This week should continue to be a financial “roller coaster” with several bits of economic data which will point to continued weakness. With stocks down roughly 35% year-to-date – as measured by the Dow 30 – has Wall Street already factored in the worst? I believe so and there isn’t much surprise left on the downside. The market has basically priced in the worst case scenario or at least very close to it. We continue to expect high volatility this week and markets bouncing around the lows of October and resistance points already established. Earnings from Dell, Target, Lowes and Home Depot should add to the instability as well as continued layoffs from the likes of Citigroup.
On Tuesday and Wednesday expect a lot of attention to be paid to the PPI and CPI numbers. Inflation, although an after thought in the current economic crisis, should begin to show some up ticking and expect some statements from the fed regarding inflation concerns later in the week. On the positive side, the market is heading into a seasonably favorable period and fund managers may begin to bottom fish for some bargain and counterbalance some of the prevailing “doom and gloom” in the markets.
