Bear Radar

Style Underperformer:

• Small-Cap Growth (-.14%)

Sector Underperformers:

• 1) Alt Energy -.95% 2) Utilities -.51% 3) Semis -.43%

Stocks Falling on Unusual Volume:

• GDP, CLMT, HMC, STD, SNE, AEIS, ACOR, RINO, ENDP and CIX
  

Stocks With Unusual Put Option Activity:

• 1) WL 2) OREX 3) BHI 4) TEVA 5) DYN
  

Stocks With Most Negative News Mentions:

• 1) FSGI 2) IDIX 3) ANH 4) PLD 5) WWE
  

Bull Radar

Style Outperformer:

• Large-Cap Value (+.63%)

Sector Outperformers:

• 1) Coal +.2.10% 2) REITs +1.28% 3) Gaming +1.18%

Stocks Rising on Unusual Volume:

• XCO, COG, IBN, GGAL, GNW, BW, CCJ, SU, ARB, NCR, AN, PCAR, WWE, OSIS, VRUS, FTNT, FIRE, IPGP, ORBK, CCME, TDSC, CSTR, IMAX, AAWW, PWRD, MEOH, GEOI, SHPGY, DORM, ATLS, CAGC, ROVI, DWA, SBR, SUR, SQL and CTB
  

Stocks With Unusual Call Option Activity:

• 1) BSX 2) NUE 3) XCO 4) YRCW 5) BHI
  

Stocks With Most Positive News Mentions:

• 1) ACI 2) AMD 3) THOR 4) WSM 5) AIG

Monday Watch

Weekend Headlines
Bloomberg:

• Fed Risks Its Credibility on a Bowlful of Mush: Caroline Baum. It’s all over but the voting. After all the speeches and the posturing, after the trial balloons and the press leaks, the Federal Reserve probably will announce another round of quantitative easing at the conclusion of its two-day meeting Wednesday. The Fed embarks on this program with the intention of lowering yields on long-term Treasuries, which in turn will bring down mortgage rates and corporate bond yields. Surely there must be two or three households holding back on a home purchase because the 30-year mortgage rate at 4.2 percent is too onerous.
• Food Inflation Rising as Cooking Oil Poised to Catch Gain Gains. Cooking oils, left behind in this year’s surge in agriculture prices, are poised to catch up with grains as record demand cuts stockpiles by the most in 17 years. Inventories of soybean oil and palm oil, used by Nestle SA and Unilever and in everything from Hellmann’s mayonnaise to Snickers candy bars, will drop 12 percent in the coming year as China and India increase consumption 11 percent, U.S. Department of Agriculture data show. Food prices climbed in September to the highest level since the crisis in 2008 that sparked riots from Haiti to Egypt, the United Nations says.
• Hedge Funds Increase Bullish Bets on Oil to Six-Month High. Hedge funds raised bullish bets on oil to the highest level in more than six months as supplies of gasoline fell, French refinery strikes ended and plants in the U.S. and Europe returned to service. The funds and other large speculators increased wagers on rising crude prices by 9.3 percent in the seven days ended Oct. 26, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the highest level since April 16.
• U.S. Nuclear-Bomb Detector Ignored by Truckers Leaves Shipping Vulnerable. Two years after South Korea’s busiest port installed a $3.5 million scanner to check U.S.- bound shipping containers for nuclear weapons, the machine sits idle because truckers won’t drive through it due to fears of radiation exposure. That means about 1.9 million containers left Busan for American harbors last year without U.S.-mandated screening. Singapore and Hong Kong, the world’s busiest and third-busiest ports, also don’t participate. Nine years after the Sept. 11 attacks, less than 1 percent of the 14.5 million cargo boxes reaching U.S. shores are scanned abroad, the government said.
• Marijuana Legalization Proposal in California Opposed by 49%, Poll Finds. A California ballot measure to legalize marijuana for recreational use has lost popularity in the past month, according to the final statewide survey by the Field Poll before the Nov. 2 election. Support for Proposition 19 has fallen to 42 percent of likely voters, with 49 percent against, according to the results of a Field Poll released today. Last month, those in favor outnumbered opponents 49 percent to 42 percent, the poll said. The measure would allow people 21 years of age and older to grow and possess marijuana in small quantities for personal use, and would allow local governments to tax marijuana businesses.

