This Week's Outlook 10/26/2009

This past week stocks received most of their lift from positive or better than expected earnings announcements and their downward movement from broker downgrades. While it was good to hear Apple beat estimates, it was more concerning to see Wells Fargo downgraded due to accelerating loan losses. This is especially concerning as the bulk of this years growth is due to signs of a recovering economy, anything indicating otherwise at this point is extremely troublesome.

Last week we forecasted a high of 110.00 on the SPY and 107.50 as a low which proved to be right on the money and helped us to have a successful trading week. Even with all of the intra-week swings the PrecisionCharts signals were able to get us in early enough to benefit quite nicely from each one.

SPY (S&P 500 SPDR) 5 Day Chart 
1 Week Change  -0.7%

This week could prove to be a fairly volatile week as several key economic indicators will shed additional light on the status of the recovering economy. Consumer confidence will likely fall back even more on Tuesday and will weigh on the overall uptrend early in the week. Durable goods orders out on Wednesday could be mixed again or slightly bullish. New home sales could jump again with the new home buyers taking advantage of the tax credit prior to its expiration on Nov. 30th. Third quarter GDP is out on Thursday and will be closely scrutinized to see exactly how well the economy has done over the past quarter. The overall market is expecting this to be positive information and has priced that into the market over the last quarter. If these numbers are not what investors wanted to see then Thursday could start another well needed sell off. Personal Income will also be a major event to watch closely.
With all of these major announcements we could fluctuate more than usual this week. Let's keep our resistance level at 110.00 and move support to 105.75 for the week as we are currently more inclined to drift lower. If any of these events drive the SPY above 110.75 then we will re-visit our levels and adjust accordingly.

  Upcoming Economic Events  
Tuesday -      S&P Case-Schiller HPI - 9:00 AM 
                    Consumer Confidence- 10:00 AM 
Wednesday - Durable Goods Orders - 8:30 AM 
                    New Home Sales - 10:00 AM
Thursday -     GDP - 8:30 AM
                    Jobless Claims - 8:30 AM 
Friday -         Personal Income and Outlays - 8:30 AM
                    Consumer Sentiment - 9:55 AM

Posted 10-26-2009 12:05 AM by Spencer T. Coles