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, profit-taking, technical selling, increasing emerging markets debt angst 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 1,804.76 +.37%*




The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,804.76 +.37%

• DJIA 16,o64.77 +.65%

• NASDAQ 3,991.64 +.14%

• Russell 2000 1,124.92 +.78%

• S&P 500 High Beta 29.29 +.21%

• Wilshire 5000 18,912.74 +.28%

• Russell 1000 Growth 909.65 +.04%

• Russell 1000 Value 909.65 +.45%

• S&P 500 Consumer Staples 443.99 -.46%

• Morgan Stanley Cyclical 1,418.29 +.11%

• Morgan Stanley Technology 858.80 -.89%

• Transports 7,199.37 -.16%

• Utilities 495.31 -2.29%

• Bloomberg European Bank/Financial Services 104.53 +.32%

• MSCI Emerging Markets 41.90 +.39%

• HFRX Equity Hedge 1,141.21 -.12%

• HFRX Equity Market Neutral 950.43 +.05%

Sentiment/Internals

• NYSE Cumulative A/D Line 194,426 -.21%

• Bloomberg New Highs-Lows Index 149 -359

• Bloomberg Crude Oil % Bulls 31.03 -20.70%

• CFTC Oil Net Speculative Position 313,160 +2.49%

• CFTC Oil Total Open Interest 1,620,640 -6.64%

• Total Put/Call .94 +25.33%

• OEX Put/Call 1.39 +183.67%

• ISE Sentiment 144.0 -5.88%

• NYSE Arms .81 +3.85%

• Volatility(VIX) 12.26 +.57%

• S&P 500 Implied Correlation 54.45 -4.86%

• G7 Currency Volatility (VXY) 8.07 +3.33%

• Emerging Markets Currency Volatility (EM-VXY) 8.59 +.23%

• Smart Money Flow Index 12,053.21 +.42%

• ICI Money Mkt Mutual Fund Assets $2.663 Trillion -.20%

• ICI US Equity Weekly Net New Cash Flow $5.407 Billion n/a

• AAII % Bulls 34.4 -12.3%

• AAII % Bears 29.5 +7.3%

Futures Spot Prices

• CRB Index 275.21 +.32%

• Crude Oil 94.77 +1.16%

• Reformulated Gasoline 272.05 +2.40%

• Natural Gas 3.78 +3.84%

• Heating Oil 303.43 +3.12%

• Gold 1,242.10 -3.61%

• Bloomberg Base Metals Index 187.68 +.73%

• Copper 322.05 +1.50%

• US No. 1 Heavy Melt Scrap Steel 360.67 USD/Ton +5.81%

• China Iron Ore Spot 136.50 USD/Ton -.22%

• Lumber 359.60 -1.05%

• UBS-Bloomberg Agriculture 1,386.88 +.98%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 2.40% +20 basis points

• Philly Fed ADS Real-Time Business Conditions Index .0170 +203.5%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 119.60 +.17%

• Citi US Economic Surprise Index 6.70 -.2 point

• Citi Emerging Markets Economic Surprise Index -14.30 -1.7 points

• Fed Fund Futures imply 34.0% chance of no change, 66.0% chance of 25 basis point cut on 12/18

• US Dollar Index 80.65 -.18%

• Euro/Yen Carry Return Index 143.14 +1.52%

• Yield Curve 246.0 +5 basis points

• 10-Year US Treasury Yield 2.74% +4 basis points

• Federal Reserve's Balance Sheet $3.864 Trillion n/a
  

• U.S. Sovereign Debt Credit Default Swap 29.88 +18.88%

• Illinois Municipal Debt Credit Default Swap 191.0 -3.05%

• Western Europe Sovereign Debt Credit Default Swap Index 62.50 -1.37%

• Asia Pacific Sovereign Debt Credit Default Swap Index 101.73 -.68%
  

• Emerging Markets Sovereign Debt CDS Index 230.0 +4.44%
  

• Israel Sovereign Debt Credit Default Swap 108.16 +.92%

• Egypt Sovereign Debt Credit Default Swap 665.0 -2.92%

• China Blended Corporate Spread Index 353.0 -10 basis points

• 10-Year TIPS Spread 2.20% +1 basis point

• TED Spread 17.0 -.25 basis point

• 2-Year Swap Spread 9.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -1.25 +1.75 basis points