Wall Street Journal:

• GOP Set for Big Gains as Voters Voice Anger. Republicans are positioned for large gains Tuesday, likely retaking the House and picking up seats in the Senate, amid strong voter frustration with President Barack Obama and the Democratic-run Congress, according to a new Wall Street Journal/NBC News poll. Republicans held a six-point edge, 49% to 43%, when likely voters were asked which party they hoped would be in charge. Nearly half of voters who favored GOP control of Congress said their feelings reflected a vote of protest against the Democrats—an unusually high proportion that pollsters said reflected deep frustration among many voters. Mr. Obama ended a pre-election campaign swing Sunday in Cleveland with a call for Democrats to vote Tuesday. But the poll results suggest he is turning off many swing voters—the same voters who are expected to decide close races. A majority of likely voters in the survey, 52%, disapproved of Mr. Obama's job performance, while one-third of independents approved.
• Packages May Have Been Sent by Militants Linked to Schools; Arrests Made. U.S. authorities believe two packages laden with explosives that were found in cargo shipments from Yemen may have been shipped by suspected militants linked to language schools there, officials say. Yemeni officials said late Saturday that security forces had arrested two people connected to a probe into who sent the two explosive-laden packages to the U.S. President Ali Abdullah Saleh said earlier during a news conference Saturday that security forces had surrounded the house of one suspect in the probe. It wasn't clear where security forces took the two suspects, a female university engineering student and her mother, according to the family's attorney. The student, Hanan Al-Samawi, was a fifth-year student at Sana'a University.
• Apple(AAPL) Sues Motorola Over Smartphone Patents. Apple Inc. sued Motorola Inc., alleging that the company's smartphone lineup and the operating software it uses infringe on the iPhone-maker's intellectual property.
• Who's Afraid of Marco Rubio? Democrats are scared enough of the charismatic Republican Senate hopeful that some were willing to sacrifice their own candidate to help a stronger challenger in the race. He appealed as a different sort of Republican. He kept his pitch upbeat, shunned personal attacks, worked hard to widen support without apologizing for his conservatism, and more noticeably than anyone in this race ran on an unabashed and constantly invoked faith in American exceptionalism. Bill Clinton sure noticed his success, and recently the former president threw a Hail Mary to stop him by nudging Kendrick Meek—the Democratic nominee who won a contested primary—to leave the race.

CNBC:

• Dispute Between China and Japan Overshadows Summit. Hillary Clinton’s meeting with 16 heads of state at the east Asia Summit in Vietnam on Saturday was supposed to be a powerful signal of the renewed engagement of the US with the region.
• China Orders Banks to Charge Higher Mortgage Interest. Beijing has taken a fresh step to discourage property buying by ordering banks to charge higher mortgage interest rates for first home buyers, local media reported over the weekend. Lenders were told by China's banking regulator that they can offer at most 15 percent, versus the previous 30 percent, discount to the benchmark interest rates to new mortgage loan applicants, the Beijing News reported.

NY Times:

• U.S. Hunts for More Suspicious Packages. Officials searched for suspicious packages in the United States and other countries after two shipments containing explosives, sent from Yemen and addressed to synagogues in Chicago, were intercepted in Britain and Dubai.
• U.S. Says Genes Should Not be Eligible for Patents. Reversing a longstanding policy, the federal government said on Friday that human and other genes should not be eligible for patents because they are part of nature. The new position could have a huge impact on medicine and on the biotechnology industry. Opponents say that genes are products of nature, not inventions, and should be the common heritage of mankind. They say that locking up basic genetic information in patents actually impedes medical progress. Proponents say genes isolated from the body are chemicals that are different from those found in the body and therefore are eligible for patents. The Patent and Trademark Office has sided with the proponents and has issued thousands of patents on genes of various organisms, including on an estimated 20 percent of human genes. But in its brief, the government said it now believed that the mere isolation of a gene, without further alteration or manipulation, does not change its nature.
• China's Fast Rise Leads Neighbors to Join Forces. China’s military expansion and assertive trade policies have set off jitters across Asia, prompting many of its neighbors to rekindle old alliances and cultivate new ones to better defend their interests against the rising superpower. A whirl of deal-making and diplomacy, from Tokyo to New Delhi, is giving the United States an opportunity to reassert itself in a region where its eclipse by China has been viewed as inevitable.

