Weekly Outlook

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 rising long-term rates/energy prices, profit-taking, technical selling, increasing eurozone/emerging markets debt angst, more shorting and earnings concerns. 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 1,770.61 +.51%*




The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,770.61 +.51%

• DJIA 15,761.70 +.94%

• NASDAQ 3,919.23 -.o7%

• Russell 2000 1,099.97 +.39%

• S&P 500 High Beta 28.68 +.14%

• Wilshire 5000 18,544.30 +.35%

• Russell 1000 Growth 821.16 -.03%

• Russell 1000 Value 893.10 +.70%

• S&P 500 Consumer Staples 438.69 +.35%

• Morgan Stanley Cyclical 1,388.08 +.25%

• Morgan Stanley Technology 847.93 +.32%

• Transports 7,017.34 -.43%

• Utilities 502.46 -.43%

• Bloomberg European Bank/Financial Services 105.2 -.76%

• MSCI Emerging Markets 41.39 -2.97%

• HFRX Equity Hedge 1,139.86 -.01%

• HFRX Equity Market Neutral 947.74 +.64%

Sentiment/Internals

• NYSE Cumulative A/D Line 193,038 -.95%

• Bloomberg New Highs-Lows Index 108 -92

• Bloomberg Crude Oil % Bulls 20.0 -17.15%

• CFTC Oil Net Speculative Position 299,514 -.89%

• CFTC Oil Total Open Interest 1,736,874 -2.11%

• Total Put/Call .83 -9.78%

• OEX Put/Call 1.34 +35.35%

• ISE Sentiment 102.0 -8.93%

• NYSE Arms .48 -28.35%

• Volatility(VIX) 12.90 -2.86%

• S&P 500 Implied Correlation 39.53 -1.89%

• G7 Currency Volatility (VXY) 8.10 +.25%

• Emerging Markets Currency Volatility (EM-VXY) 9.41 +9.53%

• Smart Money Flow Index 11,684.07 -.84%

• Money Mkt Mutual Fund Assets $2.672 Trillion +.15%

• AAII % Bulls 45.5 +1.1%

• AAII % Bears 21.8 +1.5%

Futures Spot Prices

• CRB Index 274.39 -.21%

• Crude Oil 94.60 -.01%

• Reformulated Gasoline 255.34 +.24%

• Natural Gas 3.56 +1.31%

• Heating Oil 287.16 -.36%

• Gold 1,284.60 -2.35%

• Bloomberg Base Metals Index 189.50 -2.30%

• Copper 325.40 -1.35%

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

• China Iron Ore Spot 135.90 USD/Ton +.44%

• Lumber 374.70 +1.30%

• UBS-Bloomberg Agriculture 1,390.66 +.12%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 1.80% +10 basis points

• Philly Fed ADS Real-Time Business Conditions Index .1075 unch.

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 119.32 +.12%

• Citi US Economic Surprise Index 19.40 +14.1 points

• Citi Emerging Markets Economic Surprise Index -12.60 -3.80 points

• Fed Fund Futures imply 36.0% chance of no change, 64.0% chance of 25 basis point cut on 12/18

• US Dollar Index 81.30 +.72%

• Euro/Yen Carry Return Index 138.10 -.48%

• Yield Curve 244.0 +13 basis points

• 10-Year US Treasury Yield 2.75% +13 basis points

• Federal Reserve's Balance Sheet $3.808 Trillion +.22%

• U.S. Sovereign Debt Credit Default Swap 30.83 +2.06%

• Illinois Municipal Debt Credit Default Swap 197.0 +4.0%

• Western Europe Sovereign Debt Credit Default Swap Index 66.48 -3.43%

• Asia Pacific Sovereign Debt Credit Default Swap Index 110.96 +3.52%
  

• Emerging Markets Sovereign Debt CDS Index 236.0 +1.17%
  

• Israel Sovereign Debt Credit Default Swap 110.0 -1.79%

• Egypt Sovereign Debt Credit Default Swap 683.53 -1.55%

• China Blended Corporate Spread Index 366.0 +2 basis points

• 10-Year TIPS Spread 2.18% +4 basis points

• TED Spread 19.0 -1.25 basis points

• 2-Year Swap Spread 11.75 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +1.5 basis points