• N. America Investment Grade Credit Default Swap Index 69.64 -1.15%
  

• European Financial Sector Credit Default Swap Index 101.56 -5.11%
  

• Emerging Markets Credit Default Swap Index 288.70 +1.46%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 103.0 +1.0 basis point

• M1 Money Supply $2.587 Trillion -1.30%

• Commercial Paper Outstanding 1,054.10 -1.20%

• 4-Week Moving Average of Jobless Claims 338,500 -5,500

• Continuing Claims Unemployment Rate 2.2% unch.

• Average 30-Year Mortgage Rate 4.22% -13 basis points

• Weekly Mortgage Applications 451.10 -2.30%

• Bloomberg Consumer Comfort -34.60 -.7 point

• Weekly Retail Sales +3.40% +10 basis points

• Nationwide Gas $3.24/gallon +.04/gallon

• Baltic Dry Index 1,499 -1.19%

• China (Export) Containerized Freight Index 1,043.77 unch.

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 37.50 +7.1%

• Rail Freight Carloads 266,643 +.52%

Best Performing Style

• Small-Cap Value +1.0%

Worst Performing Style

• Mid-Cap Value -.5%

Leading Sectors

• Biotech +4.0%

• HMOs +3.7%

• I-Banks +3.3%

• Defense +2.3%

• Banks +2.3%

Lagging Sectors

• Utilities -2.3% 

• Oil Service -2.4%

• Alt Energy -4.3%

• Coal -4.4%

• Gold & Silver -6.7%

Weekly High-Volume Stock Gainers (16)

• KIRK, UBNK, DAKT, TTS, LZB, CENJF, CYBX, AMWD, LMOS, ENTA, RCKB, CSII, BONT, MINI, AEC and TMUS

Weekly High-Volume Stock Losers (16)

• JEC, DAR, SJM, GOOD, NHI, SGMS, ARUN, STAN, PDCO, CPB, FOR, DWRE, BBY, GME, AMRI and LQDT

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 Central Bank Hopes, Yen Weakness, Lower Long-Term Rates, Biotech/Restaurant Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.41 -1.97%

• Euro/Yen Carry Return Index 143.15 +.67%

• Emerging Markets Currency Volatility(VXY) 8.59 -1.49%

• S&P 500 Implied Correlation 54.90 -2.73%

• ISE Sentiment Index 171.0 -17.79%

• Total Put/Call .90 +13.92%

• NYSE Arms .82 -17.90% 

Credit Investor Angst:

• North American Investment Grade CDS Index 69.12 -2.0%

• European Financial Sector CDS Index 101.57 -4.22%

• Western Europe Sovereign Debt CDS Index 62.50 unch.

• Emerging Market CDS Index 289.35 -2.02%

• 2-Year Swap Spread 9.75 -.75 basis point

• TED Spread 17.0 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -1.25 +1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .07% unch.

• Yield Curve 247.0 -4 basis points

• China Import Iron Ore Spot $136.50/Metric Tonne +.15%

• Citi US Economic Surprise Index 6.70 -.3 point

• Citi Emerging Markets Economic Surprise Index -14.30 -.2 point

• 10-Year TIPS Spread 2.20 unch.

