The Week Ahead

The last FOMC minutes revealed some major concerns--inflation estimates were raised for this year, unemployment was revised upward and GDP estimates were lowered. Clearly, we are not out of the woods yet but in spite of potentially roughtimes ahead, the minutes confirmed that the Fed is done easing--a one-two punch that could knock stocks to the canvas. With support broken at 13,800 on the SP-500 we could have some downhill sledding next week. Light holiday trading will increase volatility and there will be a number of economic releases to fuel the fire. Given the recent Fed's comments, those economic numbers are likely to be weak. For example retail sales have been generally light and that is liable to continue. The news will have a negative bias and the only thing that can prop stocks now is a decline in energy prices--but with oil hitting new highs every day this market will have a toughtime. The weak sectors are financials, healthcare, retail and restaurants and there will be some tremendous opportunities to profit on the downside with options trading. Some said that if you don't include options as one of your trading arsenal, its like golfing without a full set of clubs. Have a great weekend!