• N. America Investment Grade Credit Default Swap Index 72.95 -1.93%
  

• European Financial Sector Credit Default Swap Index 106.25 -8.88%
  

• Emerging Markets Credit Default Swap Index 299.97 +8.03%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 109.0 -1.0 basis point

• M1 Money Supply $2.654 Trillion -1.08%

• Commercial Paper Outstanding 1,070.30 -1.0%

• 4-Week Moving Average of Jobless Claims 348,300 -8,000

• Continuing Claims Unemployment Rate 2.2% unch.

• Average 30-Year Mortgage Rate 4.16% +6 basis points

• Weekly Mortgage Applications 449.60 -7.05%

• Bloomberg Consumer Comfort -37.90 -.3 point

• Weekly Retail Sales +3.40% +20 basis points

• Nationwide Gas $3.21/gallon -.06/gallon

• Baltic Dry Index 1,593 +5.92%

• China (Export) Containerized Freight Index 1,013.52 +.19%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 35.0 +7.69%

• Rail Freight Carloads 264,264 +1.16%

Best Performing Style

• Large-Cap Value +.7%

Worst Performing Style

• Mid-Cap Growth -.4%

Leading Sectors

• Software +3.3%

• Networking +2.7%

• Banks +2.5%

• I-Banks +2.3%

• Defense +2.0%

Lagging Sectors

• Papers -2.3% 

• Disk Drives -3.1%

• Hospitals -4.2%

• Homebuilders -4.2%

• REITs -4.3%

Weekly High-Volume Stock Gainers (35)

• ENDP, PMC, BEAT, BCOR, GHDX, AEIS, GTI, DWRE, ININ, AOL, KOP, AWAY, OPEN, CLDT, FNP, IMPV, ANEN, ABMD, ACIW, SQI, ESC, VCLK, SYKE, EXH, VSI, DATA, IPGP, TPH, JOE, RRGB, EFSC, VMC, PBH, RHP and MRC

Weekly High-Volume Stock Losers (48)

• LPX, PHH, HPT, POWR, HTZ, IGT, EPAY, ANF, CHTR, CNQR, THO, WFM, WAC, VRSK, GVA, FURX, HNT, PIKE, ABCO, CSU, THC, GSVC, MYRG, FF, ITMN, WRLD, FWM, BPI, AGIO, BGC, SWM, LXU, IMGN, BDE, CKP, TTPH, PPO, LAYN, JCOM, RST, IRG, CARB, NXTM, FSYS, BSFT, FUEL, NSM and QUAD

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Surging into Final Hour on Better US Economic Data, Short-Covering, Investor Performance Angst, Financial/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.23 -4.89%

• Euro/Yen Carry Return Index 138.10 +.59%

• Emerging Markets Currency Volatility(VXY) 9.40 -.11%

• S&P 500 Implied Correlation 38.73 -5.31%

• ISE Sentiment Index 103.0 -3.74%

• Total Put/Call .84 -7.69%

• NYSE Arms .60 -60.26% 

Credit Investor Angst:

• North American Investment Grade CDS Index 71.99 -2.56%

• European Financial Sector CDS Index 106.25 -3.52%

• Western Europe Sovereign Debt CDS Index 66.48 +.67%

• Emerging Market CDS Index 300.04 +4.31%

• 2-Year Swap Spread 11.75 unch.

• TED Spread 18.5 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +1.25 basis points

Economic Gauges:

• 3-Month T-Bill Yield .06% unch.

• Yield Curve 243.0 +11 basis points

• China Import Iron Ore Spot $135.90/Metric Tonne -.73%

• Citi US Economic Surprise Index 19.40 +6.4 points

• Citi Emerging Markets Economic Surprise Index -12.60 unch.

• 10-Year TIPS Spread 2.17 unch.

