Bull Radar

Style Outperformer:

• Small-Cap Growth +.09%

Sector Outperformers:

• 1) Biotech +2.28% 2) Hospitals +1.29% 3) Utilities +1.06%
  

Stocks Rising on Unusual Volume:

• CBST, LPX, ISIS, XLRN, BLUE, ISIS, CEMP, TTPH and ACAD

Stocks With Unusual Call Option Activity:

• 1) DWA 2) LPI 3) CRUS 4) ASHR 5) ZQK
  

Stocks With Most Positive News Mentions:

• 1) EBAY 2) ITW 3) NDAQ 4) SBUX 5) LUV
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg:

• Russia Contagion Spreads to Former Soviet States Amid Rout. Russia’s currency and bond rout is spreading to former Soviet states. Currencies are tumbling after holding steady since President Vladimir Putin annexed Crimea in March. Russia’s deepening crisis and the ruble’s 34 percent slump over the past six months hurt economies that rely on remittances and imports from the country. Georgia’s lari lost 10 percent against the dollar last week, surpassing the 6.5 percent decline in the ruble as the biggest loser among 169 currencies tracked by Bloomberg. The Armenian dram slumped 2.8 percent, the sixth weekly drop, the longest slump since March 2010. Kazakhstan’s dollar-denominated notes due in 2024 slid, sending yields up 57 basis points, or 0.57 percentage point, to 4.76 percent. 

• Ruble’s Rout Is Tale of Failed Threats, Missteps and Blown Cash. Russian President Vladimir Putin has tried everything from selling dollars to threatening speculators in his bid to stem this year’s plunge in the ruble. None of it has worked. The attached graph provides an upclose look at the ruble’s collapse over the past two months. It dropped 25 percent during that time to 52.51 rubles per dollar, extending this year’s slide to 37 percent. The only currency in the world that’s fallen more is that of Ukraine, the country where all of Putin’s financial troubles began when his troops invaded the Crimea peninsula in March. 

• Ukraine Accuses Rebels of More Attacks as Talks Seen. Ukraine said rebel attacks dropped off in the eastern part of the country, while the two sides neared an agreement to resume peace talks as soon as this week. The Defense Ministry said pro-Russia separatists had shelled government forces about 33 times as of 6 p.m. local time yesterday, down from 58 in the same period the day before.

• Japan’s Recession Deepens as Election Looms for Abe: Economy. Japan’s recession was deeper than initially estimated as company investment unexpectedly shrank, a blow to Prime Minister Shinzo Abe as he campaigns for re-election on his economic credentials. The economy contracted an annualized 1.9 percent in the July to September period from the previous quarter, weaker than the 1.6 percent drop reported in preliminary data. The result was also below every forecast in a Bloomberg News survey that showed a median 0.5 percent decrease. 

• ECB Loans Seen as Underwhelming Banks to Stoke Draghi’s Resolve. Mario Draghi is about to get an idea of how far reality falls short of his intentions. A round of long-term loans by the European Central Bank to lenders this week won’t even cover the repayments they owe from a previous program, according to a Bloomberg News survey of analysts. The operation could show that stimulus measures the ECB president says are “intended” to add as much as 1 trillion euros ($1.23 trillion) to the financial system won’t suffice without large-scale buying of assets such as government bonds. 

• China A-Shares ETF Slumps as Regulator Urges Caution. The largest U.S. exchange-traded fund that tracks mainland stocks fell after China’s securities regulator urged caution as a rally in Shanghai shares pushed their premium over Hong Kong companies to a 30-month high.

• Emerging Markets Masking Corporate Foreign-Debt Levels, BIS Says. Foreign-debt levels of companies in emerging markets from China to India and Brazil are underestimated, threatening financial stability, the Bank for International Settlements said. Companies are raising more foreign funds through their offshore affiliates and accounting practices understate the currency risk in such transactions, the Basel, Switzerland-based institution said in its quarterly report. Almost half of the $554 billion that the firms raised in the five years through 2013 came from the affiliates, the BIS said. 

