Where To Look For Clues This Week

  • August 11, 2003
  • Peter Navarro

Market Trend: Topping Pattern

Market Outlook: Short term bounce, Medium to Longer
Term Bearish

Peter’s Pick: Cash


The Broad Market Outlook:

Last week’s bearish call was (mostly) right on
the money.  Both the Nasdaq and the S&P 500 saw red last week, while the Dow
managed to a little green for the week on Friday. 

This coming week should be a volatile one with
the Fed meeting, lots of economic data, earnings (from Dell, Applied
Materials, Brocade, and others), and “quadruple-witching” (futures and options
expiration week).  The Dow has shown the most resilience lately, while the Nasdaq is breaking down. We believe this changing of the guard is further
support for a major top being put in within the broad markets. 

Last the week the volatility indices (VIX, VXN,
QQV) all had a reversal week to the downside. Couple this with short-term
oversold readings in numerous technical indicators and the bond market, and
these could lend support to another short-term bounce up in the markets.

We expect to hear a final surge of bullish dogma
from Wall Street and its pundits as we begin to exit earnings season. As we are
in a pivotal time both politically and economically, even the Fed may be
encouraged to talk more bullishly. We shall watch all of the markets, and read
between lines. 

Bottom line:
Our shorter-term view is bearish-to-Neutral, and our longer-term view
remains bearish. 

The Week’s Macro Data Market Movers:

The
Macroeconomic Calendar


DAY


EVENT
Tuesday


  • Fed Meeting
Wednesday

  • Business inventories

  • Mortgage Applications

  • Oil and Gas inventories


  • Retail Sales
Thursday


  • Jobless Claims

  • Trade Deficit

  • PPI
Friday

  • CPI

  • ECRI Weekly Leading Index


  • Industrial Production


  • Consumer Sentiment

  • Triple Witching


* Potential major market movers in red

The dog days of summer won’t be lacking some
interesting economic news. Look for the Fed to stand pat and say little if
anything to upset the economic recovery apple cart. 

We are watching mortgage apps closely for any
sign that the refi fuel for consumption may be drying up or the housing sector
might soften. So far, housing has had nine lives.

Both retail sales on Wednesday and Consumer
Sentiment on Friday will give us an important take on the consumption side of
the GDP equation. But Costco’s
(
COST |
Quote |
Chart |
News |
PowerRating) low-profit bombshell last week underscores the
fear on Wall Street that companies are moving stuff but margins are slim to none, along with profits. That bodes ill for the market.

Peter’s Pick: Cash

I’m going to use this upcoming week to engage in
some serious stock screening. The volatility this week is likely to be too
unpredictable to speculate on.

If you have a favorite
macroplay or stock you would like us to consider in this column, send an e-mail
to

peter@peternavarro.com or go directly to

https://www.peternavarro.com.  We’d love to hear from
you.  Â