The Week Ahead

In the week ahead, we will continue to see more indications of a slowing economy.
The participants in the debt bubble (housing, construction, financial, retail) have already paid a hefty price, with more bad news to come. But now things are spreading.
* Car makers say this will be a bad year. Not challenging. Bad.
* Starbucks is firing 600 people.

So against the background of a slowdown, any news will cause just short-term ripples. You need to sell into strength. Buy more puts on up days.

In the week ahead, we will see:
* US home sales for January
* Consumer confidence
* PPI/CPI
* Durable goods orders
* Q4 GDP revision
* Consumer sentiment
* Consumer spending
Pretty much every indicator that could show weakness.

Also this week, earnings from a few heavy hitters. With very few exceptions, I would expect bad news for all of these companies.
HOUSING
Lowe’s
Home Depot
Freddie Mac

RETAIL
Nordstroms
Macy’s
Radioshack
Target
Dell
Kohls
Sears

OIL
ESV
Foster Wheeler (oil)
Noble

CORPORATE
Office Depot
Salesforce.com

OTHER
AIG (Insurance – but tied to consumer and corporate spending)
Washington Post (Advertising revenue from the housing drop should hurt them)

Lastly, it’s that time in the quarterly cycle when funds begin to move their money into stocks. That is, we are in month 2 of the 3 month quarter. Visibility to the quarter-end results is strong and funds are looking for those whispered numbers. Reassurance that all is well.
Signs include opinion articles or analyst upgrades or updates. “Hey, this stock is looking pretty cheap given the following….”

So we should see some moves up. Great time to short, but you have to go out a few months in expiration date to avoid the mini-moves. We are playing the bigger game – that things are still heading down.