's plan. The day ended like it began, with Americans still unsure when the partial government shutdown will end, and the financial markets still uncertain as to whether the country might miss next week's deadline to raise the debt ceiling.

• Report: Obama administration brings chilling effect on journalism. The U.S. government's aggressive prosecution of leaks and efforts to control information are having a chilling effect on journalists and government whistle-blowers, according to a report released Thursday on U.S. press freedoms under the Obama administration.  The Committee to Protect Journalists conducted its first examination of U.S. press freedoms amid the Obama administration's unprecedented number of prosecutions of government sources and seizures of journalists' records. Usually the group focuses on advocating for press freedoms abroad.

Zero Hedge: 

• The Possible Outcomes Of The Shutdown Theater.

• Goldman(GS) "Whistleblower" Sues NY Fed For Wrongful Termination.

• White House, Republican Meeting "Inconclusive", To Continue Throughout The Night.

• Stocks Slump After Obama Rejects Republican Proposal; Cantor: "Seeking Path Forward".

• A Look At The Fed's Nest In 2014: Here Are Next Year's Voting Hawks And Doves.

Business Insider:

• Three Charts That Make Us Scared For Canada's Future.

Telegraph: 

• The debt burden still casts a long shadow over the US and eurozone economies. The US budget crisis may be man-made by the Republicans and Democrats, but it raises concerns about the world economy.

Evening Recommendations 
Macquarie:

• Downgraded (NVDA) to Underperform, target $14.

Night Trading

• Asian equity indices are +.50% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 142.0 -7.0 basis points.

• Asia Pacific Sovereign CDS Index 110.75 -5.5 basis points. 

• FTSE-100 futures +.77%.

• S&P 500 futures +.14%.

• NASDAQ 100 futures +.24%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JPM)/1.29

• (WFC)/.97

• (INFY)/45.64

Economic Releases
9:55 am EST

• Preliminary Univ. of Mich. Consumer Confidence for October is estimated to fall to 75.6 versus 77.5 in September.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell speaking, ECB's Praet speaking, USDA Crop Report and the Canada Unemployment Rate could also impact trading today.

BOTTOM LINE: Asian indices are 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 mixed. The Portfolio is 50% net long heading into the day.