Will A Macro Triple Witch Trip The Nascent Bull?

  • October 28, 2002
  • Peter Navarro



Long Term Market Trend:
Down



Short Term Market Trend:
Up



This Week’s Market Outlook: Neutral



Media and Barron’s Watch: 

(
VVTV |
Quote |
Chart |
News |
PowerRating)



Peter’s Picks:

(
AMTD |
Quote |
Chart |
News |
PowerRating),
(
VRSN |
Quote |
Chart |
News |
PowerRating),
(
CTXS |
Quote |
Chart |
News |
PowerRating),
(
TLAB |
Quote |
Chart |
News |
PowerRating),
(
CPWR |
Quote |
Chart |
News |
PowerRating),
(
NOVL |
Quote |
Chart |
News |
PowerRating),
(
SANM |
Quote |
Chart |
News |
PowerRating),
(
SUNW |
Quote |
Chart |
News |
PowerRating),
(
RSAS |
Quote |
Chart |
News |
PowerRating),
(
PLXT |
Quote |
Chart |
News |
PowerRating),
(
PWAV |
Quote |
Chart |
News |
PowerRating),
(
CCUR |
Quote |
Chart |
News |
PowerRating)
(Peanut Brigade)

The Broad Market Outlook:
Make that a Pivotal TWO Weeks

When
Barron’s
calls a new bull market, you know
that the bear can’t be too far away from making another comeback. OK, we’re
not that quite contrarian, but we do think that the cute little
Barron’s
cover heralding “relief in sight” may yet be premature.
 

Yes, we’ve been happy to jump into this market
on the long side in this latest move up and maybe we will make a few bucks, like
we did with the July rally. But a sober analysis of a broad range of macro
fundamentals makes us continue to believe that this latest lurch upward has more
to do with a “technical bounce” from oversold conditions and more than a whiff
of panic in a topped-out bond market ironically seeking the “safety” of stocks,
than it does with the stock market accurately predicting an acceptable economic
recovery. 

Indeed, there is absolutely no way you can put
any convincing lipstick on the macroeconomic pig.   Everything but a topped-out
housing sector is weak — from supply and capital investment to demand and
consumer confidence. That, of course, is why the big market action this week
will unfold totally in sync with the macro data calendar.

So Wall Street nerds, unite!  This will be a
most excellent week to stay close to your data reports. Here’s your road map.

The Week’s Macro Data Market Movers: A Macro “Triple Witching”

The Macroeconomic Calendar


DAY


EVENT

Monday

  • UBS Investor Optimism


Tuesday

  • Chain Store Sales Snapshot

  • Consumer Confidence


Wednesday

  • MBA Mortgage Applications Survey


Thursday

  • GDP!!

  • Chicago PMI

  • Jobless Claims


Friday

  • Jobs Report!!!!

  • ISM!!!!

  • Construction Spending

  • Personal Income

* Potential major market movers in red

After two weeks of being driven by
earnings data, it’s time for a wildly careening Wall Street to return to its
regular macroeconomic beat.  It will do so in style with its own version of a
Triple Witch brew of GDP, the Jobs Report, and the ISM Index. Throw on top of
these three of the most important reports to watch during this stage of the
business cycle yet another look at flagging consumer confidence, and you have all
the ingredients of a trip wire for our nascent bull. Here’s what to look for:

  • Any significant deviation of the GDP growth rate

  • A Chicago PMI that presages a further weakening of the ISM

    • An ISM that falls significantly below 50 — or jumps back above 50
    into the recovery range

  • Any sign of relief in the job market — with the bond market doing
    an absolute steep yield curve freak-out if unemployment substantially improves

If all of these reports come in
significantly better than estimates, you can bronze the Barron’s cover and
watch the rally bloom. If most or all come in significantly below estimates,
it’s difficult to imagine our nascent bull not falling on its face —
so
don’t fall on its horns.

Macroplay of the Week: The Peanut Brigade


Last week, I featured the “Penny Brigade” of stock
bargains under a buck with good business models and a decent change at home run
immortality. This week I offer my “Peanut Brigade” in the same spirit — stocks
over a buck but under 10. They include:

(
AMTD |
Quote |
Chart |
News |
PowerRating),
(
VRSN |
Quote |
Chart |
News |
PowerRating),
(
CTXS |
Quote |
Chart |
News |
PowerRating),
(
TLAB |
Quote |
Chart |
News |
PowerRating),
(
CPWR |
Quote |
Chart |
News |
PowerRating),
(
NOVL |
Quote |
Chart |
News |
PowerRating),
(
SANM |
Quote |
Chart |
News |
PowerRating),
(
SUNW |
Quote |
Chart |
News |
PowerRating),
(
RSAS |
Quote |
Chart |
News |
PowerRating),
(
PLXT |
Quote |
Chart |
News |
PowerRating),
(
PWAV |
Quote |
Chart |
News |
PowerRating),
(
CCUR |
Quote |
Chart |
News |
PowerRating)

Bon Chance!  And remember,
we still see a good chance of one more lurch down for the broad market.

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