Sunday, January 5, 2014

The Week Ahead: Jobs, factories, minutes

The monthly employment report, including the politically important unemployment percentage, dominates the week in economic reporting.

The employment report will be released Friday at 8:30 a.m. New York time. As always, the ADP employment report, prepared by the nation's largest payroll services company, will provide a sneak preview on Wednesday at 8:15 a.m.

Another major report, international trade on Tuesday at 8:30 a.m. will let us know if we're buying more from abroad than we're selling.

The Dec. 17-18 Federal Open Market Committee minutes will be released on Wednesday at 2 p.m. It was at this meeting that the Fed decided to taper (as the jargon goes) its bond buying program that was put in place to stimulate the economy after interest rates had hit rock bottom. It was a major move by the Fed, so the minutes are more important than usual for traders trying to understand the thinking behind monetary policy.

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 average hourly workweek in manufacturing from the employment report, at 8:30 a.m. Friday.

Manufacturers' new orders for consumer goods and materials from the factory orders report, at 10 a.m. Monday.

The S&P 500 index, reported continually during market hours.

Average weekly initial jobless claims, at 8:30 a.m. Thursday. 

Manufacturers' new orders for non-defense capital goods from the factory orders report, at 10 a.m. Monday.

Other reports of interest:

Monday: Factory orders and the Institute of Supply Management non-manufacturing index, both at 10 a.m.

Wednesday: Petroleum inventories at 10:30 a.m..


Five of the Federal Reserve glitterati take to the speaking circuit  this week: Three FOMC members, Boston Fed Pres. Eric Rosengren on Tuesday, Kansas City Fed Pres. Esther George on Thursday and St. Louis Fed Pres. James  Bullard on Friday; FOMC alternate Minneapolis Fed Pres. Narayana Kocherlakota on Thursday; and  San Francisco Fed Pres. John Williams on Tuesday. Williams is not part of the monetary policy apparatus this year.

Analytical universe

This week I shall be analyzing new bull and bear signals among 3,450 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 small-cap stocks and larger, defined as market capitalization of $1 million and greater.

Trading calendar

By my rules, I'm trading February options for the short legs of vertical, diagonal and calendar spreads and covered calls, and for all legs of butterfly spreads and iron condors. I'm trading April options for single calls and puts as well as straddles. Shares, of course, are good at any time.

Good trading.

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