The Week ahead

Nothing else can go wrong

I am optimistic about the week ahead. Get those put buys in!!! The last news on the earnings front looks pretty good. Dell Computer beat estimates and the revenue weakness they showed was expected. Their forward looking statement indicate they still plan to meet growth estimates that are currently set between 30-30%. The chances of a rate hike seem dim. What is there to worry about?

In my opinion, very little. There is a maturation process going on in technology. It is has nothing to do with a slackening of growth in this sector. It seems to have a lot to do with the law of large numbers. For a $1 Billion company to have 50% growth is only $500 million in increased sales. For Dell Computer to do it means $14 Billion in increased sales. That is simply not going to happen with Dell. It's not going to happen much longer for Cisco and Oracle either.

I don't think the Federal Reserve is going to raise rates either. The past few weeks of economic reports there is no reason to raise interest rates. Productivity surged over 5% last quarter. Retail sales numbers are slightly above expectation but nothing to worry about. The Fed is probably going to hold off.

The week ahead has little in the way of earnings news and a light week on the economic calendar. The CPI numbers due mid week are likely to be very tame. Fuel prices fell through most of July. Food prices usually fall in the summer. The core rate hasn't been bad for years, what reason would there be for it to be out of whack last month. Trade balance numbers later in the week could annoy but not sidetrack the market. Wednesday is the really big day. Initial claims for unemployment and housing starts make this the big day.

There you have it folks, everything is lined up for a calm week. The NASDAQ looks oversold, the internet IPO market might be loosening up. What could go wrong? Hopefully Iraq won't invade anybody.

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Shmuel Protter
investmenttool.com