Business Insider:

• Why Stocks Can Continue To Rally Even If QE2 Is A Huge Letdown.
• The Shipping Glut is So Bad Globally That Ships Are Now Sailing Slower Than 19th Century Clippers Just to Keep Busy.
• M2 Velocity Suggests A Stronger Q4 GDP. (graph)
  

Zero Hedge:

• Is The Fed TRYING to Force a Surge in Commodity Prices and Input Costs? Diapason Explains Why Hyperinflation is Blackhawk Ben's End Goal.

Washington Post:

• White House Considering 'Decoupling' Top-Tier Tax Cut. With Republicans poised to gain ground in Tuesday's elections, the White House is losing hope that Congress will approve its plan to raise taxes on the nation's wealthiest families and is increasingly focusing on a new strategy that would preserve tax breaks for both the wealthy and the middle class. According to people familiar with talks at the White House and among senior Democrats on Capitol Hill, breaking apart the Bush administration tax cuts is now being discussed as a more realistic goal. That strategy calls for permanent extension of cuts that benefit families earning less than $250,000 a year, and temporary extension of cuts on income above that amount. The move would "decouple" the two sets of provisions, Democrats said, and focus the debate when tax cuts for the rich expired next year or the year after. Republicans would be forced to defend carve-outs for a tiny minority populated by millionaires, an unpopular position that would be difficult to advance without the cover of a broad-based tax cut for everyone, aides in both parties said.
• Investigators Link Package Explosives to Al-Qaeda Bomb-Maker in Yemen. Investigators examining explosives found in packages intercepted in Britain and Dubai suspect the material, preliminarily identified as PETN, points not only to the role of an al-Qaeda affiliate in Yemen but to a sophisticated bomb-maker who last year sent his brother to his death in an effort to kill a Saudi prince. Ibrahim Hassan al-Asiri, a 28-year-old Saudi national who is on that country's most-wanted list, secreted a PETN-based bomb in a body cavity of his younger brother, Abdullah, who pretended to be turning himself in. The bomb killed his brother and wounded Mohammed bin Nayef, a top counterterrorism official and Saudi royal. Asiri, who is based in Yemen, is also believed to have built the underwear bomb that a Nigerian man trained in Yemen attempted to detonate last Christmas Day on a commercial aircraft approaching Detroit.

LA Times:

• Gulf Seafood Safe to Eat, FDA Says.

iStockAnalyst:

• QE2 Sends Interest Rates Up. Yes, Up!

BigGovernment:

• Jerry Brown On His First Gubernatorial Campaign: "It's All a Lie...I Didn't Have a Plan for California' (video)

Real Clear Politics:

• Obama's Economists Missed What Voters Plainly Saw.

Reuters:

• Angola Wants Higher Output Quota From OPEC. Angola wants OPEC to raise the country's oil output quota as the southwest African country depends on its natural resources for "social economic recovery", Oil Minister Jose Botelho de Vasconcelos said on Sunday. Asked if the country was producing well above the OPEC quota, he said: "We are very close to it," adding his country was cutting its output to comply with its OPEC quota.
• Ahmadinejad Aide Says Iran Not Ready to Talk Nuclear. Iran will not discuss its nuclear programme at talks with global powers, an adviser to President Mahmoud Ahmadinejad said on Sunday, adding fresh doubt to the chances of a negotiated end to its stand-off with the West.

Financial Times:

• European Central Bank President Jean-Claude Trichet warned that a future rescue mechanism for indepted countries, designed to shift responsibility to investors from taxpayers, could inadvertently push up their borrowing costs, citing European Union officials.

Telegraph:

• Angela Merkel Consigned Ireland, Portugal and Spain to Their Fate. Germany has had enough. Any eurozone state that spends its way into a debt crisis or cannot adapt to a monetary union set for Northern rhythms will face “orderly” bankruptcy.

