First off, I apologize as there are a couple of people who might be wondering how the Salve Lucrum Stock Picking Charity Contest is wrapping up. Our leader for most of the year has closed the gap from the person who took her out in November. As we mentioned out leader for most of the year got dinged because of the change in pricing from NFLX, Netflix. That tragic drop took this lady from double digit gains to a loss position. She has returned to a positive at 2.6%, but our leader for the last two months has the lead at a nice 6.1% lead. If anyone thinks my numbers are off and you can beat the 6.1%, let me know. Sorry I did not get this update to you on Friday.

 

We will get to our guesses for the week, but we are literally just sitting on ready with regards to the portfolio. We did our screening Friday at lunch and entered the positions we described and we will wait for the opening tomorrow to see how the crap game unfolds. We are looking for a down week. Here is the logic. We had a 7+% week last week and we will now watch the Euro Summit unfold. The market has absorbed the only really good global news and that was China's decision to ease bank reserve requirement for the first time in almost three years. That will help liquidity in China and spurt their economy. We all benefit from that. Beyond that, all eyes will be watching the interesting dance taking place between Merkel and Sarkowsky, or as Alan Abelson called it, The Punch and Judy Show.

 

My Abelson was born in 1925, so for younger audiences Punch and Judy are a traditional two character puppet show whose roots are based in 16th century Italy. If you have been following the Merkel/Sarkozy show, Abelson has done a good job of nailing the situation down. Any way, The two of them meet romorrow and all of next week to meet and figure out yet another game plan to save the Euro. This is good for us playing the volatility in the market. You know we will get rumors and confusion all week long until the actual summit of the European Union on Friday. That will tell us what we think we know.

 

All of that makes economic news here in the states a bit irrelevant, but here it goes.

 

Monday

 

Look for a correction on Monday as profit taking from last Friday's couple hours in the market tails off. We have factory orders reporting about 7:00 am out time. With all of the positive news of late concerning industrial production being up in several areas, it would be hard to suggest a drop in factory orders. The consensus is a drop, but we feel a nice surprise so that should be good news for the market. The ISM non manufacturing survey comes out (Basically the service sector.) and again we are thinking good news above estimates. Beyond that on Monday keep looking to the east. (Merkel/Sarkozy). This will be there first day of blah blah, so they can make up what they want and it will be good news. Our guess is the market is up2%.

 

Tuesday

 

Clarifications about each others (Merkel/Sarkozy) comments will surface our of Europe so the market will open wickedly down say 2-3 points. In our market news we have a couple of retail sales reports which will be good news. Other than that, the Bank of Canada won't do anything with their interest rates despite some talk about an increase due to there strong economy. Market will finish down 1-2% on the day.

 

Wednesday

 

The only piece of news is the consumer credit report and people are shopping and probably not paying all cash. We think people are tired of being frugal. We'll see.   A nice bump in this number should help the market squeeze out another point.

 

Thursday

 

We are guessing this is where we will see the confusion from the (Merkel/Sarkozy) confab earlier in the week begin to unravel and send more fear and volatility in the market. Look for Italian and French Bonds escalate and keep real close eye on the German Bonds, there have been slowly creeping up over the last three weeks. That is a very dangerous sign. The Bank of England and the European Central Bank will leave rates a lone, no surprise. Initial jobless claims are expected to drop a little more to 395,000. We are thinking it may be better than that. Look for a number below 390,000. Good news, but the spooky Euro news will not let us enjoy that good news. Keep an eye on the Wholesale Trade report for more good news on Thursday. Look for the market to be confused and down one point.

 

Friday

 

The balance of trade report will be out and look for it to be relatively flat at 43 Billion and no impact on the market. Consumer sentiment comes out Friday, and it is a tough one to call. The Frugal Fatigue might have people spending, but it might be remorseful spending. The consensus in another nice jump to 66. We are not too sure. All the political rhetoric here and abroad might be having some negative impact so we think it will be lower than expected. The real market news will come out of the European Union statement due Friday. By then, everyone should have had time to look at the scheme floated by our Fed, the BOJ, the ECB, the BOE, The SNB, and the BOC (Ok that was a test. The first person to tell who all those players are gets a mention in the blog and a nice bottle of wine. Get your answer too me by Wednesday). Our guess is there will be disappointment galore and the market will correct 2%.

 

If my math is correct look for the Dow to be at 11775ish and the S & P 500 at 1225 ish.

 

Hope that helps. Please review our post from Friday night to see our game plan for tomorrow morning. Jack has early practice tomorrow so we will be at the bell, sittin on ready.

 

Now you have a great week.  Enjoy what you do even when you don't.  Share a smile with friend or a stranger.  Try and give more than you get at least one day this week.  Read a book you normally wouldn't.  Drive a new way to the office or mall.  Don't order the same meal at your favorite restaurant.  Anonymously buy someone's lunch or dinner.  All this stuff is fun try it.

 

Salve Lucrum