• China Stocks Set for Record Run; Oil Heads to 5-Year Low. China’s CSI 300 Index (SHSZ300) advanced a 12th day, the longest streak ever, as the country reported a record trade surplus. Crude oil dropped toward a five-year low while emerging-market currencies were weaker against the dollar after a U.S. payrolls report beat all estimates. The CSI 300 climbed 2.3 percent by 11:47 a.m. in Tokyo, as China’s exports exceeded imports by $54.47 billion. The MSCI Asia Pacific Index swung between gains and losses.

• Oil Declines From 5-Year Low on Signs U.S. Taking Fight to OPEC. WTI for January delivery dropped as much as $1.21 to $64.63 a barrel in electronic trading on the New York Mercantile Exchange and was at $65.08 at 2:31 p.m. Sydney time. It slid 97 cents to $65.84 on Dec. 5, the lowest close since July 2009. The volume of all futures traded was about 27 percent above the 100-day average. Prices have decreased 34 percent this year.

• Merck(MRK) in Talks to Buy Cubist(CBST) for $7 Billion, NYT Reports. Merck & Co. (MRK) is in talks to acquire Cubist Pharmaceuticals Inc. (CBST), a maker of antibiotics, in a deal valued at more than $7 billion, the New York Times reported, citing people briefed on the matter. Merck would pay about $100 a share, and an agreement could be announced as early as next week, the newspaper said. An offer in that range would represent a 34 percent premium over Cubist’s closing share price yesterday. 

Wall Street Journal:

• Big Australian Banks Could Face Higher Capital Requirements. Panel Makes Recommendations to Prepare Against Potential Financial Crises. Australia’s big banks could face additional capital requirements to buffer against potential financial crises and new challenges to their dominance in mortgage lending from regional lenders, following the first comprehensive review of the country’s financial industry in 17 years. 

• Banks Urge Big Customers to Take Cash Elsewhere or Be Slapped With Fees. J.P. Morgan, Citigroup and Others Tell Large U.S. Clients That New Regulations Make Some Deposits Less Profitable. 

• ObamaCare’s Threat to Private Practice. The payment system is forcing doctors to sell out to hospitals. The trend, and the law, will be unstoppable without reform. Here’s a dirty little secret about recent attempts to fix ObamaCare. The “reforms,” approved by Senate and House leaders this summer and set to advance in the next Congress, adopt many of the Medicare payment reforms already in the Affordable Care Act. Both favor the consolidation of previously independent doctors into salaried roles inside larger institutions, usually tied to a central hospital, in effect ending independent medical practices.

• Watch Out for That Puddle, Soon It Could Be Federally Regulated. The EPA wants to redefine ‘the waters of the United States’ to mean virtually any wet spot in the country. 

Barron's:

• The Case for Hedge Funds. Morgan Stanley advisor Deborah Montaperto has boosted her assets under management sixfold in six years. Why she’s a huge fan of hedge funds.

Fox News:

• Will GOP's control of the South play significant role in 2016 races? The defeat Saturday of Louisiana Democratic Sen. Mary Landrieu was essentially the final act in the Republican Party’s control this fall of the South -- a transition expected to have a significant impact on the 2016 White House races. The victory by Republican challenger and Louisiana Rep. Bill Cassidy means that Democrats in January will be left without a single U.S. senator or governor across nine states -- stretching from the Carolinas to Texas.

CNBC: 

• Keep an eye on the Fed's accelerating asset sales. The U.S. monetary authorities (Fed) are stepping up the contraction of their balance sheet at a surprisingly fast pace. Since peaking at $4.07 trillion last August, the Fed's monetary base has been reduced by $259.2 billion as of the latest reserve reporting date on November 26, 2014.

Zero Hedge:

• Consumer Credit Growth Misses For 3rd Month, Credit Card Debt Trickles To A Halt. (graph)

• Third Hindenburg Spotted In Best Week For Silver Since June, Crude Crucified. (graph)

• 5 Things To Ponder: Unstoppable Force Paradox.