Sunday Times:

• BHP Billiton may increase its $39 billion bid for Potash Corp.(POT) by 10%. The revised offer won't be made until after a Nov. 8 court case about Potash Corp.'s use of a so-called poison-pill defense against the attempted takeover.

Sunday Business Post:

• The Irish government may cut 4 billion euros from next year's budget to reduce its deficit. The budget, set to be announced in December, will include more than 1 billion euros of tax increases.

China Business News:

• China faces "unprecedented" pressure on its currency and in trade, Zhang Yansheng, a researcher affiliated with the National Development and Reform Commission, wrote. The pressure on China comes as the external environment will worsen in 2011 because of weakening economies in developed nations and as trade disputes intensify.

Economic Information Daily:

• China may raise the resource tax paid by coal producers from 3% to 5% of sales, from 1% currently, citing a person familiar with the matter.

21st Century Business Herald:

• China may require banks to raise interest rates for second home loans to the maximum floating rate. The maximum floating rate is 1.7 times the benchmark rate.

Shanghai Securities News:

• Inflation in China may be as high as 4% in October, citing Liu Yuhui, a researcher at the Chinese Academy of Social Sciences. Inflation may quicken to between 4% and 5% during much of the first half of 2011 on "new price gain factors," Liu said.

Weekend Recommendations
Barron's:

• Made positive comments on (RSH), (QCOM), (FCX) and (WHR).
• Made negative comments on (CMG) and (SKX).

Citigroup:

• Removed .
• Reiterated Buy on (IM), boosted target to $25.
• Reiterated Buy on (CLF), target $87.
  

Night Trading

• Asian indices are unch. to +1.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 107.0 +3.0 basis points.
• Asia Pacific Sovereign CDS Index 100.25 +3.25 basis points.
• S&P 500 futures +.72%.
• NASDAQ 100 futures +.62%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SPG)/.90
• (GLW)/.53
• (CNA)/-.69
• (L)/-.01
• (ICE)/1.36
• (AGN)/.78
• (BHI)/.46
• (PTV)/.56
• (ACV)/.39
• (HUM)/1.67
• (FST)/.45
• (VMC)/.17
• (PPS)/.31
• (WMS)/.36
• (APC)/.31

Economic Releases
8:30 am EST

• Personal Income for September is estimated to rise +.2% versus a +.5% gain in August.
• Personal Spending for September is estimated to rise +.4% versus a +.4% gain in August.
• The PCE Core for September is estimated to rise +.1% versus a +.1% gain in August.
  

10:00 am EST

• ISM Manufacturing for October is estimated to fall to 54.0 versus a reading of 54.4 in September.
• The ISM Prices Paid for October is estimated to rise to 70.0 versus a reading of 70.5 in September.
• Construction Spending for September is estimated to fall -.5% versus a +.4% gain in August.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The (KCG) analyst/investor meeting could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by technology and financial shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
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 mixed as investment manager performance angst, short-covering, less financial sector pessimism, mostly positive earnings reports, diminishing economic fear, seasonal strength and buyout speculation offsets a "sell the good news" reaction to the US election and the Fed's QE2 announcement. My intermediate-term trading indicators are giving mostly bullish signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,183.26 +.01%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,183.26 +.01%
  
