Market Outlook: Huge Week Ahead

Things turned south this week, with the major indexes posting their first losing week in three. Our long positions gave up some ground along with the general indexes.

Markets remain overbought and we are very close to a "Red Flag Flying" signal, indicating lower prices ahead. The environment remains difficult and in my opinion, caution is in order.

We have a huge week ahead with a flurry of reports, particularly on Thursday and Friday, that could make for a wild ride in the markets later this week.

The View from 35,000 Feet

Economic reports were less than robust with U.S. home resales declining, new home sales basically flat and durable goods orders declining unexpectedly in August.

On the upside, the Fed kept interest rates near zero and the G20 said they'd sustain stimulus programs and they see a turnaround in progresss. Consumer confidence came in at the highest levels since 2008.

There were downwards revisions in financials and energy and upwards revisions in tech and consumer stocks.

On Friday we had our weekly bank failure, bringing the yearly total to 95 and unemployment is approaching the top of the double dip recession in 1982.

The Week Ahead

As I mentioned at the outset, this week will have enormous implications going into the autumn and set the stage for the earnings season about to get underway.

Here are the more significant reports coming at us this week, with Thursday and Friday bringing whoppers like Construction Spending and Auto Sales and Friday's monthly payroll data and Factory Orders.

Tuesday: July Case/Shiller Home Price Index, September Consumer Confidence

Wednesday: September ADP Employment Summary, Final Q2 GDP, September Chicago PM

Thursday: Weekly Jobless Claims, August Personal Income, August Personal Spending, August Construction Spending, September ISM Index, August Pending Home Sales, September Auto Sales

Friday: September Non Farm Payrolls, August Factory Orders

Sector Spotlight

Leaders: Bonds, Yen

Laggards: Real Estate, Mexico

Disclosure: None

Comments

[Spartacuss:]

At some point I posit that the "slobbering love affair with the Fed" will find that reality will have it's say regardless: no jobs, no rise in industrial output, home sales only at the bottom end, more bank failures, and disallusionment as true profits don't appear.

And so, more deleveraging is de jour and soon the true ugliness will become apparent as we move more and more towards depression.

Sep 27 02:07 PM

[Mrudula Shah:]

Pessimism will prevail for U.S. economy, but optimism will ring in for economies of Brazil-India-China-Rus... Thus, companies from the latter conutries and doing businesses in those countries will see some green soots. Meaning, it will be a mixed market. Investors in the U.S. should note that our country is no longer the dominant driving force. What do you expect if we keep spending beyond our means and keep living with money borrowed from Japan and China and, on top of that, keep buying more and more goods made in these very two countries? Sadly, to American children and mothers, idols are not scientists or engineers, but Hollywood actors/actresses, television stars and ball players; at the same time, all working adults want to be managers, executives and share/commodity traders, etc. to squeeze easy money and services from others while themselves unwilling to do any constructive work!! Hardly a minority wants to be hard-working and proud scientists or engineers. Thanks to almost-all lawyer politicians running and steering the country to be the country full of legal jargons. Their priority is not exploring constructive means to create more jobs but to work for global-warming concerns, killing Al Quaeda leaders, saving Israel, and protecting the rights of wrong people!! What a future we are building for ourselves!! At this rate, we will surely be a second-rate economic power within a couple of decades. Investors must note these facts.

Sep 27 05:18 PM