January Barometer / Q4 Earnings

If you are a bullish-minded investor and believe in the January Barometer theory and the old Wall Street adage that suggests, "As goes January, so goes the year," then last week's trading must be a bit unsettling. January still has three weeks to go, and there is the another Wall Street adage that notes January's first five days tend to decline in a bear market. The later has a better record of forecasting the market in post-election years. In the first five days of January 2005, the Dow, NASDAQ, and S&P declined 1.7%, 4.0%, and 2.1%, respectively.

Keep in mind there are always exceptions. Just as quickly as concerns about inflation led to a round of profit-taking last week, a favorable earnings report from Intel (INTC) on Tuesday could turn it around just as fast. While taking into account the "first five days" adage, bear in mind, too, that it has also been observed that the market has had a positive year in every fifth year since 1885. This is an amazing 120 year statistic.

What can investors and traders expect this week? Earnings reports start coming in this week and some big tech names top the list. Besides Intel (INTC) on Tuesday, Genentech (DNA) reports on Monday after the close. Wednesday evening Apple Computer (AAPL) reports, while Thursday evening, Sun Microsystems (SUNW), Cree (CREE) and Rambus (RMBS) all report. Negative pre-announcements have been running ahead of positive ones by a ratio of 1.9 to 1, in line with historical trends, which have averaged 2 to 1.

Conferences this week, include Apple Computer (AAPL) who are hosting their annual Macworld in San Francisco, where the company has been riding high on expectations of new products that capitalize on the success of their iPod. JP Morgan's four-day Healthcare Conference in San Francisco, SG Cowen's two-day Consumer Conference in New York, and Needham's four-day Growth Conference also in New York. In Phoenix Smith Barney hosts an Entertainment, Media and Telecommunications Conference.

The Economic releases this week include: Monday, November Wholesale Inventories will be released, Wednesday, the November International Trade deficit is reported, and Thursday both the December Retail Sales and Import Prices will be released. The week ends with Friday's closely watched December Producer Price Index release and the December Industrial Production and Capacity Utilization will be reported.

Friday's December PPI release will be a key factor in near term Fed decisions on interest rates.

Stay tuned!