The Week Ahead: The steep decline in the major market averages marked the worst week in 4 years and has ushered in a new season of high volatility. If the public mood sours, the likelihood of recession increases. The 4th quarter productivity and cost numbers along with January factory orders are due out Tuesday. The Fed beige book of economic activity is released Wednesday while the weekly jobless claims figures are out on Thursday. The week will end with a closely watched February employment report combined with the wholesale and international trade numbers for January.

Stocks to Watch: American International Group (AIG) had impressive 4th quarter results, was upgraded despite missing estimates, and will buy back up to $5 billion of its stock in 2007. Kohl's Corp. (KSS) reported a 29% profit increase as its stock rebounds from an oversold condition. Palm Inc. (PALM) shares are rising on takeover speculation by either Nokia (NOK) or Motorola (MOT). Advanced Micro Devices (AMD) looks poised to bounce from an oversold level after it showcased a single-system Accelerated Computing platform.

Special Note: The larger technical picture for the year 2007, in addition to the marked increase in volatility, shows a 3.3 year cycle that is due to bottom in a year. This cycle is important as it follows on the heels of the 4 year cycle low that was due in 2006 but was only mild. This makes it the dominant cycle and should be much more severe. A similar occurrence developed in 1986,1987 and 1906,1907 when despite a usually bullish pre-election year the market corrected over 40% in the "7" year after only a mild set back in the "6" year. 1937 was also a similarly harsh "7" year. Investors should stay diversified with off-setting hedges where applicable.


Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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