• Energy Bond Crash Contagion Suggests Oil Will Stay Lower For Longer. (graph)

• Jim Grant Sums It All Up In 2 Stunning Paragraphs. (graph)

• Barron's On The Crash? - "This Time It's Different".

• IceCap Asset Management: The Third Law Of 'Stock Market' Motion.

• Citi(C) Faces $270 Million Loss; "In Panic" Over Chinese Port Commodity Fraud.

• When Goldman(GS) Writes The New York Fed's Press Releases, Then All Is Lost.

• Citi(C): "The Limits Of Investors' Faith That Central Banks Can Push Up Asset Prices, Are Increasingly On Display".

• Even The BIS Is Shocked At How Broken Markets Have Become.

• 5 Ways Russia's Demise Could Spread Around The World.

• Something Stinks Inside The BLS Jobs Data.

• Caught On Tape - State Department Spokesperson Admits Her Own Propaganda Is "Ridiculous". (video)

• There Has Never Been A Greater Portion Of America Living On Food Stamps. (graph)

• Total Derivatives Decline By 3% In Q2 To Only $691 Trillion. (graph)

• Nikkei Slides Back Below 18,000 On Deeper-Than-Expected Recession, Record Bankruptcies. (graph)

• China Fixes Yuan At Strongest Since March As Trade Surplus Hits Record Highs. (graph)

• Wall Street Moves To Put Taxpayers On The Hook For Derivatives Trades.

Business Insider:

• Mexico's 'Arab Spring' Is Here.

• Russia's Strategy For Undermining Western Unity Is Working.

• Apple(AAPL) May Be Reintroducing The 4-inch iPhone.

• Russia Is Militarizing The Arctic.

• Afghan Students Are Becoming Inspired By The Islamic State's Success.

• There's A Troubling Level Of Fragility Hidden Beneath Market Bouyancy.

USA Today

• American journalist killed in failed Yemen rescue attempt.

Financial Times:

• Merkel accuses Putin of ‘creating problems’. German chancellor Angela Merkel delivered a sweeping criticism of President Vladimir Putin over the Ukraine crisis, warning that Russia was “creating problems” in Moldova and Georgia, and trying to make some Balkan states “politically and economically dependent”.

China Securities Journal:

• China Faces Rising Debt Ratio, Local Govt Debt. The Chinese economy faces a rising debt ratio, swelling local government debt and a possible property market correction, citing Li Yang, vice president of the government-backed Chinese Academy of Social Sciences.

People's Daily:

• China to Adopt 'Strong' Measures to Reduce Overcapacity. China won't allow any projects to build capacity in industries with "serious overcapacity such as steel and will charge more for power and water in the sectors, according to an article written by Renzhou, an official with the Ministry of Industry and Information Technology.

Weekend Recommendations
Barron's:

• Bullish on (CFX), (HPQ), (HON), (DOOR), (DIS) and (GOOG).

Night Trading

• Asian indices are -.50% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 101.0 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 61.75 unch.

• FTSE-100 futures n/a.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (IDT)/.42

• (HRB)/-.42

• (PBY)/.12

Economic Releases
10:00 am EST

• Labor Market Conditions Index Change for November.  

Upcoming Splits

• (INFY) 2-for-1

Other Potential Market Movers

• The Fed's Lockhart speaking, German Industrial Production report, KeyBanc Engineering/Construction/Utilities Conference, UBS Media/Communications Conference, (AMGN) investor meeting, (DOV) investor meeting and the (SLG) investor conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology 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 week.