• DJIA 11,118.49 -.13%
  
• NASDAQ 2,507.31 +1.13%
  
• Russell 2000 703.35 -.01%
  
• Wilshire 5000 12,263.83 +.13%
  
• Russell 1000 Growth 540.07 +.33%
  
• Russell 1000 Value 598.20 -.04%
  
• Morgan Stanley Consumer 723.15 -.46%
  
• Morgan Stanley Cyclical 927.42 -.44%
• Morgan Stanley Technology 627.61 +1.55%
  
• Transports 4,754.29 -.01%
  
• Utilities 404.86 -.48%
  
• MSCI Emerging Markets 46.01 +.04%
  
• Lyxor L/S Equity Long Bias Index 1,000.13 +.83%
  
• Lyxor L/S Equity Variable Bias Index 856.72 +.18%
  
• Lyxor L/S Equity Short Bias Index 781.45 -1.46%
  

Sentiment/Internals

• NYSE Cumulative A/D Line +104,681 +.04%
  
• Bloomberg New Highs-Lows Index +282 -147
  
• Bloomberg Crude Oil % Bulls 12.0 -29.41%
  
• CFTC Oil Net Speculative Position +125,271 +24.24%
  
• CFTC Oil Total Open Interest 1,394,673 -1.98%
  
• Total Put/Call .87 +1.16%
  
• OEX Put/Call .74 -31.48%
  
• ISE Sentiment 147.0 +12.21%
  
• NYSE Arms 1.19 +19.0%
  
• Volatility(VIX) 21.20 +12.88%
  
• G7 Currency Volatility (VXY) 12.89 +2.87%
  
• Smart Money Flow Index 9,446.0 -.31%
  
• Money Mkt Mutual Fund Assets $2.807 Trillion +.9%
  
• AAII % Bulls 51.23 +3.24%
  
• AAII % Bears 21.60 -14.25%
  

Futures Spot Prices

• CRB Index 300.67 +1.16%
  
• Crude Oil 81.41 -.64%
  
• Reformulated Gasoline 206.02 +.09%
  
• Natural Gas 4.07 +9.85%
  
• Heating Oil 223.88 -1.66%
  
• Gold 1,359.80 +2.29%
  
• Bloomberg Base Metals 233.32 -1.70%
  
• Copper 374.70 -1.89%
  
• US No. 1 Heavy Melt Scrap Steel 328.67 USD/Ton unch.
  
• China Hot Rolled Domestic Steel Sheet 4,264 Yuan/Ton -.58%
• S&P GSCI Agriculture 458.98 +4.17%
  

Economy

• ECRI Weekly Leading Economic Index 123.10 +.90%
  
• Citi US Economic Surprise Index +1.70 +6.4 points
  
• Fed Fund Futures imply 72.1% chance of no change, 27.9% chance of 25 basis point cut on 11/3
• US Dollar Index 77.03 -.43%
  
• Yield Curve 226.0 +5 basis points
  
• 10-Year US Treasury Yield 2.60% +4 basis points
  
• Federal Reserve's Balance Sheet $2.278 Trillion -.43%
  
• U.S. Sovereign Debt Credit Default Swap 40.45 -1.45%
• Illinois Municipal Credit Default Swap 271.0 -4.99%
  
• Western Europe Sovereign Debt Credit Default Swap Index 148.0 +6.54%
  
• 10-Year TIPS Spread 2.15% +3 basis points
  
• TED Spread 18.0 +1 basis point
  
• N. America Investment Grade Credit Default Swap Index 94.02 -2.83%
  
• Euro Financial Sector Credit Default Swap Index 93.80 -2.63%
  
• Emerging Markets Credit Default Swap Index 204.54 -2.33%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 245.0 +7 basis points
  
• M1 Money Supply $1.764 Trillion -.50%
• Business Loans 601.0 +.02%
  
• 4-Week Moving Average of Jobless Claims 453,300 -1.2%
  
• Continuing Claims Unemployment Rate 3.5% unch.
  
• Average 30-Year Mortgage Rate 4.23% +2 basis points
  
• Weekly Mortgage Applications 828.90 +3.17%
  
• ABC Consumer Confidence -47 -1 point
  
• Weekly Retail Sales +2.70% +10 basis points
  
• Nationwide Gas $2.81/gallon -.02/gallon
  
• U.S. Cooling Demand Next 7 Days 9.0% below normal
• Baltic Dry Index 2,707 -.48%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 37.50 +25.0%
  
• Rail Freight Carloads 235,606 -.66%
  
• Iraqi 2028 Government Bonds 93.18 +2.27%
  

Best Performing Style

• Mid-Cap Growth +1.16%

Worst Performing Style

• Small-Cap Value -.45%

Leading Sectors

• Gaming +6.25%
• Semis +4.06%
• Gold +3.96%
• Airlines +3.78%
• Software +2.81%

Lagging Sectors

• Medical Equipment -1.14%
• REITs -1.79%
• Insurance -2.05%
  
• Computer Hardware -2.30%
• HMOs -2.86%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change