Overseas Futures:

• Nikkei Futures: Indicating +189 open in Japan

• DAX Futures: Indicating +9 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:

• France’s Bonds Decline With Spain’s After S&P Ratings Downgrade. France’s government bonds declined after Standard & Poor’s lowered the country’s sovereign-credit rating by one level. Spanish bonds dropped following a rally yesterday when the European Central Bank unexpectedly cut its key interest rate to counter a risk of deflation. S&P downgraded France to AA from AA+ with a stable outlook saying the government’s reform of tax, labor markets, products and services won’t raise medium-term growth prospects. 

• European Stocks Climb for Fifth Week as ECB Cuts Rates. Stocks in Europe posted a fifth week of gains, the longest winning streak this year, as the European Central Bank unexpectedly lowered its key interest rate and U.S. economic growth and jobs data beat forecasts. Commerzbank AG posted the largest advance in three months after reporting third-quarter profit that surpassed analysts’ estimates. ArcelorMittal surged the most in almost two years as earnings increased at the world’s biggest steelmaker. Ryanair Holdings Plc slid 5.6 percent after the budget airline forecast its first annual income decline in five years. Finmeccanica SpA dropped 4.8 percent after cutting its full-year outlook. The Stoxx Europe 600 Index added 0.4 percent to 322.72 this week.

• China Stocks Fall for Weekly Loss Before Plenum, Inflation Data. China’s stocks fell, capping a weekly loss for the benchmark index, before the start of a Communist Party meeting tomorrow. Technology and agriculture shares slid. Sanan Optoelectronics Co. dropped 3.3 percent, paring this year’s gain to 43 percent. China Cosco Holdings Co. slumped the most in two months after the largest shipping company said an executive director is under investigation. Zhongken Agricultural Resource Development Co. lost the most in two weeks, paring this week’s gain to 17 percent. The government is scheduled to release data on consumer prices and industrial output tomorrow. The Shanghai Composite Index fell 1.1 percent to 2,106.13 at the close, adding to a 2 percent loss this week.

• Fed’s Lockhart Says Fed Can’t Rule Out QE Tapering Next Month. Federal Reserve Bank of Atlanta President Dennis Lockhart said the central bank will consider reducing its bond-buying program at next month’s policy meeting. “I would not take off the table at least consideration at that time,” Lockhart told reporters in Oxford, Mississippi, in response to a question on tapering in December. “The question of changing the mix of accommodative tools ought to be on the table at every meeting for the foreseeable future.”  

• Gold Falls to 3-Week Low. Gold futures for December delivery declined 1.8 percent to settle at $1,284.60 an ounce at 2:01 p.m. on the Comex in New York, extending the week’s drop to 2.2 percent. Earlier, prices touched $1,280.50, the lowest for a most-active contract since Oct. 17.

• Stock Options Among Tax Breaks Democrats Target in Budget Talks. Executive stock options, corporate jets and the tax break enjoyed by hedge-fund managers are among the targets for Democratic lawmakers seeking to negotiate a budget deal by next month. The Democrats’ list of options, obtained by Bloomberg News, sets the stage for a renewed clash with Republicans, who reject proposals to raise revenue as part of an agreement. Democrats say taxes must be on the table as lawmakers seek an annual budget that would replace some of the $1 trillion in automatic spending cuts now in effect. 

• Treasuries Drop Most in 4 Months. “The discussion and the decision of taper is back on the table,” said Dan Heckman, a fixed-income strategist in Kansas City, Missouri, at U.S. Bank Wealth Management, which oversees $112 billion. “They could announce it in December and start in January, that’s a real possibility. This is forcing yields on the long end higher.” The benchmark U.S. 10-year yield rose 14 basis points, or 0.14 percentage point, to 2.74 percent at 12:42 p.m. New York time, Bloomberg Bond Trader data showed.

