Weekly Outlook

Click here for Wall St. Week Ahead by Reuters.

Click here for stocks in focus for Monday by MarketWatch.

There are a few economic reports of note and some significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. – Personal Income, Personal Spending, PCE Core

Tues. – S&P/CaseShiller Home Price Index, Chicago Purchasing Manager, Consumer Confidence, NAPM-Milwaukee, weekly retail sales reports

Wed. – Total Vehicle Sales, weekly EIA energy inventory data, weekly MBA mortgage applications report, Challenger Job Cuts, ADP Employment Change, ISM Manufacturing, Construction Spending, ISM Prices Paid

Thur. – Initial Jobless Claims, Factory Orders

Fri. – Change in Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings, ISM Non-Manufacturing Composite

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. – Steelcase(SCS), Walgreen Co.(WAG), Circuit City(CC)

Tues. – Pepsi Bottling Group(PBG)

Wed. – Actuant Corp.(ATU), Mosaic Co.(MOS), Micron Tech(MU)

Thur. – Marriott(MAR), Constellation Brands(STZ), Global Payments(GPN), Resources Connection(RECN)

Fri. – Family Dollar(FDO)

Other events that have market-moving potential this week include:

Mon. – (AWI) Investor Meeting

Tue. – (SJI) Analyst Meeting, (VQ) Analyst Day, (ATO) Analyst Meeting

Wed. – Merrill Lynch Global Energy Conference, (ENER) Investor Day, (OKS) Analyst Meeting, (SFE) Analyst Day

Thur. – Cowen Therapeutics Conference

Fri. – None of note

BOTTOM LINE: I expect US stocks to finish the week modestly higher on bargain-hunting, less credit market angst, diminishing financial sector pessimism and short-covering. My trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,213.27 -3.33%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices
S&P 500 1,213.27 -3.33%
DJIA 11,143.13 -2.15%
NASDAQ 2,183.34 -3.98%
Russell 2000 704.79 -6.49%
Wilshire 5000 12,298.47 -4.04%
Russell 1000 Growth 503.34 -3.40%
Russell 1000 Value 656.96 -4.12%
Morgan Stanley Consumer 671.96 -1.61%
Morgan Stanley Cyclical 807.32 -7.35%
Morgan Stanley Technology 497.21 -4.49%
Transports 4,750.86 -6.85%
Utilities 445.11 -1.45%
MSCI Emerging Markets 35.49 -2.21%

Sentiment/Internals
NYSE Cumulative A/D Line 35,404 -9.64%
Bloomberg New Highs-Lows Index -853 -457.52%
Bloomberg Crude Oil % Bulls 28.0 -38.8%
CFTC Oil Large Speculative Longs 204,940 +1.35%
Total Put/Call 1.02 +27.50%
OEX Put/Call .77 -34.19%
ISE Sentiment 112.0 +69.70%
NYSE Arms .72 -42.40%
Volatility(VIX) 34.74 +8.33%
G7 Currency Volatility (VXY) 13.26 +2.85%
Smart Money Flow Index 7,816.12 -5.99%
AAII % Bulls 34.04 +25.1%
AAII % Bears 45.74 -15.95%

Futures Spot Prices
Crude Oil 106.89 +4.04%
Reformulated Gasoline 266.51 +3.20%
Natural Gas 7.63 -2.48%
Heating Oil 299.49 +3.63%
Gold 888.50 +1.37%
Base Metals 202.45 +1.51%
Copper 307.45 -3.73%
Agriculture 377.32 +.61%

Economy
10-year US Treasury Yield 3.85% +4 basis points
10-year TIPS Spread 1.77% -15 basis points
TED Spread 2.92 +59 basis points
N. Amer. Investment Grade Credit Default Swap Index 161.97 +3.09%
Emerging Markets Credit Default Swap Index 315.34 +1.10%
Citi US Economic Surprise Index +16.10 -52.08%
Fed Fund Futures imply 68.0% chance of 25 basis point cut, 32.0% chance of 50 basis point cut on 10/29
Iraqi 2028 Govt Bonds 67.0 +.15%
4-Wk MA of Jobless Claims 462,500 +3.6%
Average 30-year Mortgage Rate 6.09% +31 basis points
Weekly Mortgage Applications 591,400 -10.62%
Weekly Retail Sales +1.5%
Nationwide Gas $3.68/gallon -.13/gallon
US Cooling Demand Next 7 Days 1.0% below normal
ECRI Weekly Leading Economic Index 122.20 -2.24%
US Dollar Index 76.95 -.94%
Baltic Dry Index 3,746 -16.03%
CRB Index 364.57 +1.39%

Best Performing Style
Large-cap Growth -3.4%

Worst Performing Style
Small-cap Value -6.93%

Leading Sectors
Software +2.80%
Drugs +.28%
Computer Services -.67%
Medical Equipment -1.27%
Biotech -1.29%

Lagging Sectors
Banks -10.53%
Construction -12.03%
Steel -12.95%
Airlines -14.71%
Coal -14.98%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Finish at Session Highs, Led by Gaming, REIT, HMO and Financial Shares

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

Stocks Mostly Lower into Final Hour on Global Growth Worries, Rescue Package Uncertainty

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Medical longs, Biotech longs, Gaming longs and Emerging Market/Commodity shorts. I haven’t traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, sector performance is mixed and volume is below average. Investor anxiety is above average. Today’s overall market action is mildly bullish. The VIX is rising 6.2% and is very high at 34.94. The ISE Sentiment Index is low at 109.0 and the total put/call is above average at 1.03. Finally, the NYSE Arms has been running below average most of the day and is currently .73. The Euro Financial Sector Credit Default Swap Index is rising 13.2% today to 122.0 basis points. This index is up from a low of 52.66 on May 5^th, but down from 157.81 on Sept. 16^th. The North American Investment Grade Credit Default Swap Index is falling .58% to 161.52 basis points. The TED spread is falling 3.6% to 2.91 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is down 3 basis points to 1.76%, which is down 86 basis points in about 10 weeks and at the lowest level since July 2003, when deflation was the concern. Gauges of credit angst are mixed today, which is somewhat positive given the news. Action in the (XLF) is very encouraging. As well, the US dollar remains steady despite worries over the costs of the rescue package and weaker economic data. Oil will likely see another temporary surge on an announcement of the rescue package next week, but should begin to weaken again shortly thereafter. The Hedge Fund VIP Index(favorite longs of the hedge fund community) is falling another 2.3% today, substantially underperforming the broad market. I cautioned several months ago about the popularity of the fertilizer stocks and they are getting hit hard today. These stocks are getting oversold again short-term, but still have further downside, in my opinion. I continue to believe that most investors are still underestimating the impact of the global slowdown on commodity/infrastructure plays. One of my largest longs, (AAPL), is down today in sympathy with (RIMM). I think this is a mistake and will look to add again to my position on any meaningful downside in the shares from current levels. Nikkei futures indicate a +212 open in Japan and DAX futures indicate an +80 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, diminishing financial sector pessimism, lower credit market angst, falling commodity prices and bargain-hunting.