Sunday, March 16, 2014

The Week Ahead: Credit policy, consumer prices, housing starts, witches

The Federal Open Market Committee meets for two days, ending with an announcement Wednesday at 2 p.m. New York time and a news conference by Fed Chair Janet Yellen at 2:30 p.m., her first post-FOMC meeting newser since taking the job. Look for careful parsing of the statement and her words for clues about the pace of the Fed's moves to tighten credit.

The week will also be punctuated by several reports that have the potential to move markets, most notably the consumer price index and housing starts, both on Tuesday at 8:30 a.m.

Also scheduled, industrial production on Monday at 9:15 a.m. and two other reports, existing home sales and the Philadelphia Federal Reserve survey, both on Thursday at 10 a.m.

Friday is a quadruple witching day, when stock index futures and options, stock options and single-stock futures all expire on the same day, a quarterly confluence that can add to market volatility.

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. 

Building permits for new private homes from the housing starts report, at 8:30 a.m. Tuesday.

Although not a leading indicator itself, I find that the index of leading indicators, out Thursday at 10 a.m., provides a "You are Here" mark that is useful for understanding the American economy.

Other reports of interest:

Monday: The Treasury international capital report on money flows into and out of the United States, at 9 a.m. and the Home Builders' housing market index at 10 a.m.

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

Thursday:  The Federal Reserve money supply report at 4:30 p.m.

I also keep an eye on the Baltic Dry Index, updated daily.


The silence of the Fedsters, no doubt out of deference to Fed Chair Yellen's news conference on Wednesday at 2:30 p.m.

Analytical universe

This week I shall be analyzing new bull and bear signals among 3,847 small-cap and larger stocks and exchange-traded funds.

Trading calendar

By my rules, I'm trading April 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 June options for single calls and puts as well as straddles. Shares, of course, are good at any time.

Good trading.

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