There are a number of important economic reports and several significant corporate earnings reports scheduled for release this week. Economic reports this week include Trade Balance, Advance Retail Sales, PPI, CPI, Business Inventories, Empire Manufacturing, Preliminary U. of Mich. Consumer Confidence, Housing Market Index, Housing Starts, Industrial Production, Capacity Utilization, Initial Jobless Claims, Leading Indicators, Philadelphia Fed. and Current Account Balance. PPI, CPI, Consumer Confidence, Initial Jobless Claims, Leading Indicators and Philly Fed all have market-moving potential.
Oracle(ORCL), Lehman Brothers(LEH), Circuit City(CC), Bear Stearns(BSC), Best Buy(BBY), KB Home(KBH), Adobe Systems(ADBE), Solectron(SLR), Carnival Corp.(CCL) and Red Hat(RHAT) are some of the more important companies that release quarterly earnings this week. There are also a few other events that have market-moving potential. The Thomas Weisel Growth Forum, Bear Stearns Tech Conference and NYSSA Semi Conference could all impact trading this week.
Bottom Line: I expect U.S. stocks to trade weaker-to-neutral this week on a moderate rise in interest rates and energy prices. Numerous economic reports will likely point to continued strong economic growth and higher-than-expected inflation which will send interest rates higher and pressure stocks in the short-term. The spike in the AAII % Bulls, lower Put/Call and ARMS readings and a falling VIX last week also point to a tougher week for U.S. stocks. Finally, the market's technically overbought short-term condition and psychological factors will also weigh on shares this week. My short-term trading indicators are giving mixed signals and the Portfolio is market neutral(longs-shorts=0) heading into the week.