US Economic Forecasts for the Week

The week has a fairly good stream of economic data coming up with mostly positive news and the possibility of a couple of poor numbers. Monday is free of data which is currently allowing the Automotive industry to steal the headlines with their poor performance and the new Obama Administration stepping in to mandate a quick turnaround on new government funding.

Markets Give Buy Signals

The big news this week is the major indexes all giving buy signals with break outs to the upside on the S&P 500, the Dow Jones Industrial Average, the Nasdaq and the Russell 2000. I also like the number of stocks breaking to the upside with their 13 day moving averages moving above their 50 day moving averages. For the complete market according to ClearStation.com 185 stocks broke out on Friday with only 21 stocks breaking to the downside.

The US Dollar, Gold and Aluminum

Late Wednesday the Federal Reserve put in place a plan to add $1 trillion dollars to the US economy to help consumer and small business lending in addition to buying long-term government bonds. The recent action of the government helped boost the markets Wednesday but has led to a quick downturn in the US Dollar and strength in commodities traded in dollars.

US Dollar - Powershares US Dollar Index Bearish (UDN)

You can play the US Dollar downturn with the Powershares US Dollar Index Bearish ETF (UDN). This fund moves in the opposite direction of the US Dollar. The ETF is up 1.2% today and has broken out of a tight range in the beginning of March to rally from $24.5 a share to it's current level of $25.5. The ETF does not make quick moves with large percentage gains but is a more conservative investment for a longer term hold.

Us Markets Rally Despite Being Overbought

I was holding onto Short S&P 500 Proshares (SH) shares last week and until today feeling there would be a leg down before a bottom formation was created. But the action today with a strong run at the end of the day even with the markets already overbought, changed my mind and I got rid of the SH shares. A housing report and a strong financial rally led to the optimistic day.

Amex Paying Customers $300 to Cancel

American Express is having trouble with some of their riskiest customers and fear these bad accounts will drag down the company profits/losses further. Near the end of February, according to reports, Amex offered $300 to these clients that will payoff their accounts and close them by the end of April. Credit Card companies like American Express are also in fear that customers that loose their jobs will increase their borrowing pushing their accounts into a riskier position and defaulting more often.

Citigroup has made a profit for the first two months of 2009 according to the company's CEO, Vikram Pandit. This news caused a rally of banks across the board including Citigroup, 37%, JP Morgan Chase, 21%, Wells Fargo, 17%, Bank of America, 25%, and Royal Bank of Canada, 16%. This is a similar rally to the bank rally in July of 2008 when Wells Fargo beat estimates and the banks took off for a couple of days after being driven down faster and harder than anything before for a month straight.

Casinos/Wynn Resorts Ltd. (WYNN) Free Fall Continuing

With a world-wide economic recession continuing, the major casino operators in both Las Vegas and Macau, China are seeing slowing traffic and decreasing profits. The stocks of casino operators Wynn Resorts (WYNN), Las Vegas Sands (LVS), and MGM Mirage (MGM) all fell Friday. MGM fell 1.5% midway through the afternoon with Las Vegas Sands falling 14% and Wynn Resorts tumbling 8%.

Too Late to Short the S&P 500?

Is it too late to short the S&P 500 index with the rapid and consistent downturn the index has taken over the past month? If you feel the markets will not make a quick turnaround in a V chart formation or you think the markets will continue to drift lower, getting short the S&P 500 would be a possible trade at this time. And you can take a negative position without shorting the index by purchasing an inverse Exchange Traded Fund (ETF) like the Short S&P 500 Proshares (SH).

The Short S&P 500 Proshares ETF has rallied over the past two months beginning near $70.08 a share at the beginning of the year and finishing today at $90.72 a share, the highest mark since December 4th of last year. The index invests in financial instruments that represent the inverse of the S&P 500 index. I like the stability of the single inverse ETF while still enjoying the upside that could occur if the markets continue to adjust lower. Look for a decent early morning market rally to take a small position in proportion to your overall portfolio.

Sequenom Inc. (SQNM) Still up 100% in 52 Weeks

If you're looking for a company that flew high during the biotechnology boom this last year that is now having trouble making money and increasing revenue, Sequenom Inc is a company that is in a downward spiral at this time. The stock has dropped from a three month high of $25.54 to its current level of $14.63. In addition the company has missed it's earnings the past four quarters, never a good sign.

Three Semiconductor Names Give A Negative Signal

Analog Devices (ADI),  Linear Technologies (LLTC) and Intersil (ISIL) all gave negative signals after the close on Monday with their 13 day moving averages crossing below their 50 day moving averages. The Semiconductor sector is one of the first to recover in a normal economic rebound, but the fundamentals are still very weak as the companies have little to no pricing power.