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Dear Fellow Investor,

The upcoming Holiday shortened week will be extremely important as far as the health of the current rally is concerned.

Several significant economic reports are coming our way along with key earnings reports from bell weather companies, all of which we’ll discuss in a moment.

Our Standard Portfolio remains fully invested and we have one position in the 2X.

Friday’s sell off left virtually all sectors and major indexes in deeply oversold territory and so we would expect a resumption of the uptrend next week.  All indicators remain in up trends and there was substantial buying within the last 30 minutes on Friday.

Sector action for the week was muted with only Consumer Staples, Health Care and Utilities outperforming the S&P 500 which also posted a loss for the week.

The View from 35,000 Feet

The news was mixed last week with Intel blowing away expectations with their earnings reports displaying revenue up +25%, a good top line and a positive forward looking outlook.  Industrial Production exceeded expectations and the New York Manufacturing Index rose more than expected along with capacity utilization and the Fed Beige book showed modest improvement in business conditions.

The first week of January was in the positive column which bodes well for the rest of the year as it was the 12th strongest first week in 50 years and 85% of the time the year is positive when the first week logs a gain.

On the negative side of the ledger, JP Morgan missed their revenue forecast and adding $1.9 Billion to their loan loss reserves. December retail sales dipped an unexpected -0.3% while weekly jobless claims rose and Alco missed their earnings forecast.

The Week Ahead

The week ahead brings significant news on the economic and earnings front and will focus a spotlight on what we can expect for the First Quarter.  By Thursday or Friday at the latest we’ll have a much clearer view of where the economy and market might be going as the economic reports will focus on housing, inflation, jobs and leading indicators.

This will be a huge week for earnings, as well, and analysts will be looking for improvements and top line revenue growth.  We’ll see a cross section of financials, transportation, consumer, tech and manufacturing and some of the more notable releases to keep an eye on are:

Tuesday: Citi Group, IBM

Wednesday: Bank of America, Morgan Stanley, Wells Fargo, Starbucks

Thursday: Goldman Sachs, American Airlines, Advanced Micro Devices, Burlington Northern and Google

Friday: McDonalds, General Electric

On the economic front major reports include:

Wednesday: December Building Permits, December Housing Starts, December Producer Price Index and Consumer Price Index

Thursday: Weekly Jobless Claims, Continuing Claims, December Leading Economic Indicators, January Philadelphia Fed Report

Sector Spotlight:

Leaders: Japan, Treasuries

Laggards: China, Oil

I hope and pray that America can marshal enough aid soon enough to help the poor people in Haiti.  I was there once, and on a good day it’s a sad, desperate country.  I can’t imagine how difficult the task ahead will be.

It’s a quiet weekend around Bend. I hope you have a great weekend wherever you may be.

To get a Complimentary Special Report from Wall Street Sector Selector, click here:

All the best,

John

John Nyaradi

Publisher

Wall Street Sector Selector

All information presented herein is for general information only and deemed to be from reliable sources, but we cannot guarantee its accuracy. Readers are strongly advised to check with their investment counselors before making any investment. There is risk of loss in all investment activity.