There are a number of important economic reports and only a few significant corporate earnings reports scheduled for release this week. Economic reports this week include Construction Spending, ISM Manufacturing/Prices Paid, Auto Sales, Non-farm Productivity, Unit Labor Costs, Initial Jobless Claims, Factory Orders, ISM Non-Manufacturing, Unemployment Rate, Average Hourly Earnings, Change in Non-farm Payrolls and Average Weekly Hours. The ISM reports, Productivity, Unit Labor Costs, and Change in Non-farm Payrolls all have market-moving potential.
Hovnanian Enterprises(HOV), Albertson's(ABS), Neiman-Marcus(NMG/A), Comverse Technology(CMVT) and Mandalay Resort Group(MBG) 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 Citi SmithBarney Semiconductor Conference, ASCO 2004 Annual meeting, American Society of Clinical Oncology Conference, Flextronics(FLEX) Mid-quarter Update and Intel(INTC) Mid-quarter Update could all impact trading this week.
Bottom Line: I expect U.S. stocks to rise this week on strong economic reports, declining energy prices and stabilizing interest rates. As well, positive news from mid-quarter updates and several conferences should push stocks higher. The relatively high Put/Call and ARMS readings at the end of last week and fall in the AAII % Bulls also bode well for stocks this week. Recent price action in the major U.S. indices is very similar to that seen right after the lows in March 03. Breadth is very good, small-caps are outperforming and tech is recovering. I expect biotechnology and technology shares to outperform this week, while homebuilders and retailers lag. My short-term trading indicators all still giving buy signals and the Portfolio is 125% net long heading into the week.
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