Weekend Reading: Running Out of Upside Momentum

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Good morning. Here are some articles and papers worth reading over the weekend. First, however, a look at the week that just finished, and a look forward at the week ahead.

Is that it? Having spent a few weeks on the upside, the majormarkets took a breather last week. The three finished mixed, with the Nasdaq Composite off 0.5%, while the S&P 500 and Dow went the other way (slightly), gaining 0.7% and 0.2%, respectively. Click here for the weekly performance.

Looking forward to next week, it seems likely markets will continueto be somewhat weak. After all, there is little earnings news left todrive things, and the double-whammy of Alan Greenspan's inflationcomments on Wednesday and last Friday's higher-than-expected core PPIfigures will make many people nervous.

Is inflation really on the rise, though? The core PPI was up 0.8% inJanuary, which annualizes to more than 8%, butthere are reasons to think that January was anomalous. Either way, wewill get consumer inflation data this week, and while that won'tsettle things, it will help give a sense of where January really came in.

Turning to the best and worst performers of the week, last week's list of best-performing stocks was led by Canadian Superior Energy ( SNG). The tiny Canadian exploration company, which trades on the Amex and the Toronto Stock Exchange, was told by the TSE last week that it met theexchange's continued listing requirements. There had been muchspeculation in, well, speculative circles that the company would bedelisted, so the news was greeted gleefully, and the stock flew up 35% onthe week (only just edging out old favorite TravelZoo ( TZOO), in case you'recurious). Click here for the winners.

Over on the list of weekly losers, pride of place wentto Audible ( ADBL). The company, which deals in online audio content, hasbeen a steady performer with impressive growth, so analysts had set upsome reasonably high hurdles for the firm in 2005. This week thecompany kicked most of those hurdles over rather than clearing them.It announced that due to spending initiatives it would not turn in the38 cents a share that analysts were expecting, but it would be closer to,oh, 4 cents or so. As you might expect, investors didn't take kindly tothe surprise, and they drove the stock down more than 30% on the week.Some people really do need to learn the gentle art of managingexpectations. Click here for the losers.

Turning to the economic week ahead, here are the events worthwatching: The CPI report is due Wednesday (it is expected to be 0.2%,excluding food and energy), and that will be closely watched, givenlast Friday's PPI figure. Also next week we have the ConferenceBoard's February consumer confidence index, due Tuesday, and Januarydurable goods orders, due Thursday. Given that energy prices are onthe rise again, weekly oil inventory data will also be worth watching.Any hint of a refinery outage or supply disruption andprices will go whooshing upward.

Over on earnings, things are eerily quiet. There is thePresidents Day market holiday on Monday, and then a few prominentcompanies reporting during the week. For example, we have Home Depot ( HD), Gap ( GPS), Limited ( LTD)and J.C. Penney ( JCP) all set to report.

Finally, here are some articles and papers worth reading:

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Dr. Paul Kedrosky was formerly a highly ranked sell-side technology equity analyst, and he is currently a Distinguished Fellow at the University of California, San Diego, where he lectures on business. At time of publication, Kedrosky held no positions in any of the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Kedrosky cannot provide investment advice or recommendations, he welcomes your feedback and invites you to send your comments to pkedrosky@thestreet.com.

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