Sunday, December 05, 2004

Weekly Outlook

There are a few economic reports and some significant corporate earnings reports scheduled for release this week. Economic reports include Final 3Q Non-farm Productivity(Tues.), Final 3Q Unit Labor Costs(Tues.), Consumer Credit(Tues.), Import Price Index(Thur.), Initial Jobless Claims(Thur.), Wholesale Inventories(Thur.), Univ. of Mich. Consumer Confidence(Fri.) and the Producer Price Index(Fri.). Initial Jobless Claims, Consumer Confidence and the PPI have market-moving potential.

Circuit City(CC)-Mon., Hovnanian Enterprises(HOV)-Tues., Autozone(AZ)-Wed., DreamWorks(DWA)-Wed., Costco Wholesale(COST)-Thur., National Semiconductor(NSM)-Thur., Toll Brothers(TOL)-Thur. and Nortel Networks(NT)-Fri. 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 CSFB Media & Telecom Week(Mon.-Thur.), Cisco Analyst Meeting(Mon.-Wed.), Citi SmithBarney Chemical Conference(Tues.) and the Texas Instruments Mid-quarter Update(Tues.)could also impact trading this week.

Bottom Line: I expect U.S. stocks to finish the week higher on seasonal strength, improving fundamentals in the technology sector, more optimism, a stabilizing US dollar, declining energy prices, short-covering and bargain-hunting. As I stated a couple of months ago, a number of companies lowered estimates in anticipation of a continuation of the "economic soft patch". However, the economy has since reaccelerated. Thus, many companies, specifically tech, should beat lowered estimates over the next couple of months. Intel was an example of this. 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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