Fox News:

• Former NBC News Host Dylan Ratigan Has His Insurance Canceled for Much More Expensive Plan. “Thnx Mr. President.” That’s all former MSNBC host Dylan Ratigan had to say to President Barack Obama on Thursday when he announced that the health insurance plan he purchased on the individual market after leaving the news network was being cancelled. The new plan he was eligible would cost him 3.5 times more than his previous plan. “I bought a catastrophic health policy for $170/mo when I left MSNBC,” Ratigan confessed. “Obamacare cancelled the policy. New rate $600/mo. Thnx Mr. President!”

MarketWatch:

• Marc Faber: China could spark a bigger crisis than in 2008.

CNBC: 

• US consumers tapped out as holidays approach. American shoppers have a way of rallying when the holidays roll around. But years after the Great Recession, consumers' budgets remain badly squeezed by flat wages, higher payroll taxes and a weak job market. 

• Surprise! Shutdown may have pushed jobs numbers higher. Friday morning's shockingly high payroll numbers might have been boosted by the government shutdown in October.

Zero Hedge: 

• Consumer Confidence Collapses To Lowest Since Dec 2011 (Biggest Miss Since 2006). (graph)

• October Housing Traffic Weakest In Two Years On "Broad-Based" Housing Market Slowdown. (graph)

• The Stunning Magic Of "New Normal" Hedge Fund Leverage. (graph)

• GREcovery Interrupted: Greek Deflation Worst In 50 Years. (graph)

• BofAML Warns "Treasury Bears Beware". (graph)

• Obama's 'Socialism' Experiment Brought Home.

Business Insider:

• Hedge Funds Just Had Their Best Year Since 2009. The monthly index, which proxies for hedge fund returns across sectors, gained 1.5% last month, which pushed up its year-to-date performance by 7.2%.

Townhall.com:

• Poll: 78% Of Uninsured Not Interested In ObamaCare. A new Gallup poll brings more terrible news for President Obama and his signature health plan. Only 22% of uninsured Americans intend to buy insurance through the ObamaCare exchanges. One of the major selling points for using ObamaCare to disrupt our health care system (that polls showed up to 80% of Americans were satisfied with), was to insure the uninsured. But according to this poll, only a very small minority of that small minority is even interested in being insured.

Washington Post:

• The Insiders: Six reasons Obamacare will only get worse for Democrats. 1) There will be more canceled health insurance plans. 2) If you like your doctor, you can’t keep your doctor. 3) Sticker shock. 4) Obamacare ads. 5) Navigators. 6) Security breaches.

USA Today:

• Israel warns of 'very bad' Iran nuclear deal. Secretary of State Kerry's decision to fly to Geneva comes after signs that global powers and Iran were close to a deal. Speaking before a meeting with Kerry in Jerusalem on Friday, Netanyahu said it appears that the Iranians "got everything and paid nothing." "They wanted relief of sanctions after years of grueling sanctions, they got that. They paid nothing because they are not reducing in any way their nuclear enrichment capability. So Iran got the deal of the century and the international community got a bad deal," Netanyahu said.

Telegraph:

• Hollande approval rating slumps as France downgraded. Approval ratings at record low as debt grade cut from AA+ to AA due to weak economic growth, high unemployment and government spending constraints.  

• Five charts that show the state of the French economy. France's credit rating has been downgraded by Standard & Poor's. We look at the state of the country's economy.

Bear Radar

Style Underperformer:

• Large-Cap Value +.89%

Sector Underperformers:

• 1) Homebuilders -2.43% 2) REITs -1.41% 3) Gold & Silver -1.32%

Stocks Falling on Unusual Volume:

• LEN, CST, SLCA, AREX, AVG, NSM, FF, EAC, MSCC, UNXL, TOL, HNT, MTD, MNTX, NVO, BFAM, SWY, UEIC, CUBE, ALJ, POWR, CIB, TSLA, EXR, SAH, POWR, TTS, FF, AREX, EZPW and FUEL

Stocks With Unusual Put Option Activity:

• 1) TWX 2) ITB 3) IYR 4) SHLD 5) XLU
  

Stocks With Most Negative News Mentions:

• 1) FB 2) TSLA 3) WCG 4) WMT 5) DE
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume