Three big economic reports will stir the markets this week, giving traders deeper insight into the pace of the recovery and the aggressiveness with which the Fed will tapering of its bond buying to stimulate the economy.
Durable goods orders, out Monday at 8:30 a.m. New York time, tracks new orders for factory hard goods. It's a key measure of the future pace of American industry.
The second estimate of 2nd quarter gross domestic product will be released at 8:30 a.m. on Thursday. Any revision from the 1.7% annual rate reported in July will cause the markets to take notice.
Personal income and outlays, out Friday at 8:30 a.m., is the ultimate "How are we doing" report. It tracks what we made and how much of that we spent, and a bit of simple math comes up with a savings rate. The lower the savings rate, the more Americans are shopping till we drop, an activity that is good for the economy, although not necessary for the stock markets, since good news for the economy is likely to exacerbate inflation fears at the Fed.
Note that the weekend following this week is the Labor Day holiday. U.S. markets will be closed on Monday, Sept. 2. Markets in London, Tokyo and Sydney will be open for business as usual.
Leading indicators (in descending order of importance):
The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.
The M2 money supply, at 4:30 p.m. Thursday.
The S&P 500 index, reported continually during market hours.
Average weekly initial jobless claims, at 8:30 a.m. Thursday.
The Reuters/University of Michigan consumer sentiment report, at 9:55 a.m. on Friday.
Other reports of interest:
Monday: The Dallas Federal Reserve manufacturing survey at 10:30 a.m.
Tuesday: The S&P Case-Shiller home price index at 10 a.m. This is the report that tracks home prices in 20 metro areas. Also, the Conference Board's consumer confidence index at 10 a.m.
Wednesday: Pending home sales at 10 a.m., and petroleum inventories at 10:30 a.m.
Friday The Chicago purchasing managers index at 9:45 a.m.
St. Louis Fed Pres. Jeffrey Lacker, a voting member of the Federal Open Market Committee, makes two public appearances, on Thursday and Friday.
Two Fed officials not serving on the FOMC this year (although who knows how much influence they wield behind the scenes) will take to the podium: San Francisco Fed Pres. John Williams on Tuesday and Richmond Fed Pres. Jeffrey Lacker on Thursday.
This week I shall be analyzing new bull and bear signals among 2,319 stocks and exchange-traded funds that have some analyst interest. They are traded both on the major U.S. exchanges and over-the-counter. My universe is selected from mid-cap stocks and larger, defined as market capitalization of $1 billion and greater.
By my rules, I'm trading September options for the short legs of covered calls and vertical and diagonal spreads, calendar and butterfly spreads, and iron condors, and December options for single calls and puts. Of course, shares are good at any time.