The Week Ahead: A Veritable Roller Coaster

 | Feb 24, 2013 | 8:00 PM EST  | Comments
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If I were to submit to a Rorschach test that had me looking at last week's charts for the major U.S. indices -- the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite -- my response would be "roller coaster." That's before this Friday's deadline for congressional budget sequestration.

Tracing the ride taken by the indices last week, stocks climbed into the middle of the week, only to drop late Wednesday following the release of the most recent Federal Reserve minutes from the latest Federal Open Market Committee meeting. That late-session drop continued through Thursday, but the market proceeded to rebound Friday. Despite the gyrations, the Dow and the S&P 500 were little changed, even though the Nasdaq dipped 1% for the week. I attribute that fall-off more to last week's decline in Apple (AAPL) shares.

Apple, along with the mobile space, will in be in the news and Twitter-sphere in spades over the next few trading days. The tech giant's annual shareholder meeting is set for this week, and the event will be watched like a hawk by those investors clamoring for a bump in Apple's cash dividend. My concern is not whether Apple will eventually bump up the payout, but rather by how much. Given the some $137 billion in cash on its balance sheet, I can already see a group of investors saying that, regardless of the increase, it won't be enough. While this could turn Apple's shareholder meeting into a "buy the rumor, sell the news" event, in my view any dividend increase would serve as a step up in the stock's floor for longer-term investors.

Apple aside, mobile will be big this week as the largest mobile trade show -- the 2013 Mobile World Congress -- is held. I'd expect a flurry of the usual announcements from the usual players -- mobile carriers, like AT&T (T), Vodafone (VOD) and others, as well as device manufacturers such as Nokia (NOK), Sony (SNE), Motorola (GOOG). Those will be interesting, but we have to remember that most of the time those new devices tend to hit shelves in the second half of the year. While many are watching that, I'll be tuning more closely in to the smart- or connected-home news. That market potential was a wildcard factor in my recommending ADT (ADT) shares on Real Money Pro recently.

Besides those two events, my focus will be on the consumer this week. As we all know, gas prices have jumped significantly so far this year. As a result, this week's earnings reports will be even more pivotal -- it's a veritable "who's who" in retailers issuing earnings and outlooks  -- Home Depot(HD), Macy's (M), Gap (GPS), TJX (TJX), Target (TGT), and J.C. Penney (JCP), to name a few. It's also pizza week, as we're set to hear from both Papa Johns (PZZA) and Domino's Pizza (DPZ).

On the economic data front, personal income and spending data will be watched, but we have to remember those figures will be for January, and therefore will not reflect the February bounce in gas prices. We also get the latest snapshot on housing in the form of new-home sales, as well as February auto and truck sales Friday.

The real question is where this roller coaster ride goes this week -- up, down or sideways. For my money, I suspect we'll be hearing cautionary tales from companies, particularly retail and restaurant ones, as they adjust to the rising price/cost environment. Factor in the usual Washington nonsense as we inch ever closer to the sequestration deadline, and it's shaping up to look like more risk and uncertainty ahead, at least for the near term.

Here's a more in depth look at what's on tap this trading week:

_______________
Economic Calendar

Tuesday, Feb. 26

Case-Shiller 20-City Index (December)
Federal Housing Finance Agency Housing Price Index (December)
New Home Sales (January)
Consumer Confidence (February)

Wednesday, Feb. 27
Mortgage Bankers Association Mortgage Index (Weekly)
Durable Orders (January)
Pending Home Sales (January)

Thursday, Feb. 28
Weekly & Continuing Jobless Claims (Weekly)
Gross Domestic Product Second Estimate (Fourth Quarter of 2012)
Chicago PMI (February)

Friday, March 1
Personal Income & Spending (January)
Michigan Sentiment Index (February)
Institute for Supply Management Index (February)
Construction Spending (January)
Auto and Truck Sales (February)

_______________________
Corporate Earnings Calendar

Monday, Feb. 25
Autodesk (ADSK)
AXT (AXTI)
Cooper Tire & Rubber (CTB)
Caesars (CZR)
Hertz (HTZ)
Lowe's (LOW)
Mercadolibre (MELI)
Aqua America (WTR)
____
Tuesday, Feb. 26
AMC Networks (AMCX)
American Tower (AMT)
Avago (AVGO)
AutoZone (AZO)
Big 5 Sporting (BGFV)
DreamWorks Animation SKG (DWA)
First Solar (FSLR)
GrafTech International (GTI)
Home Depot (HD)
Live Nation (LYV)
Macy's (M)
Martha Stewart Living (MSO)
Priceline.com (PCLN)
Ritchie Bros. Auctioneers (RBA)
RadioShack (RSH)
Steve Madden (SHOO)
Saks (SKS)
Spreadtrum Communications (SPRD)
Tivo (TIVO)
Titan (TWI)
Vitamin Shoppe (VSI)
Zagg. (ZAGG)
____
Wednesday, February 27
American Water Works (AWK)
Carters (CRI)
DineEquity (DIN)
Dollar Tree (DLTR)
Dycom Industries (DYCM)
Federal-Mogul (FDML)
Groupon (GRPN)
Hansen Medical (HNSN)
ITT (ITT)
J.C. Penney (JCP)
Joy Global (JOY)
Monster Worldwide (MNST)
Mylan Labs (MYL)
Universal Display (PANL)
Papa John's (PZZA)
Target (TGT)
TJX (TJX)
____
Thursday, Feb. 28
Sotheby's (BID)
Barnes & Noble. (BKS)
Churchill Downs (CHDN)
Chico's FAS (CHS)
Salesforce.com (CRM)
Deckers Outdoor (DECK)
Domino's (DPZ)
FARO Technologies (FARO)
Gap (GPS)
Granite Construction (GVA)
Kohl's (KSS)
Limited Brands (LTD)
Molycorp (MCP)
NII (NIHD)
OmniVision (OVTI)
Palo Alto Networks (PANW)
Pall (PLL)
Sturm, Ruger (RGR)
Visteon (VS)
Wendy's (WEN)
____
Friday, March 1
Comfort Systems (FIX)
Foster Wheeler (FWLT)
MasTec (MTZ)
Tesco (TESO)

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