Weekly Outlook

There are only a few important economic and corporate earnings reports scheduled for release this week. Scheduled economic reports include Empire Manufacturing, Housing Starts, Building Permits, Initial Jobless Claims, Continuing Claims, Leading Indicators and Philadelphia Fed. The Leading Indicators and Philadelphia Fed. report both have market-moving potential.

Lowe's(LOW), Barnes & Noble(BKS), Home Depot(HD), Deere(DE), Saks Fifth Avenue(SKS), Staples(SPLS), Applied Materials(AMAT), Hewlett Packard(HPQ), Marvell Technology(MRVL) and Nordstrom(JWN) 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 GigaWorld IT Forum, Semi Book-to-Bill, Piper Jaffray Tech Conference, Wireless Enterprise Symposium, Goldman Global Chemical Conference, Bank of America Investors Conference and Prudential Software Summit could all impact trading this week.

BOTTOM LINE: While U.S. stocks may begin the week lower on weakness in Asia, I expect shares to rise as the week progresses. The market's oversold state, strong earnings reports, investor conferences and stabilizing interest rates should provide the catalysts for a continuation of the rally that began last Wednesday. There are many positive aspects to the US market and economy that are currently being ignored as investor psychology has been damaged by the constant barrage of negative reporting in the mainstream press. Job growth is accelerating substantially, American's net worth is at all-time highs, home ownership is at all-time highs, consumer spending is very strong, corporate spending is accelerating, corporate profits are at all-time highs, corporate cash levels are at all-time highs, interest rates and inflation are relatively low, the 04 P/E on the S&P 500 is 17.04 and falling(the lowest in 7 years and down 41% from its highs reached during the bubble), the US dollar has stabilized, US and world economic growth will be the best in two decades this year, the budget deficit is shrinking, manufacturing is improving rapidly, exports to China are exploding, the Japanese economy is finally showing real growth and Europe is improving. These many positives are forgotten as the vast majority of headlines focus on something bad about Iraq or inflation. This intense focus on negativity could result in a self-fulfilling prophecy of slower economic growth as investors lose confidence, stocks drop, consumers lose confidence and consumer/corporate spending slows. At this time, I do not anticipate such a scenario.