The Week Ahead: The price of oil hit $92.00 a barrel due to increased Middle East tensions and consumer sentiment slipped again in October. Still the market rose by weeks end believing the Federal Reserve would cut interest rates this week. The FOMC meeting begins on Tuesday with an interest rate decision by Wednesday. The first read of 3rd quarter GDP will also be released. The auto sales numbers and ISM Manufacturing Survey are out Thursday while an important employment report and factory orders are due Friday.

Stocks to Watch: Shares of Genworth Financial (GNW) reversed a sharp decline and spiked up after good 3rd quarter earnings and revenue increases. Waste Management (WMI) missed estimates for earnings in the 3rd quarter and broke sharply below the 50 and 200 day moving averages. Devry Inc. (DY) came in with solid 1st quarter numbers and received an upgrade by Bear Stearns. Graham Corp. (GHM) which makes oil refinery ejector systems had blow-out 2nd quarter sales and earnings, set a 5 for 4 stock split, and increased its quarterly dividend.

Special Note: Look for a quarter point interest rate cut on Wednesday and a probable rally into and thereafter the announcement. Since short-term Treasuries are yielding under 4%, the possibility of a half point cut is out there. This could be construed as a negative by the market and may mean the Fed sees a deeper drop in economic activity than is widely believed. Regardless, volatilty will likely remain high going forward. Hedging long positions and raising cash seems prudent.


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

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