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 rising financial sector pessimism, global debt angst, global growth worries and emerging market inflation fears offset short-covering, technical buying, bargain-hunting and lower food/energy prices. My intermediate-term trading indicators are giving mostly bearish signals and the Portfolio is 50% net long heading into the week.

Market Week in Review

S&P 500 1,136.43 -6.54%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,136.43 -6.54%
  
• DJIA 10,771.48 -6.41%
  
• NASDAQ 2,483.23 -5.30%
  
• Russell 2000 652.43 -8.66%
  
• Wilshire 5000 11,759.03 -6.91%
  
• Russell 1000 Growth 535.30 -6.10%
  
• Russell 1000 Value 556.40 -7.10%
  
• Morgan Stanley Consumer 682.84 -5.12%
  
• Morgan Stanley Cyclical 770.67 -11.14%
• Morgan Stanley Technology 567.41 -5.77%
  
• Transports 4,218.77 -9.56%
  
• Utilities 431.55 -1.76%
  
• MSCI Emerging Markets 35.89 -10.95%
  
• Lyxor L/S Equity Long Bias Index 961.80 +.59%
  
• Lyxor L/S Equity Variable Bias Index 865.15 -.10%
  
• Lyxor L/S Equity Short Bias Index 628.59 -1.62%
  

Sentiment/Internals

• NYSE Cumulative A/D Line 115,736 -5.10%
  
• Bloomberg New Highs-Lows Index -2818 -2,594
  
• Bloomberg Crude Oil % Bulls 23.0 -28.1%
  
• CFTC Oil Net Speculative Position 159,965 -3.28%
  
• CFTC Oil Total Open Interest 1,365,197 -6.63%
  
• Total Put/Call 1.15 +11.65%
  
• OEX Put/Call 1.29 +5.74%
  
• ISE Sentiment 147.0 +137.10%
  
• NYSE Arms .86 +7.50%
  
• Volatility(VIX) 41.25 +33.15%
• S&P 500 Implied Correlation 83.17 +4.56%
  
• G7 Currency Volatility (VXY) 15.52 +18.93%
  
• Smart Money Flow Index 10,106.04 -1.53%
  
• Money Mkt Mutual Fund Assets $2.621 Trillion -.40%
  
• AAII % Bulls 25.33 -16.95%
  
• AAII % Bears 48.0 +16.08%

Futures Spot Prices

• CRB Index 301.87 -8.40%
  
• Crude Oil 79.85 -9.35%
  
• Reformulated Gasoline 255.47 -8.10%
  
• Natural Gas 3.70 -3.14%
  
• Heating Oil 279.58 -6.74%
  
• Gold 1,639.80 -9.65%
  
• Bloomberg Base Metals 203.63 -14.41%
  
• Copper 328.0 -16.62%
  
• US No. 1 Heavy Melt Scrap Steel 419.67 USD/Ton unch.
  
• China Hot Rolled Domestic Steel Sheet 4,711 Yuan/Ton -1.94%
  
• UBS-Bloomberg Agriculture 1,554.98 -7.58%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate -6.70% -60 basis points
  
• S&P 500 EPS Estimates 1 Year Mean 95.89 -.09%
  
• Citi US Economic Surprise Index -40.80 +2.3 points
  
• Fed Fund Futures imply 31.7% chance of no change, 68.3% chance of 25 basis point cut on 11/02
• US Dollar Index 78.50 +2.56%
  
• Yield Curve 161.0 -27 basis points
  
• 10-Year US Treasury Yield 1.83% -22 basis points
  
• Federal Reserve's Balance Sheet $2.841 Trillion -.20%
  
• U.S. Sovereign Debt Credit Default Swap 55.75 +12.97%
  
• Illinois Municipal Debt Credit Default Swap 257.0 +6.70%
  
• Western Europe Sovereign Debt Credit Default Swap Index 355.47 +9.70%
• Emerging Markets Sovereign Debt CDS Index 285.88 +14.58%
  
