The Week Ahead: Despite the strong Q4 GDP number, the economy is lagging badly in many areas not the least of which is the poorer showing in new home sales from January to February do to high unemployment and higher lending standards. Future GDP comparisons will be tough. The ISM Manufacturing Index, Personal Income, and Construction Spending reports will start the week off on Monday. Auto Sales arrive Tuesday. The Non-Mfg. Index on Wednesday will provide a peak at the service sector. Factory orders on Thursday and the Employment Report on Friday should be the most noteworthy of the week.
Stocks to Watch: Bancorpsouth (BXS), a regional bank, fell 13.74% after it delayed its annual report do to the review of asset quality measurements and setting aside $35 million for bad loans. Deckers (DECK) footwear beat estimates handily as sales and profits margins rose propelling the stock to 52 week highs. Nuvasive (NUVA), a medical device maker, shot up 35% on word that Aetna insurance will cover its final surgery procedure, but Rockwell Medical (RMTI) collapsed 27% after disappointing results for its experimental anemia drug.
Special Note: The Mutual Fund Cash to Asset Ratio of 3.6% at year end 2009 has reached the second lowest level since the data for this series began tracking it in the 1960’s. As some may be aware, readings this low notoriously accompany major tops in stocks nearby. The last reading near this level was in July 2007 when the ratio reached its lowest 3.4% three months before the big top. It’s an important contrary statistic to keep in mind as it is showing extreme bullish sentiment among fund managers with little wiggle room to meet redemptions.
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