GDP Revisions

A Week Full of Economic Numbers

There're some key economic data coming out this week that warrants some mentioning and will definitely have impact on traders and investors this week. For all of those who think trading on economic news is hubris just ask our friends who didn't heed the Producer Price Index numbers or the Fed minutes last week. The DJIA closed 12601.19-227.49( -1.8%) off this news and higher oil prices last Wednesday. Ignoring these numbers last week cost a lot of heartache. So to prepare for this week we first focus on the important numbers Wednesday, the Durable goods orders which reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. It is a real good indicator for forecasting short term economic growth and is published monthly ahead of Factory Orders a week later. The consensus is Durable goods will be down -1.1%, so expect these numbers to have a big impact. Next on the weekly agenda is the preliminary 1 Qtr GDP numbers being released Thursday). The consensus is that the preliminary numbers will show 1.0% growth increase keeping us away from the technical definition of a recession. However, the Federal Resevere last week lowered its expectations for the economy because of the housing downturn,credit crunch, and rising fuel prices. So, it is hard to say how the investing community will react to this data. I would be looking at shorting the market with ETF's like Proshares products that offer over 32 different shorting opportunities. These our the most important things coming out this week and there implications can be severe. So watch out!!!

Oil Speculator

The price of oil has been on a unfettered journey hitting unbelievable heights and psychological barriers along the way. I was just reading a piece published in the WSJ on Thursday, November 8, 2007 titled, " Why $100 Oil Can't Float". The article gave ten reasons, deeply grounded in supply and demand fundamentals on why oil wouldn't sustain this point if it came about. The main argument was based on the 4.2 billion barrels world reserves above ground at the end of June(2007) according to U.S. Energy Information Administration. However, even after all this good analysis the price of oil settled over $100 on January 1, 2008. The momentum came from hard to forecast variables like supply disruptions in Mexico, geopolitical trouble in Nigeria, speculation on further rate cuts by the Fed, and a decrease in reserves domestically. All of these reasons and in addition to speculators looking for any reason to reassert there propensity to push oil and other commodities higher was more than enough of a catalyst to get the job done. And, today the price of oil continued its rein, closing above a new high of $127. All of this suspense begs the question, when will the price of oil descend? The first step to answering this question is to agree on what is really causing oil's ascent. I firmly believe that most of the increases in the price of oil isn't based primarily on demand in China or India, but rather mere speculative investing through new innovative finanical products like index funds that makes it easier to participate in the commodity and future markets like never before. Some events that may trigger a more reasonable price for a barrel of oil is a cease in interest rate cuts by the Fed, a substantial decline in driving this summer by Americans on vacation, or a noticeable increase in the EIA's Petroleum status inventory reports, or a Global slow down. Any of these four events can trigger a run for the border from oil and other commodities. I think one or a combination of these events will occur a lot sooner than Goldman Sachs prediction of $200 barrell oil will occur. If your bearish on the price of oil there are two ways you can play this strategy. One is Proshares Ultra Short Oil and Gas ETF DUG and another is Deutsche Bank Double Short Commodities ETN DEE. Both, are down signficantly because of the price of oil and both will directly benefit if the price of oil begins to fall.

Visa Buy Entry

Visa, stock ticker (V) had a nice day the past 3 trading sessions but is heavily in the over bought range. You can see the retracement on Visa every time it broke past the upper bollinger band. I expect V to sell off over the next few tradings sessions ceteris paribas (all things considered equal) and see a more favorable buy point. Currently as of 11:54 est (V) is trading at 82.72 down -3.14%.