The Week Ahead: Retail sales increases in January are reason for optimism among investors but expectations for February are likely to offset the January increase as the economy struggles to gain traction. Housing Starts, Industrial Production, and Capacity Utilization reports arrive on Wednesday of a Holiday shortened week. The Producer Price Index and Leading Indicators will be Thursday’s focus while the Consumer Price Index on Friday will provide clues to the inflation/deflation outlook.
Stocks to Watch: A number of food establishments benefited from increased traffic and sales revenue as Chipotle Mexican Grill (CMG), Panera Bread (PNRA), and Cheesecake Factory (CAKE) all benefited with new 52 week highs. Ingersoll-rand (IR) dropped 8% and fell to multi month lows after coming in with weaker Q4 results and a dimmed outlook. Computer Storage firm Compellant Technologies (CML) hit a 5 month low after falling 25% as analysts downgraded the stock. General Cable (BGC) came in with half the earnings forecasted and the stock promptly dropped 13% to 10 month lows.
Special Note: Worries that China raising the reserve requirements for banks to slow the growth of loan demand to head off potential bubbles may have merit. Typically these government responses are more the cause of bubbles bursting than anything else. Witness the collapse of the Nasdaq bubble as the Fed raised interest rates in 2000 here in the U.S. More importantly though China and Hong Kong have been leading other markets around the world in up and down trends with the current trend reversal being no different as the Shanghai Composite and Hang Seng Index rolled over last August and November respectively.
Market commentary provided by Barry Ward, registered principal, NobleTrading.com, Inc.
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