It’s Monday – What We Are Watching for the Week

Did you hear… Apple is holding a analyst call on Monday? The headline has plenty of speculationĀ relative toĀ a dividend being paid from the nearly $100 billion in cash on the balance sheet. It seems no matter what they do at this point it will disappoint someone. This is going to be like the story of the Three Bears, if it doesn’t come out just right the impact on the stock will be negative. In addition this is another sign that Steve Jobs influence on the company is dissipating. If the reaction is negative the impact on the NASDAQ 100 index will be equally so. Watch and see how this plays out today.

Global markets have benefited from less doom-and-gloom relative to sovereign debt and better economic data the last month. The EAFE index has moved back to the top end of the wide trading range and is poised to break higher. Thus, watching and scanning the country ETFs offers some interesting opportunities if the trend continues. Emerging markets have been in the headlines, but they have been the weaker of the global components of late. That said, there are some interesting countries in the space worth watching looking forward. Russia has moved up nicely and continues to have a positive outlook relative to growth due to their oil production. Poland, Hong Kong, Korea, Chile and Mexico are on my watch list as well.

Energy got a boost on Friday from analyst comments on Transocean (RIG). XLE gained nicely as well as the oil services (OIH)sector overall. The rig count is rising again as oil remains above the $100 mark. The rising demand in China and other countries is keeping the hunt for oil an attractive opportunity. If the global economies are mending as the reports show the issue of demand will become more prevalent going forward. The price of crude could continue to rise towards the $120 level and gasoline towards the $5 mark per gallon in the US. This is a sector to watch on the week as it fights to hold support and move from the current consolidation patterns.

Transportation moved up as well last week on the news of higher loads for the rails. The increase in food, consumer staplesĀ and autos helped offset the losses from coal. The warmer weather hit the need for more coal transports and thus the drop in the sector. As the economy picks up consumer goods are being shipped helping the sector. The shipping sector for oil tankers got a boost from the Transocean news and is worth digging into as well. Scanning the ETF IYT, iShares Transportation Index shows positive breakouts in these stocks. Watch to see if they follow through on the upside.

Natural gas is in the headlines as well relative to theĀ price hitting new lows. The assumption is the price will begin to rise along with demand. That story has been around for awhile, but it is worth watching as some buying is taking place in the sector. Bottom fishing? Time will tell, but the stocks are interesting opportunities short term. FCG, First Trust Natural Gas ETF is worth drilling into to find the winners.

This promises to be an interesting week as the markets are a decision point relative to the move higher. The trend is in place, but the conviction to own stocks at these levels is the bigger question. Will money rotate from safe havens such as bonds and cash to higher risk stocks? I am not a prophet, but there have been no shortage of predictions that money flow will continue into equities pushing prices higher. For now the trend is in play and we continue to take what the market gives one day at a time. Be disciplined and use stops to protect against the downside should the trend shift.