Overseas Futures:

• Nikkei Futures: Indicating +205 open in Japan

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

• Higher: On gains in my biotech/tech/medical sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• France’s Economy Most Serious Threat for EU, Bankers Say. France’s economy poses the most serious threat to Europe’s recovery from a debt crisis that has crippled growth and driven unemployment to record highs, according to a survey of bankers and their regulators in Frankfurt. The outlook for France is more concerning than prospects for Italy, Spain or Germany, said 61 percent of respondents in the electronic survey held at a conference in the euro-area’s financial capital today. France “desperately needs leadership,” Timothy Adams, the Institute of International Finance Chief Executive Officer, said in a panel discussion at the conference. “There’s a lack of concern about competitiveness in France,” Andre Sapir, an economist and senior fellow at Bruegel, a Brussels-based think tank, said on the same panel. 

• Italy, Spain Face Budget Scrutiny as Euro Ministers Meet. Italy and Spain will defend their 2014 spending plans at a meeting of euro-area finance ministers today, risking a clash over economic frailties that could undermine efforts to pull the currency bloc out of a debt crisis now in its fifth year. Fabrizio Saccomanni of Italy and Luis de Guindos of Spain will be called upon to justify their draft budgets at the meeting in Brussels, amid fears that complacency is setting in following the easing of bond-market pressure over the past 18 months. 

• Most European Stocks Rise Amid German Confidence Report. Most European stocks advanced as German business confidence rose to the highest level since April 2012 and investors weighed comments by European Central Bank officials. Daily Mail & General Trust Plc (DMGT) gained 3.5 percent after Barclays Plc upgraded its recommendation on the newspaper publisher. Whitbread Plc climbed 3 percent after JPMorgan Chase & Co. raised its rating of the company to overweight, similar to buy. Rhoen-Klinikum AG fell 3.3 percent after saying its second-biggest shareholder sued to block the sale of 43 clinics to Fresenius SE’s Helios unit. The Stoxx Europe 600 Index added 0.1 percent to 322.77 at the close, as almost three shares in the gauge increased for every two that fell.

• Indian Banks’ Rising Bad Debt Is ‘Major Challenge,’ RBI Says. Rising bad loans at Indian lenders remain “a major challenge” amid a slowdown in Asia’s third-largest economy, the nation’s central bank said. Nonperforming loans rose to 986 billion rupees ($15.7 billion) at the end of March from 652 billion rupees a year earlier, the Reserve Bank of India said in a report yesterday on the country’s banking industry. The ratio of sour debt to total lending swelled to 3.6 percent from 3.1 percent. More debtors are finding it harder to pay off loans in a $1.8 trillion economy that is projected to grow in the year ending March 2014 at the weakest pace in more than a decade. Rising bad loans contributed to a 35 percent slump in State Bank of India (SBIN)’s net income for the quarter ended Sept. 30. “Macro stress tests indicate that if the current macroeconomic conditions persist, the credit quality of commercial banks could deteriorate further,” the Mumbai-based RBI said. “In the short term, the stress on banks’ asset quality remains a major challenge.”  

• Pakistani Doctor Who Hunted Bin Laden Accused of Murder. A Pakistani doctor who helped the U.S. track down Osama bin Laden faces charges in a murder case after a woman accused him of causing the death of her son from an operation six years ago, a defense lawyer said. A court in the Khyber tribal region along the border with Afghanistan has registered a case based on the complaint by the woman against the doctor, Shakil Afridi, his lawyer Samiullah Afridi said by phone from the city of Peshawar. Doctor Afridi already is imprisoned after being sentenced to 33 years in jail in 2012 for providing funding and medical assistance to the militants of the now-defunct group Lashkar-e-Islami. He hasn’t been charged for covert ties to the U.S. Central Intelligence Agency that the Pakistani government denounced.

Wall Street Journal:

• For Small Businesses, a Hidden Tax in Health Care? Smaller Companies Expected to Bear the Brunt of Little-Known Fee for Insurers. Starting next year, small businesses are among those poised to bear the brunt of a little known tax created by the Affordable Care Act that will impose an annual "fee" on health-insurance companies. The fee is expected to bring in a total of $8 billion next year and as much as $14.3 billion by 2018, according to the legislation, and will be spread out among insurers based on the percent of the market they cover.

