Week 2

Looking forward into this week I cannot say I have have a very good feel for what it will bring. Futures are indicating the market will open modestly lower this morning, dragged by financials. I will say that I see financials modestly lower by the end of the week and airlines considerably lower. That is barring surprise jobs, housing, or GDP numbers (due out on Friday, Tuesday and Thursday respectively). I feel that there are bulls waiting to seize any piece of good news and turn it into huge market gains this week.

The GDP is expected to come in at an annualized 2.1%, a number I find surprisingly high given all the doom and gloom talk by CNBC pundits about the pending "deep recession". I have made a point of not listening to these people and personally don't feel that the economy will even suffer a textbook recession - defined as two straight quarters of negative GDP growth - but do feel that this 2% growth here is optimistic. Any surprise here (especially to the upside) will have a big effect on the market.

The Case-Shiller index is out on Tuesday where economists are expecting it to show a 16-17% decline in housing prices since last July. Again an upside surprise here would be huge in my opinion, especially for the homebuilders. A surprise here though would not have an effect of the same magnitude of a surprise in GDP numbers.

Jobs I feel are the least important economic data to be released this week. Economists are looking for a drop of 70,000 in July non-farm payrolls. Unless there is a BIG surprise here I don't really feel that these numbers will have much of an impact.

All told, I feel that this market will move sideways, possibly with a small downtrend, barring any major surprises in the economic data. If I were to bet which, of any, of these numbers were to surprise, I would have to say the GDP figure is looking a little high, even for me.