Weekly Outlook

There are a number of economic reports scheduled for release this week as well as a few significant corporate earnings reports. Scheduled economic reports include the Import Price Index, Trade Balance, Monthly Budget Statement, Producer Price Index, Retail Sales, Initial Jobless Claims, Continuing Claims, Consumer Price Index, Business Inventories, Industrial Production, Capacity Utilization and the preliminary reading of the Univ. of Mich. Consumer Confidence Index for May. The Producer Price Index, Retail Sales, Initial Jobless Claims, Consumer Price Index and Consumer Confidence all have market-moving potential.

Wal-Mart(WMT), Target(TGT), Cisco(CSCO), Dell(DELL), May Department Stores(MAY), Federated Department Stores(FD), Kohl's(KSS), Cablevision(CVC), Disney(DIS), Computer Associates(CA), Analog Devices(ADI), Elan Corp.(ELN), Panera Bread(PNRA) and Tiffany(TIF) 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 Fed's Snow speaks at the Chicago Fed Conference on the Banking Industry, the Fed's Santomero speaks on the current economic outlook, the 2004 Electronic Expo and the Intel, Texas Instruments, Yahoo! and Qualcomm Analyst Meetings could all impact trading this week.

BOTTOM LINE: It is good to see investor complacency falling from very high levels as evidenced by the decline in the AAII Bullish % and the rising VIX and Put/Call readings. As well, Friday's sell-off had a "washed-out" feel to it as breadth was horrific, many tech stocks rose and volume was average. I expect to see an oversold rally begin on either Mon. or Tues. of this week as many stocks have come down too far too fast. Strong earnings, strong economic reports and stabilizing interest rates should provide the positive catalysts for the rally. I expect networking, semiconductor, basic material and industrial stocks to outperform this week, while restaurants, retailers and pharmaceuticals may underperform.