Market Catalysts for This Week

Defense contractors are in the spotlight this week as the sequester draws near.

   

As European markets continue reeling from the Italian election results, U.S. economic data really picks up Tuesday through Friday and could add volatility to the mix. This week, here are the top items on the minds of investors and economists and what I expect will impact the markets this week and beyond:

Fed Chairman Ben Bernanke’s Humphrey-Hawkins Testimony

Tuesday and Wednesday, Ben Bernanke will sit in front of Congress and explain the current action of the Fed. One can already see the long look of frustration on the Fed Chairman’s face. But this should be interesting as he will have a chance to offset some of the concern over the Fed minutes. Seeing that the perception that the minutes were more hawkish was given as a reason for the decline in markets, his comments and the reaction in the markets should help set the tone for the coming weeks.

Earnings

Q4 earnings continues its long season. While the majority of the big names are out already, there are a lot of notables next week that will offer traders volatility. Retailers will be of particular interest with Lowe’s (NYSE:LOW), Home Depot (NYSE:HD), Target (NYSE:TGT), Macy’s (NYSE:M), Kohl’s (NYSE:KSS), Sears (NASDAQ:SHLD), Deckers Outdoor (NASADQ:DECK), J.C. Penney (NYSE:JCP) and Gap (NYSE:GPS) are among those reporting.

Conferences/Meetings/Speeches

Also a busy week here. JPMorgan Chase (NYSE:JPM) will hold its annual Investors Day Tuesday, while Apple (NASDAQ:AAPL) will hold its Shareholders Meeting Wednesday. Some of the more notable conferences include: GS Agribusiness, Wells Fargo Real Estate, Bank of America/Merrill Hedge Fund, BMO Capital Mining, Bank of America/Merrill Agriculture, ASCO, and RBC Capital Global Healthcare conferences.

Economic Data

Later this week, we will have a full boat of countries reporting the latest economic numbers. Housing Prices, new Home Sales, Chicago PMI, and a revision to Q4 GDP will also capture attention in just a few days week. Around the globe, Q4 revisions, consumer confidence, and retail sales numbers will dominate the landscape.

The Sequester

On Friday, we will hit the deadline on spending cuts in the U.S. There is little expected in the way of an 11th hour deal as neither side appears prepared to budge on the issue. Commentary is now centering on how it will have little impact on financial markets. Defense names like Lockheed Martin (NYSE:LMT), General Dynamics (NYSE:GD), Northrop Grumman (NYSE:NOC), iShares Dow Jones U.S. Aerospace & Defense ETF (NYSEARCA:ITA), and United Technologies (NYSE:UTX) will be at the top of the list.

All of this adds up to my taking a bearish stance in Trending123 and Parabolic Options. I’m hesitant to add any new longs at the moment, but if you are in the bull camp, at least stick with high-yield-dividend plays that are somewhat insulated from any market downturn. One name that’s currently on my buy list for Trending123 is Invesco Mortgage Capital (NYSE:IVR) but keep in mind I have tight stops for all of my long plays and you should be ready to exit any longs quickly.

InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the Open, Parabolic Options and Trending123.  For more information on which service is for you click here.

 

 


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