Weekly Outlook

There are a number of important economic reports and a few significant corporate earnings reports scheduled for release this week. Economic reports include Empire Manufacturing(Mon.), Producer Price Index(Tues.), Housing Market Index(Tues.), Consumer Price Index(Wed.), Housing Starts(Wed.), Industrial Production(Wed.), Capacity Utilization(Wed.), Leading Indicators(Thur.), Initial Jobless Claims(Thur.) and Philadelphia Fed.(Thur.). The PPI, CPI and Philly Fed all have market-moving potential.

Wal-Mart(WMT-Tue.), Lowe's(LOW-Mon.), Staples(SPLS-Tues.), Home Depot(HD-Thur.), JC Penney(JCP-Tues.), Gap(GPS-Wed.), Medtronic(MDT-Wed.), Walt Disney(DIS-Thur.), Hewlett Packard(HPQ-Fri.) and Applied Materials(AMAT-Wed.) 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 Merrill Lynch Financial Services Conference(Mon.), Fed's Santomero speaking(Tues.), Fed's Moskow speaking(Tues.), CSFB Healthcare Conference(Wed.), UBS Communications Conference(Wed.), SEMI Book-to-Bill(Thur.) and Fed's Greenspan speaking(Fri.) could also impact trading this week.

Bottom Line: I expect U.S. stocks to finish the week higher on strong economic reports, declining energy prices, short-covering, bargain-hunting and improvements in Iraq. New inflows into equity funds should also help boost shares. I expect long-term interest rates to move modestly higher this week as the CPI/PPI exceed estimates and investors anticipate stronger economic growth. Any pullback over the next few weeks will be mild as investors who missed the rally jump in, shorts cover to protect gains and new money is put to work on the long side. My short-term trading indicators are giving Buy signals and the Portfolio is 125% net long heading into the week.