Weekly Outlook

There are a few important economic reports and a number of significant corporate earnings reports scheduled for release this week. Economic reports this week include the Trade Balance, Monthly Budget Statement, Advance Retail Sales, Import Price Index, Producer Price Index, Initial Jobless Claims, Business Inventories, Empire Manufacturing, Industrial Production, Capacity Utilization, Philadelphia Fed., Consumer Price Index and U. of Michigan Consumer Confidence. Retail sales, Producer Price Index, Industrial Production, Philly Fed, Consumer Price Index and Consumer Confidence all have market-moving potential.

Novellus Systems(NVLS), Cintas Corp.(CTAS), ADTRAN(ADTN), Gannett Co.(GCI), Johnson and Johnson(JNJ), Merrill Lynch(MER), Intel Corp.(INTC), Juniper Networks(JNPR), Bank of America(BAC), Genzyme Corp.(GENZ), Harley-Davidson(HDI), Advanced Micro Devices(AMD), Apple Computer(AAPL), QLogic Corp.(QLGC), SanDisk Corp.(SNDK), Citigroup(C), Nokia(NOK), Southwest Air(LUV), UnitedHealth Group(UNH), International Business Machines(IBM) and PMC-Sierra(PMCS) 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. SEMICON West, Applied Materials' Analyst Meeting, CIBC's Annual Consumer Growth Conference, Oracle's Analyst Meeting and Dell's Annual Meeting of Shareholders could also impact trading this week.

Bottom Line: I expect U.S. stocks to fall modestly this week on continuing concerns over technology sector earnings, slowing economic growth, politics and terrorism. The severity of some of the technology sector earnings' shortfalls likely means some conservative forward guidance when reporting begins in earnest over the next 2 weeks. As well, the market sustained technical damage last week that will need time to repair. Finally, Put/Call, Arms, VIX and AAII % Bulls readings are all showing too much investor complacency. Thus, I expect U.S. stocks to work towards the lower-end of the recent trading range over the coming weeks. As the election approaches, stocks will likely move back towards their highs set in March. I expect U.S. equities to break-out of the trading range to the up-side sometime in late October or early November and reach their highs for the year in December. My short-term trading indicators are giving sell signals and the Portfolio is market neutral(Longs-Shorts=0) heading into the week.