Coming Week: Brokers on Duty

Macro Musings and Fearless Predictions

U.S. economic reports next week include Tuesday's February retail sales report, Thursday's producer price index release, and the New York State Empire Index and Philadelphia Fed Index regional manufacturing reports.

Friday's consumer price index report, however, likely is the most important item on the economic calendar.

As of January, core CPI inflation is up 2.7% on a year-over-year basis, "stubbornly above the Federal Reserve's target level," writes Robert Pavlik, chief investment officer at Oaktree Asset Management. "Should February's report come in below estimates it would remove some pressure off the Fed and allow them room to cut rates should the economy near a recession" -- or should the subprime mortgage mess become more of a threat to the broader economy.

As for the fearless forecast, last week I wrote about the potential for major indices to bounce back toward the 50-day moving averages, which are now 12,509 for the Dow, 1427.50 for the S&P 500 and 2450 for the Nasdaq.

On Friday, the Dow came within 200 points of its 50-day moving average, and a continuation of the bounce-back scenario still seems most likely in the coming week. Perhaps the aforementioned brokerage stocks will lead the way.

That said, Friday's action was noteworthy in that the Philadelphia Stock Exchange Semiconductor Index rose 0.7% in the wake of National Semiconductor's(NSM) positive comments and a Texas Instruments(TXN) upgrade. But the chip strength was accompanied by a (modest) down day for the Nasdaq -- 60% of volume was to the downside -- which is notable because chips are viewed as a leading indicator for the broader tech sector and (still!) get many a daytrader's heart aflutter.

In this regard, Friday reminded me of the action on Feb. 22, when it was a bit surprising to see the market "accentuate the negatives," as I wrote at the time. In hindsight, that session was a harbinger of the recent swoon.

Once bitten, twice shy.

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting

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