Weekly Newsletter September 30th - October 6th

Current Events: The Federal Reserve's recent move to go forward with quantitative easing for a third time has already caused a few ups and downs for the market. Tuesday's large slide was the latest substantial move experienced in the U.S. markets due to the Fed's purchasing program commonly known as QE3. Many high ranking officials and financial experts have voiced concerns over the Fed's decision, but Bernanke and team have repeatedly expressed their strong belief that the Fed should step in to support the economy.

What to Look for This Week

As expected, Friday's unemployment rate will be one of the most heavily anticipated and scrutinized reports this week. Some investors are even boldly expecting a rise in unemployment by a tenth of a percent, something that has not occurred for quite some time, which could quickly turn the market sour.

News Affecting the Markets

Federal Reserve Chairman Ben Bernanke will likely utilize Monday afternoon's meeting to promote the benefits of quantitative easing. This comes just days after the stock market reacted negatively to a strong rebuke of bond purchases from noted hawk Charles Plosser, the president of the Philadelphia Fed Bank. Plosser supported his actions stating the program (QE3) wouldn’t create jobs and risked the Fed’s credibility.

Smart Investing

Following Insider Decisions:  Many investors like to track what insiders are doing and mimic what they do by buying shares in a company when the insiders do. The thinking being that insiders are the best placed individuals to know what truly is happening in their own company and thus they only buy shares when they are confident that the projections are good. This logic is actually based on historical evidence which does indicate abnormal gains in such scenarios. Insiders' trading signals clearly generate significant positive abnormal returns on the buy side and small, less significant returns on the sell side. Larger abnormal returns are concentrated in smaller value stocks in particular. If you want to track insiders' buys, remember they will buy at a better price than you will get, because once it becomes known that insiders have been buying, the share price quickly goes up. So is it a good strategy to track share buys by company Insiders? Typically yes, provided they have bought a significant amount and only if you can buy your shares at something close to what the Insiders paid for theirs.

Earnings for the Week

Monday: No major announcements.

Tuesday: No major announcements.

Wednesday: Family Dollar Store (FDO), Marriott International (MAR), Monsanto (MON) {after the close}

Thursday: No major announcements.

Friday: Constellation Brands (STZ)

* Earnings dates and times are subject to change

Economic Data this Week

Monday

ISM Index @ 10:00 AM for September (Est. = 49.2 to 49.7, Prior = 49.6)

Construction Spending @ 10:00 AM for August (Est. = 0.1% to 0.4%, Prior = -0.9%)

Tuesday

Auto Sales @ 2:00 PM for September (Est. = n/a, Prior = 5.3M)
Truck Sales @ 2:00 PM for September (Est. = n/a, Prior = 6.3M)

Wednesday

MBA Mortgage Index @ 7:00 AM for 09/29 (Est. = n/a, Prior = 2.8%)
ISM Services @ 10:00 AM for September (Est. = 52.0 to 53.0, Prior = 53.7)
Crude Oil Inventories @ 10:30 AM for 09/29 (Est. = n/a, Prior = -2.446M)
FOMC Minutes @ 2:00 PM for 9/12

 Thursday

Initial Claims @ 8:30 AM for 09/29 (Est. = 365K to 370K, Prior = 359K)
Continuing Claims @ 8:30 AM for 09/22 (Est. = 3273K to 3275K, Prior = 3271K)
Factory Orders @ 10:00 AM for August (Est. = -5.5% to -6.0%, Prior = 2.8%)

Friday

Non-farm Payrolls @ 8:30 AM for September (Est. = 120K, Prior = 96K)
Unemployment Rate @ 8:30 AM for September (Est. = 8.1% to 8.2%, Prior = 8.1%)
Consumer Credit @ 3:00 PM for August (Est. = $5.0B, Prior = -$3.3B)