Sunday, September 12, 2004

Weekly Outlook

There are several important economic reports and some significant corporate earnings reports scheduled for release this week. Economic reports include the Monthly Budget Statement, Current Account Balance, Advance Retail Sales, Empire Manufacturing, Business Inventories, Industrial Production, Capacity Utilization, Consumer Price Index, Initial Jobless Claims, Philly Fed and Univ. of Mich. Consumer Confidence. Retail Sales, CPI, Philly Fed and Consumer Confidence all have market-moving potential.

Oracle Corp.(ORCL), Best Buy(BBY), Cintas(CTAS), General Mills(GIS), AG Edwards(AGE), Carnival Corp.(CCL), Circuit City(CC) and Jabil Circuit(JBL) are some of the more important companies that release quarterly earnings this week. There are also a couple of other events that have market-moving potential. Rosh Hashanah and an OPEC meeting could also impact trading this week.

Bottom Line: I expect U.S. stocks to finish the week modestly higher as traders and investors boost shares on optimism over diminishing terrorism fears, more merger activity, declining energy prices, falling inflation/interest rate concerns and economic data showing stabilizing sustainable growth. With measures of investor anxiety beginning to reach excessively complacent levels, I expect U.S. equities to put in a shot-term top during the next 2 weeks. However, I continue to believe stocks will resume their rally during the latter part of October and move meaningfully higher during the fourth quarter. My short-term trading indicators are still giving Buy signals and the Portfolio is 125% net long heading into the week.

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