Weekly Outlook

Week Ahead (audio) by Bloomberg. 
Wall St. Week Ahead by Reuters.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on global growth worries, rising European/Emerging Markets debt angst, profit-taking and technical selling. 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 2,075.37 +.38%*

The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 2,075.37 +.38%

• DJIA 17,958.70 +.73%

• NASDAQ 4,780.75 -.23%

• Russell 2000 1,182.43 +.78%

• S&P 500 High Beta 34.62 +.55%

• Wilshire 5000 21,532.13 +.32%

• Russell 1000 Growth 970.28 -.25%

• Russell 1000 Value 1,033.05 +.88%

• S&P 500 Consumer Staples 501.44 -1.0%

• Solactive US Cyclical 143.50 +.79%

• Morgan Stanley Technology 1,018.0 -.12%

• Transports 9,152.0 -.50%

• Utilities 596.72 -.50%

• Bloomberg European Bank/Financial Services 109.58 +1.42%

• MSCI Emerging Markets 40.88 -2.02%

• HFRX Equity Hedge 1,183.11 -.26%

• HFRX Equity Market Neutral 987.32 +.29%

Sentiment/Internals

• NYSE Cumulative A/D Line 230,637 -.20%

• Bloomberg New Highs-Lows Index -242 -267

• Bloomberg Crude Oil % Bulls 16.67 -26.7%

• CFTC Oil Net Speculative Position 264,996 +4.74%

• CFTC Oil Total Open Interest 1,439,654 +3.82%

• Total Put/Call 1.03 -5.5%

• OEX Put/Call 2.15 -72.44%

• ISE Sentiment 95.0 +28.38%

• NYSE Arms 1.10 -11.29%

• Volatility(VIX) 11.82 -11.32%

• S&P 500 Implied Correlation 64.86 -5.35%

• G7 Currency Volatility (VXY) 9.26 +6.44%

• Emerging Markets Currency Volatility (EM-VXY) 8.70 +8.48%

• Smart Money Flow Index 17,673.42 +.72%

• ICI Money Mkt Mutual Fund Assets $2.688 Trillion +.96%

• ICI US Equity Weekly Net New Cash Flow -$2.044 Billion

• AAII % Bulls 42.7 -18.2%

• AAII % Bears 25.9 +24.8%

Futures Spot Prices

• CRB Index 252.3 -.8%

• Crude Oil 65.84 -.23%

• Reformulated Gasoline 177.34 -2.57%

• Natural Gas 3.80 -6.90%

• Heating Oil 210.78 -4.36%

• Gold 1,190.40 +2.0%

• Bloomberg Base Metals Index 191.38 -.28%

• Copper 290.25 +1.33%

• US No. 1 Heavy Melt Scrap Steel 309.0 USD/Ton unch.

• China Iron Ore Spot 71.77 USD/Ton +.63%

• Lumber 339.0 +3.48%

• UBS-Bloomberg Agriculture 1,241.78 +.19%

Economy

• ECRI Weekly Leading Economic Index Growth Rate -2.4% -10 basis points

• Philly Fed ADS Real-Time Business Conditions Index -.0496 +21.89%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 127.02 -.44%

• Citi US Economic Surprise Index 14.90 +8.8 points

• Citi Eurozone Economic Surprise Index -21.40 +.1 point

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

• Fed Fund Futures imply 46.0% chance of no change, 54.0% chance of 25 basis point cut on 12/17

• US Dollar Index 89.33 +1.26%

• Euro/Yen Carry Return Index 155.81 +1.01%

• Yield Curve 166.0 -4.0 basis points

• 10-Year US Treasury Yield 2.31% +15.0 basis points

• Federal Reserve's Balance Sheet $4.446 Trillion +.01%

• U.S. Sovereign Debt Credit Default Swap 18.17 +10.29%

• Illinois Municipal Debt Credit Default Swap 184.0 +4.73%

• Western Europe Sovereign Debt Credit Default Swap Index 25.26 -10.14%

• Asia Pacific Sovereign Debt Credit Default Swap Index 61.73 -.98%
  

• Emerging Markets Sovereign Debt CDS Index 273.27 +9.25%
  

• Israel Sovereign Debt Credit Default Swap 72.38 -5.18%

• Iraq Sovereign Debt Credit Default Swap 334.12 -1.94%

• Russia Sovereign Debt Credit Default Swap 380.49 +21.05%

• China Blended Corporate Spread Index 327.48 +1.11%

• 10-Year TIPS Spread 1.76% -4.0 basis points

• TED Spread 22.50 +.5 basis point

• 2-Year Swap Spread 21.25 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.50 +.75 basis point

• N. America Investment Grade Credit Default Swap Index 62.01 +.89%
  

• European Financial Sector Credit Default Swap Index 55.97 -5.81%
  

• Emerging Markets Credit Default Swap Index 304.89 +11.45%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 87.0 unch.

