Sunday, February 13, 2005

Weekly Outlook

There are a number of important economic reports and some significant corporate earnings reports scheduled for release this week. Economic reports include: Tues.-Empire Manufacturing, Advance Retail Sales, Business Inventories, Net Foreign Security Purchases and the NAHB Housing Market Index Wed.-Housing Starts, Building Permits, Industrial Production, Capacity Utilization and Greenspan's Report on the Economy/Fed Policy Thur.-Import Price Index, Initial Jobless Claims, Leading Indicators and Philadelphia Fed Fri.-Producer Price Index and Preliminary Univ. of Mich. Consumer Confidence. Advance Retail Sales, Housing Starts, Industrial Production, Greenspan's report and Consumer Confidence all have market-moving potential.

Some of the more important companies that release quarterly earnings this week are: Mon.-Agilent(A) Tues.-Applied Materials(AMAT), Career Education(CECO), Deere & Co.(DE), Medco Health Solution(MHS), Network Appliance(NTAP), Nordstrom(JWN), Transocean(RIG) Wed.-Coca-Cola(KO), Hewlett Packard(HPQ), IAC/InterActiveCorp(IACI), Medtronic(MDT), Outback Steakhous(OSI), Synopsys(SNPS), Wendy's Intl.(WEN) Thur.-Baker Hughes(BHI), Barrick Gold(ABX), Genzyme Corp.(GENZ), Intuit(INTU), Nextel Communications(NXTL), RadioShack(RSH), Wal-Mart Stores(WMT) Fri.-Campbell Soup(CPB), Target Corp.(TGT).

There are also a few other events that have market-moving potential. The UBS Global Healthcare Services Conference(Mon.-Wed.), Merrill Lynch Insurance Conference(Mon.-Wed.), Banc of America Gaming Conference(Tues.), UBS Chemical Conference(Tues.-Wed.), Deutsche Bank Global Transport Conference(Wed.-Thur.), Citi SmithBarney Small/Mid-cap Conference(Wed.-Thur.), Fed's Greenspan testimony before Senate(Wed.), JP Morgan Airline Conference(Thur.), Semi Book-to-Bill(Thur.) and the Fed's Greenspan testimony before House(Thur.) could also impact trading this week.

Bottom Line: I expect US stocks to finish the week modestly higher on a decline in energy prices, increasing fund inflows, rebounding tech shares, short-covering, strong earnings reports and more constructive Fed comments. I continue to expect the major US indices to end the first half of the year mostly unchanged, however stocks should work higher over the near-term. I would like to see the Nasdaq close above technical resistance at around 2100, before positioning the Portfolio in a more aggressive manner. The 10-Year T-Note is overbought short-term and may decline modestly this week. My short-term trading indicators are still giving mixed signals and the Portfolio is 75% net long heading into the week.

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