Sunday, October 31, 2004

Weekly Outlook

There are a number of important economic reports and significant corporate earnings reports scheduled for release this week. Economic reports include Personal Income(Mon.), Personal Spending(Mon.), PCE Deflator(Mon.), Construction Spending(Mon.), ISM Manufacturing(Mon.), Factory Orders(Wed.), ISM Non-Manufacturing(Wed.), Vehicle Sales(Wed.), Preliminary 3Q Non-farm Productivity(Thur.), Unit Labor Costs(Thur.), Initial Jobless Claims(Thur.), Unemployment Rate(Fri.), Change in Non-farm Payrolls(Fri.) and Consumer Credit(Fri.). Personal Spending, ISM Manufacturing, ISM Non-Manufacturing and Change in Non-farm Payrolls all have market-moving potential.

Cigna(CI-Mon.), Maxim Integrated(MXIM-Mon.), Tyco Intl.(TYC-Mon.), MBIA Inc.(MBI-Tues.), Fox Entertainment(FOX-Wed.), IAC/InterActiveCorp(IACI-Wed.), Qualcomm(QCOM-Wed.), Time Warner(TWX-Wed.), CVS Corp.(CVS-Thur.), XM Satellite Radio(XMSR-Thur.) are some of the more important companies that release quarterly earnings this week. There are also some other events that have market-moving potential. The Morgan Stanley Software, Services, Internet & Networking Conference(Mon.), the U.S. Presidential Election(Tue.), Merrill Lynch Global Energy Conference(Wed.) and Chain Store Comp Sales Releases(Thur.) could also impact trading this week.

Bottom Line: I expect U.S. stocks to finish the week sharply higher on strong economic reports, significantly diminishing domestic terrorism fears, no delay in the declaration of a winner in the election, an end to uncertainty over the direction of the country, subsiding negativity from the media and politicians, falling energy prices and good earnings reports. Equities will likely open mixed on Mon./Tues. mornings and move modestly higher by both day's end. I expect U.S. shares to gap higher on Wed. with the DJIA rising 100-250 points, depending on the various election outcomes I foresee. Stocks should continue moving modestly higher to end the week. My short-term trading indicators are giving Buy signals and the Portfolio is 125% net long heading into the week.

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