• M1 Money Supply $2.837 Trillion -.15%

• Commercial Paper Outstanding 1,095.50 +.4%

• 4-Week Moving Average of Jobless Claims 299,000 +5,000

• Continuing Claims Unemployment Rate 1.8% +10 basis points

• Average 30-Year Mortgage Rate 3.89% -8 basis points

• Weekly Mortgage Applications 347.0 -7.34%

• Bloomberg Consumer Comfort 39.8 -.9 point

• Weekly Retail Sales +4.20% +20 basis points

• Nationwide Gas $2.71/gallon -.08/gallon

• Baltic Dry Index 1,019 -11.62%

• China (Export) Containerized Freight Index 1,030.07 -1.62%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 32.50 unch.

• Rail Freight Carloads 220,873 -18.0%

Best Performing Style

• Large-Cap Value +.9%

Worst Performing Style

• Large-Cap Growth -.3%

Leading Sectors

• Hospitals +5.4%

• I-Banks +4.0%

• Education +2.9%

• Disk Drives +2.7%

• Banks +2.6%

Lagging Sectors

• Homebuilders -2.8% 

• Telecom -3.6%

• Social Media -4.0%

• Gaming -6.2%

• Coal -7.1%

Weekly High-Volume Stock Gainers (10)

• CODE, CARB, SCVL, OTIC, HE, CY, AVNR, GIII, RCL and UTIW

Weekly High-Volume Stock Losers (31)

• RYAM, CFR, COKE, OVTI, TREC, VPFG, PB, BOKF, BOBE, BNCL, HBHC, CUZ, NSC, WMS, WCN, BKS, PRO, GES, EXPR, PWR, MFRM, WEX, TESO, QDEL, FTK, STRZA, DXPE, VNCE, GBX, HEES and OAS

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Slightly Higher into Final Hour on US Economic Data, Less Eurozone Debt Angst, Yen Weakness, Financial/Healthcare 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) 11.84 -4.36%

• Euro/Yen Carry Return Index 155.78 +.60%

• Emerging Markets Currency Volatility(VXY) 8.73 +2.46%

• S&P 500 Implied Correlation 65.33 -.68%

• ISE Sentiment Index 106.0 -15.22%

• Total Put/Call .99 -3.48%

• NYSE Arms 1.06 -27.61% 

Credit Investor Angst:

• North American Investment Grade CDS Index 62.46 +1.06%

• European Financial Sector CDS Index 56.38 -4.03%

• Western Europe Sovereign Debt CDS Index 25.26 -5.11%
• Asia Pacific Sovereign Debt CDS Index 61.64 -.16%

• Emerging Market CDS Index 302.04 +2.80%

• China Blended Corporate Spread Index 327.48 +.45%
• 2-Year Swap Spread 21.25 +.25 basis point

• TED Spread 22.0 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.5 +.75 basis point

Economic Gauges:

• 3-Month T-Bill Yield .01% -1.0 basis point

• Yield Curve 167.0 -5.0 basis points

• China Import Iron Ore Spot $71.77/Metric Tonne +.73%

• Citi US Economic Surprise Index 14.90 +2.8 points
• Citi Eurozone Economic Surprise Index -21.40 +4.2 points

• Citi Emerging Markets Economic Surprise Index -4.6 +.3 point

• 10-Year TIPS Spread 1.75 -3.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +109 open in Japan

• DAX Futures: Indicating -5 open in Germany

Portfolio: 

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

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

• Market Exposure: 50% Net Long