The Week ahead

A good week?

On Friday the NASDAQ's three day winning streak was trounced by a terrorist threat in the Middle East. As U.S. ships steamed out of port, trying to avoid a repeat of the USS Cole incident, stock prices that were marginally higher dropped. In reality it was a pretty good week for stocks. After weathering a flow of bad news, the good news still seemed to hold the day.

The FOMC is going to drop rates on Wednesday. This should provide a short term boost to the market, especially if the widely predicted 50 basis point cut goes through. Just how far the market will go will hinge on the statement that Mr. Greenspan crafts.

If there is a signal that rate cutting is over, the market may suffer.  If there is a signal that economic weakness is a greater danger than inflation, the market will rise.  Barring a terrorist threat, this should rule the week.

The only other danger is an unexpected flow of earnings warnings. The market expects some warnings, but according to Thomson Financial, the flow of warnings has slowed. The next two weeks are critical to the warnings season for the big July reporting season.

If warnings come in at a slower than expected pace, it could spark a rally of around 10% on the NASDAQ during the next two weeks.

The next two issues if investmenttool.com will be produced in Israel. That should make for some trouble getting prices updated on time. Our focus the second week will be on an Israeli company that trades on the NASDAQ stock exchange.

To see our past issues, click here.
Last weeks column.

For our front page, click here.

Shmuel Protter
investmenttool.com