• Saudi Sovereign Debt Credit Default Swap 128.69 +16.08%
• Iraqi 2028 Government Bonds 80.77 -6.51%
• China Blended Corporate Spread Index 780.0 +135 basis points
  
• 10-Year TIPS Spread 1.76% -21 basis points
  
• TED Spread 37.0 +2 basis points
• 3-Month Euribor/OIS Spread 89.0 +14 basis points
  
• N. America Investment Grade Credit Default Swap Index 140.83 +12.52%
  
• Euro Financial Sector Credit Default Swap Index 258.13 +5.92%
  
• Emerging Markets Credit Default Swap Index 367.67 +26.41%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 284.0 -13 basis points
  
• M1 Money Supply $2.107 Trillion -1.39%
  
• Commercial Paper Outstanding 1,029.8B -1.30%
  
• 4-Week Moving Average of Jobless Claims 421,000 +.10%
  
• Continuing Claims Unemployment Rate 3.0% unch.
  
• Average 30-Year Mortgage Rate 4.09% unch.
  
• Weekly Mortgage Applications 702.73 +.56%
  
• Bloomberg Consumer Comfort -52.1 -2.8 points
  
• Weekly Retail Sales +4.50% -20 basis points
  
• Nationwide Gas $3.54/gallon -.07/gallon
  
• U.S. Cooling Demand Next 7 Days 30.0% above normal
• Baltic Dry Index 1,920 +5.84%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 35.0 +7.69%
  
• Rail Freight Carloads 242,250 +16.42%
  

Best Performing Style

• Large-Cap Growth -6.41%

Worst Performing Style

• Small-Cap Value -8.66%

Leading Sectors

• Restaurants -1.48%
  
• Utilities -1.76%
• Computer Services -2.62%
  
• Biotech -3.04%
• Telecom -3.67%

Lagging Sectors

• Agriculture -13.27%
• Construction -13.64%
  
• Oil Service -16.23%
  
• Steel -16.36%
  
• Coal -22.90%

Weekly High-Volume Stock Gainers (6)

• GR, WMGI, DMND, KIOR, RPXC and CCOI
  

Weekly High-Volume Stock Losers (17)

• MDVN, ACC, CATM, TRH, CPRT, UPL, PRAA, CPT, HME, SREV, LAD, RLOC, AAWW, NFLX, HLS, MCP and MNTA
  

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 Less Eurozone Debt Angst, Short-Covering, Bargain-Hunting, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: About Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 42.16 +1.96%
  
• ISE Sentiment Index 137.0 +57.47%
  
• Total Put/Call 1.14 -8.80%
  
• NYSE Arms .91 -63.85%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 144.50 -2.54%
  
• European Financial Sector CDS Index 263.93 -4.45%
  
• Western Europe Sovereign Debt CDS Index 356.0 +.58%
  
• Emerging Market CDS Index 367.28 -.50%
  
• 2-Year Swap Spread 30.0 -2 bps
  
• TED Spread 37.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 159.0 +7 bps
  
• China Import Iron Ore Spot $174.10/Metric Tonne -.91%
  
• Citi US Economic Surprise Index -40.80 +.2 point
  
• 10-Year TIPS Spread 1.75 +3 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating -150 open in Japan
• DAX Futures: Indicating -10 open in Germany

Portfolio:

