What The Market Wants: Quintuple Witching Economic Indicator Week

Includes: DIA, QQQ, SPY
by: David Brown

What a week ahead! While there are no releases today that allow us to celebrate “Greek Austerity Day”……well, maybe… tomorrow begins a week packed with economic releases starting with retail sales and import/export prices accompanied by business inventories. On Wednesday, we get the important industrial production number, which is not expected to please anyone, along with capacity utilization, which will likely be a non-event. Thursday, we hope to applaud even lower initial jobless claims, (although that is not predicted). Thursday also has housing starts and business permits, and both are expected to be off a little. Producer Price Index (PPI) readings aren’t expected to change much. If we end up surviving the first four days, we start Friday with the Consumer Price Index (CPI); the non-core (food and energy) reading is expected to be up more than we would like. The week ends with the venerable Leading Indicators, which are expected to be unchanged.

If the numbers as a whole aren’t too bad, and that is probably less than a 50-50 bet, and if Europe remains quiet, which is another likely losing bet, we could escape with a slightly up week considering today’s positive action.

Last week was a bit of a bummer as a Greek lack of action led the market down for the first time in 5 weeks. Large-cap Growth was the only cap/style up for the week, eking out a tiny +0.11% gain. Small-cap Value brought up the bottom, down -2.2% in a flight-to-safety week. Treasuries did well for a change with the 10-year note falling back below 2%.

The sectors were essentially uneventful for the week with no sector establishing leadership, except perhaps Non-Cyclical Consumer. A number of companies across sectors reported better-than-expected earnings: Technology produced a small gain, and the rest were slightly above or below zero.

It’s still best to buy well-priced stocks with a hedge. You might consider using the VXX since volatility is near long-term lows despite the sharp upward spike last Friday.

Here are the market stats.

4 Stock Ideas for this Market

This week, I created a custom search with MyStockFinder, emphasizing high value, high growth, high earnings quality and momentum. Here are four stock ideas for your consideration:

Delta Air Lines, Inc. (NYSE:DAL) – Industrials

Cummins Inc. (NYSE:CMI) – Industrials

CVR Energy Inc. (NYSE:CVI)—Energy

Encore Capital Group, Inc. (NASDAQ:ECPG)—Financials