RED FLAG
Please note the RED FLAG over on the right side of the blog. We are officially in a market correction. Friday's post spent a lot of time talking about what that might mean to you. Please go back and read the post from the sixth of April.
Since we are in a confirmed correction, we probably won't be entering any new positions. Let's take a quick look at the various economic data points out this week.
Much of the global adjustment last week was due to the US Fed indicating no more quantitative easing along with some less than glowing economic news out of China. Let's see what might be going on internationally this week that will make this correct worse or get us back on track.
Monday we have the Bank of Japan announcing monetary policy. This should be plain vanilla type stuff so it should not move the market. Monday will also see Consumer Price Index numbers and Producer Price Index numbers out of China. Significant surprises to the upside would not be good. We will know this long before market opens.
Tuesday
Germany has its merchandise trade report along with the industrial production report. Our guess is they will both disappoint to the down side and look for a poor market correction here in the states.
Wednesday
Japan has its Machine orders reports which may surprise to the upside, but off of pitiful numbers so it will not be a market mover. China reports its trade balance and we a re guessing they are exporting less.
Thursday
(We get to see how the world responds to our beige Book report released on Wednesday. Italy has is production report out (probably bad news) and the UK will announce Producer price Index numbers and we think the number will continue to rise. China unloads a bunch of market data including GDP, Industrial Production, and retail sales.
So look for the market to be feeling some pain on Thursday and Friday.
Here in the States:
Monday
Not much going on in economic news. Let's see how the bond floats go and keep an eye on the ten year yield.
Tuesday
Besides the usual retail reports we have the business optimisim report and the Whole Sale trade numbers. These are not usually market mover so let's look internationally for news tha tmovces the market.
AA Alcoa kicks of the first quarter earning season and they are expected to loose 4 cents a share. Anything worse than that will scare the market and set the tone for earnings this quarter.
Wednesday
Mortgage applications, import export prices, petroleum status, and the Beige Book all report, but barring any surprises, nothing to sway the market.
Thursday
International Trade, Initial Jobless Claims, and PPI could all move the market. The move will probably not be in the correct direction.
FAST Fastnel reports earnings and it is a good litmus for tool order industry. We are thinking they will beat the 35 cents expected, but give lower guidance.
GOOG Google also reports. They too will beat the 6.94 a share but provide lower guidance. (Do you see a theme emerging?)
Friday
Consumer Price Index and Consumer Sentiment reports. We are guessing stable prices and a slightly rising sentiment figure. Remember these are lagging indicators.
All in all we are thinking the market will be down two percent next week. Gold will probably come back a bit and we will see a nice pop in the VXX. In other words RED FLAG.
