There are a number of important economic reports and a few significant corporate earnings reports scheduled for release this week. Economic reports this week include Consumer Confidence, Existing Home Sales, Durable Goods Orders, New Home sales, Preliminary GDP, Initial Jobless Claims, Personal Income, Personal Spending, PCE Deflator, Univ. of Mich. Consumer Confidence and the Chicago Purchasing Manager report. Consumer Confidence readings, Durable Goods Orders, PCE Deflator and the Chicago Purchasing Manager report all have market-moving potential.
Novell(NOVL), Medtronic(MDT), Computer Associates(CA), Williams-Sonoma(WSM), Sports Authority(TSA), Toll Brothers(TOL), Vodafone(VOD), Krispy Kreme(KKD), Autozone(AZ), Costco(COST) and Vivendi Universal(V) 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 CSFB Semiconductor & Equipment Conference, UBS Software and Services Conference and the CSFB Small-cap Conference could all impact trading this week.
Bottom Line: I expect U.S. stocks to rise modestly throughout the week as oil and interest rates decline. As well, continued positive news on the earnings front and from several conferences should push stocks higher. While the major indices were mostly flat last week, breadth improved as many stocks posted significant gains. Recent Put/Call and Arms Index readings are also consistent with a rise this week. I expect basic materials stocks will continue their outperformance, while energy-related stocks should remain laggards. I took a long position in NKTR on Friday afternoon and I am using a $17 stop-loss on the position. The Portfolio is 125% net long heading into the week.
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