Weekly Outlook

The coming week is relatively light on market-moving economic reports and earnings releases. Durable Goods Orders, New Home Sales, 4Q Final GDP, Existing Home Sales, Help Wanted Index, Personal Income, Personal Spending and the Final U. of Mich. Confidence reading for March are scheduled for release next week. Durable Goods Orders and Consumer Confidence are the most important releases. Durable Goods Orders are estimated +1.5% versus -2.3% in January. The Final reading from the U. of Mich. Consumer Confidence Index for March is expected to be 93.5 vs. a prior estimate of 94.1.

To date, there have been only 1.7 earnings warnings for the upcoming quarter to every positive preannouncement, significantly lower than the average of 2.5. Walgreen(WAG), Micron(MU), Carnival Corp.(CCL), Goldman Sachs(GS) and EchoStar(DISH) are some of the more important companies that release quarterly earnings this week. PeopleSoft's(PSFT) annual stockholder meeting on Thurs. will be of interest as investors look for comments on Oracle's takeover bid. Several Fed Governors speak throughout the week as well. The CTIA Wireless Conference lasts all week. Amgen's Research and Development Day is Tues. Applied Materials(AMAT) annual meeting is Wed. Finally, Nokia's(NOK) annual meeting is scheduled for Thur.

BOTTOM LINE: The Portfolio is 100% net long heading into the week. I am overweight gaming, base metal and homebuilding stocks on the long-side. I would like to see 466 hold on the Morgan Stanley High-tech Index and 463 hold on the Semiconductor Index. In my opinion, these levels are crucial to the short-term direction of the entire market. I will likely reduce market exposure substantially on a convincing break of these levels. A rally early next week will likely lead me to increase tech exposure. I would like to reiterate that the S&P 500 2004 P/E is 17.9(where it is was in the late 80's and down over 60% from its high set in 02) and falling, the economy is growing the fastest since the mid-80's, interest rates are still near 46-year lows, corporate profitability is at all-time highs, American's net-worth is at all-time highs, corporate spending is improving, consumer spending remains strong, the Fed remains on hold as inflation hovers near all-time lows, energy prices will likely fall into the spring, the unemployment rate is falling with improvement in job creation around the corner and the U.S. dollar has stabilized. These are all very important reasons that I believe the recent weakness is just a healthy correction in a bull market that began a year ago.