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Monday, with no new economic data, the market struggled through its third consecutive negative day of trading after a six-day winning streak. What's the difference? We have traded a dubious, yet serious, problem in Syria for a much more tangible, and perhaps less solvable battle, in Congress. The debt ceiling problems have not been addressed by an adequate solution and continued sequestration drags on the economy. Then there is the issue of Obamacare, which we thought had cooled off a year ago.

During the remainder of the week, we should get at least a few hints on how much damage Washington is causing. Tuesday we get Consumer Confidence, which is expected to be ok. Wednesday, we get Durable Goods, which is always an important release; economists are projecting a significant improvement on last month's dismal decline. New Home Sales will be released on Wednesday as well, and it is expected to be nicely improved. Thursday, we get some sort of Initial Jobless Claims data, which is still likely to be skewed by computational issues. On Friday, the third estimate of Q2 GDP is scheduled for release; in addition, Personal Income & Spending will be "front and center" along with Michigan Sentiment Final for September. All three are expected to be positive. If all of the above expected positives come true, the market should respond favorably as long as Congressional bickering doesn't get worse and the rest of the globe remains status quo. That is a lot of hoping, but it could happen.

Last week, the market ended higher in all Style/Caps with Small-cap Growth leading the way yet again (see chart below). Even the worst of the Style/Caps, Large-cap Value, was up nearly a full percent. Sector wise, Industrials led the way, up nearly 2.5%, with Consumer Non-Cyclicals also up over 2%. That's sort of an odd pairing as Industrials normally lead when the economy is expected to grow and Non-Cyclicals are normally a sign of flight-to-safety. Utilities, another flight-to-safety sector, was third, but that was probably due to strength from Treasuries following the unexpected Fed announcement that QE3 would not be slowed in September.

It's clearly a week for caution - hopefully things turn out better than the market forecasted today.

3 Stock Ideas For This Market

I selected the following stocks from a custom search looking for recent upward analyst revisions (*all data below from Yahoo! Finance):

Packaging Corporation of America (PKG) -Basic Materials

  • Trading for 25.4x current earnings and 16.6x forward earnings estimates
  • 2.7% forward dividend yield
  • 61.8% projected EPS growth for current quarter, 37.7% next quarter, 48% in 2013, and 13% over the next 5 years

Lowe's Companies, Inc. (LOW) - Cyclical Consumer

  • Trading 24.2x current earnings and 17.8 forward earnings estimates
  • 1.5% forward dividend yield
  • Recent upward analysts revisions to earnings estimates
  • 20% projected EPS growth for the current quarter, 26.9% next quarter, 25% in 2013, 17% over the next 5 years

EPL Oil & Gas, Inc. (EPL) - Energy

  • Trading for 12.1x current earnings, and 8.9X forward earnings
  • Upward analysts revisions to earnings estimates
  • 203% projected EPS growth for the current quarter, 50.7% next quarter, 100% in 2013, 5% over the next 5 years
Source: Trying To Ignore Congressional Bickering