Fox News:

• Filibuster Fallout: Reid maneuver could send ‘wrecking ball’ through talks on key legislation.

CNBC: 

• ‘Sentiment is too high,’ stock market bull says. (video)

• Cramer: 'There's bubbling everywhere'. (video) "In other words, there's bubbling everywhere, and it does worry me," Cramer said Friday on "Squawk on the Street." "We saw too much cloud. We saw too much organic food. And now I think we're getting too much of a whole set of areas."

Zero Hedge: 

• David Stockman Blasts "It's 2007/8 All Over Again". "Bubbles are breaking out everywhere," exclaims outspoken former-insider David Stockman in this brief FoxTV clip, warning that "its like 2007/2008 all over again." 

• Europe Unveils Its Latest Deus Ex Machina Growth Bazooka: Encourage Debt-Cutting "Reform" With Even More Debt. (graph)

• Bill Ackman Admits $500 Million Herbalife Loss, Stock Surge Adds To Pain.

• Which Is It? According To The BLS, The Average Monthly Job Gain In 2013 Is Either 184K Or 20% Lower.

• Which Is It? According To The BLS, The Average Monthly Job Gain In 2013 Is Either 184K Or 20% Lower. (graph)

• Circular Bubble Logic.

• Hugh Hendry Capitulates: "Can't Look At Himself In The Mirror" As He Throws In The Towel, Turns Bullish.

ValueWalk:

• Herbalife(HLF): Bill Ackman Says He Still Hates It, Shares Surge.

CNN:

• Obama approval rating sinks to new low in CNN poll. According to a CNN/ORC poll released Thursday, 41% of Americans approve of the job the President's doing in the White House, the lowest level for that crucial indicator in CNN polling. Fifty-six percent questioned say they disapprove of Obama's performance, an all-time high in CNN surveys.

Washington Post:

• The Democrats’ naked power grab. “Congress is broken,” Senate Majority Leader Harry Reid said Thursday before holding a party-line vote that disposed of rules that have guided and protected the chamber since 1789. If Congress wasn’t broken before, it certainly is now. What Reid (Nev.) and his fellow Democrats effectively did was take the chamber of Congress that still functioned at a modest level and turn it into a clone of the other chamber, which functions not at all. They turned the Senate into the House.

Reuters:

• EMERGING MARKETS-Brazil's Bovespa index rebounds though banks sink.

Telegraph:

• Oil is both the lifeblood and the poison of the global economy. For all the talk of green power, it’s black gold that still drives the economic cycle - and the key to prices is Saudi Arabia, the world’s biggest producer. According to research by the Centre for Global Energy Studies, the minimum price Saudi Arabia needs at the present level of production to sustain government expenditure is $86 per barrel. This compares with $64 just four years ago. Saudi has jacked up public spending substantially following the Arab Spring in an attempt to keep the locals quiescent. The survival of the sheikhs carries a very high price, and may in itself have come to dictate the level of the global oil price.

Handelsblatt:

• Dijsselbloem Says France Must Do More to Reform. Eurogroup chairman Jeroen Dijsselbloem is in favor of deadlines for reforms, citing the Dutch finance minister.

Bear Radar

Style Underperformer:

• Large-Cap Value -.03%

Sector Underperformers:

• 1) Oil Tankers -1.38% 2) Alt Energy -1.03% 3) REITs -.66%

Stocks Falling on Unusual Volume:

• EPAM, TFM, ADC, TXTR, ROST, HCLP, LL, OLED, DLLR, LNDC, NNI, NGVC, HIBB, EIX, P, RST, NTLS, SNP, ARCW, SFM, INTC, TTS, PETM, PRLB, FWM, BURL, MOVE and EGOV

Stocks With Unusual Put Option Activity:

• 1) JNK 2) CCL 3) ANN 4) HYG 5) INTC
  

Stocks With Most Negative News Mentions:

• 1) EIX 2) LL 3) TGT 4) ROST 5) NUE
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume