Since the Iraqi elections went better than expected, and several mergers are being announced including the SBC/ ATT merger, as well as some positive earnings releases, this should be enough to continue the relief rally that began last week. For the week, the Dow rose 34 points but is still down 3.3% for the year. The S&P 500 added 3 points and is still off 3.3% for the year. The NASDAQ gained almost 2 points and is the year's biggest loser so far with a decline of 6.4% year-to-date. The Russell 2000 added 0.3% and remains down 5.9% for the year.

It may very well be that some of the enthusiasm this week will be a result of the Iraqi people embracing democracy and having the prospect of freedom. The markets have needed a catalyst since the New Year began and they may have found one. Investors and Traders have been cautious so far in 2005 as the market keeps testing key support levels. The NASDAQ is currently testing its 50-day moving average at 2039.

Nearly half of the S&P 500 companies have reported Q4 results and 67% of those have beat Wall Street's expectations. Just 17% have missed their estimates. Companies reporting this week include, Exxon Mobil (XOM), Kellogg (K), Disney (DIS) on Monday. MGM Mirage (MGG), Level-3 Communications (LLL), Tyco International (TYC) and Google (GOOG) post results on Tuesday. Google's earnings are highly anticipated to beat the 76 cents per share expectations. Since the start of the New Year five brokerage firms have made comments that Google is likely to far exceed analyst's estimates. Wednesday Northrop Grumman (NOC) and Amazon.com (AMZN) report results. Sprint (FON) and Time Warner (TWX) close out the week posting earnings on Thursday and Friday respectively.

President Bush addresses the nation on Wednesday night in his State of the Union address, which should give confidence to the markets with the recent upbeat news from Iraq. The economic calendar this week is a busy one. Monday the December Personal Income and Consumption will be reported, as well as the January Chicago PMI and December New Home Sales. Tuesday, the January ISM Index and December Construction Spending will be released. The Federal Reserve will announce their position on interest rates Wednesday, and are expected to raise rates by another 25 basis points. Thursday, the European Central Bank announces their decision on interest rates, and December Factory Orders and Weekly Jobless claims will also be reported. On Friday the always-anticipated January Employment Report is expected to show that 200,000 new jobs were created.

In summary, it appears that this week is shaping up to be a volatile one with Iraq, Bush and Google leading the way.

Stay tuned!