• Slightly Higher: On gains in my Biotech, Medical, Tech and Retail sector longs
  
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish, as the S&P 500 is unable to bounce meaningfully, despite recent losses, technical support, a precious metals collapse, less Eurozone debt angst, numerous Eurozone rumors and less financial sector pessimism. On the positive side, Steel, Construction, Homebuilding, Education and Airline shares are especially strong, rising more than +1.5%. Cyclicals and small-caps are outperforming. (XLF) has also outperformed throughout the day. The UBS-Bloomberg Ag Spot Index is down -1.43%, Silver is plunging -14.8% and Gold is down -5.5%. The 10-year yield is rising +11 bps to 1.83%. The France sovereign cds is down -3.2% to 196.0 bps, the Spain sovereign cds is falling -5.1% to 414.3 bps and the Italy sovereign cds is declining -3.68% to 518.33 bps. Major European indicies rose 1-2% today. On the negative side, Energy, Oil Service, Ag, Drug and Gaming shares are lower on the day. Copper is plunging -5.96% and Lumber is down -2.24%. Rice is still very near its multi-year high, rising +29.0% in about 11 weeks. The average US price for a gallon of gas is -.02/gallon today to $3.54/gallon. It is up .40/gallon in about 7 months. The Germany sovereign cds is gaining +3.03% to 107.83 bps, the Russia sovereign cds is soaring +7.9% to 309.83 bps, the Israel sovereign cds is gaining +4.47% to 218.45 bps, the China sovereign cds is jumping 6.7% to 158.85 bps, the Japan sovereign cds is rising +1.82% to 143.19 bps and the UK sovereign cds is gaining +1.26% to 95.83 bps. The Germany sovereign cds made another new record high today. The China sovereign cds is braking to the highest level since April 2009. The Russia sovereign cds is breaking out to the highest since July 2009. The Western Europe Sovereign CDS Index is making another new all-time high and the European Financial Sector CDS Index is still very near its record. The Emerging Markets Sovereign CDS Index is surging 21.0 bps today to a record 285.9 bps. The 2-Year Euro Swap Spread is at the highest since December 2008. The 3-Month Euribor-OIS Spread is rising +4 bps to the highest since March 2009. The TED spread is at the highest level since July 2010 despite Europe's recent efforts. The China Blended Corporate Spread Index is continuing its parabolic move higher, rising another +26.0 bps to 780.0 bps, which is the highest since March 2009. South Korean stocks plunged -5.7% overnight and are back at their August lows, falling -17.2% ytd. Philippine shares also plummeted -5.1% and are now down -7.5% ytd. Hong Kong shares fell another -1.4% overnight to the lowest since July 2009 and are now down -23.3% ytd. Ukraine shares dropped to new multi-year lows, falling -1.9% and are now down -42.8% ytd. Various credit gauges continue to indicate intense global recession fears. Gauges of Asian credit are now rapidly deteriorating. The S&P 500 bounced off the lower end of its recent trading range again. However, given how oversold we are, technical support, less Eurozone debt angst, the break in the precious metals fever, a bounce in financials and numerous rumors out of Europe, today's lackluster equity breadth and volume is noteworthy. I still believe the situation in Europe must at least stabilize very soon or a full test, and likely break, of the August lows is likely over the coming weeks. I expect US stocks to trade mixed-to-lower into the close from current levels on rising global debt angst, global growth worries, US tax hike concerns, more shorting and margin selling.

Bear Radar

Style Underperformer:

• Large-Cap Value (+.63%)

Sector Underperformers:

• 1) Gold & Silver -4.40% 2) Agriculture -1.11% 3) Oil Service -.89%

Stocks Falling on Unusual Volume:

• RIC, SLW, HPQ, CAVM, ACOM, OPTR, RGLD, SSRI, CRZO, MNRO, MAKO, GOLD, PAAS, AKO/A, TDW, CH, SLV, CRR and GTU
  

Stocks With Unusual Put Option Activity:

• 1) UUP 2) TBT 3) SLV 4) NTES 5) UBS
  

Stocks With Most Negative News Mentions:

• 1) GR 2) NBR 3) TDW 4) SLV 5) RIMM
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Small-Cap Value (+1.49%)

Sector Outperformers:

• 1) Airlines +3.34% 2) Education +3.19% 3) Homebuilders +2.79%

Stocks Rising on Unusual Volume:

• SNP, DB, RMBS, YOKU, PTR, UBS, FINL, NFLX, CPHD, SLXP, ALXN, PNM and NKE
  

Stocks With Unusual Call Option Activity:

• 1) KBH 2) SLM 3) SLV 4) KGC 5) ACN
  

Stocks With Most Positive News Mentions:

• 1) FEIC 2) CPHD 3) AWK 4) RDA 5) NKE
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume