Game Plan for February 11-15, 2008

February 9, 2008 | Posted by Jorge

The economic calendar for this week is chock full of reports which will sway the markets one way or another.  Wednesday brings in retail sales.  Consensus is flat at 0% from a drop in December of 0.4%.  Another drop in retail sales could confirm the recession theories out there and could potentially drag the markets lower.

Thursday brings in initial claims.  Consensus for initial claims comes in at about 360,000. An interesting fact from Briefing.com states that in the prior two recessions, the 4-week moving average hovered near 360,000.  Currently, the 4-week average for initial claims stands at 335,000.  A drop in initial claims could potentially send the markets higher.  I think the markets can deal with a credit and housing crisis.  They, however, can’t deal with a drop in employment, which is always much more serious than the current credit issues.

Friday brings in consumer sentiment with a consensus of 76.5-78.0.  Interesting fact in that during the 2001 recession, consumer sentiment was near 81.8.  Consumer sentiment last month came in at 78.4.

Overall, it’s going to be a busy week.  My guess is if both retail sales and initial claims come in under consensus, I’d expect the markets to head downward in a hurry with most of the pundits out there claiming we’re in a recession.  Problem is, I think we’ve been in a recession for a couple of months now.  As Eric Bolling’s said in his interview with WallStrip, we’re in a bear market so trade small.

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