Weekly Market Preview

"What's not really healthy is the big blow up Thursday and then this negative day back to back. That's not healthy for the market," said one trader as the Dow plunged nearly 250 points Friday. As stocks moved lower, the Chicago Board of Options Exchange's VIX, or volatility index, shot higher, signaling increased fear in the market Friday. "The price to cover downside risk, meaning a break in the market, has gone up incredibly," he said. VIX is now implying a daily move of as much as 19 points in either direction. As if to intentionally add insult to injury, the FDIC marched in and closed nine more retail banks Friday nite - not a good sign at all even though with about 400 left on FDICs watch list, some bank analysts are beginning to hint they think the worst may be behind us - let us hope so. SUNDAY afternoon UPDATE!! CIT files for Chap 11 BK protection essentially WIPING OUT both common & preferred shareholder values entirely.... observe: "CIT's move will wipe out current holders of its common and preferred stock. That means the U.S. government will likely lose the $2.3 billion it sunk into CIT last year in return for preferred shares to prop up the ailing company. The government could have lost billions more, however, had it not declined to hand over more aid to the company earlier this year."

While quite possibly near-to-inevitable going into the weekend, the news surely can't be good going into a new week already staggering after the Thurs/Fri rope-a-dope.

Back to more mundane views....

Major data to watch this week will be ISM manufacturing data on Monday, and the jobs report Friday. In September, both of the those data points were weaker than they were in August, and it is important to see them improve. Job losses of 135,000 expected on the low end vs. the general consensus of about 170,000. People are looking for improvement & the question really is how quickly that might occur. The real disagreement is what happens when we get to zero. Until we start to see positive payroll prints, people will remain unconvinced. Auto sales will also be important when reported Tuesday. "The noise we're hearing out of the auto makers in October is that things are better. There's some real improvement going on there. I don't think we should fool ourselves into thinking things are good because clearly they're not, but they're not the lows that we saw earlier in the year," one analyst said. Other data includes Monday: pending home sales construction spending manufacturing ISM Tuesday: factory orders Wednesday: ADP employment service sector ISM Thursday: weekly jobless claims productivity and costs Friday: wholesale trade consumer credit CEN-BANKERS on PARADE: The Fed's meeting starts Tuesday and winds down Wednesday with a 2:15 p.m. statement. The European Central Bank and Bank of England also hold rate meetings Thursday. For the first time in more than four years, the Federal Open Market Committee will meet in the same week in which the Bureau of Labor Statistics issues its monthly employment report. Cynics might suggest we could look to the announcement Wednesday following the FOMC meeting for a hint of what the BLS will report two days later, reacting in advance, but there’s enough for the FOMC to chew on even before the labor numbers are reported. Fed policymakers convene Tuesday on the heels of a stronger than expected report that the economy grew at a 3.5% annualized rate in the third quarter, the fastest pace since third quarter 2007 and the first growth at all in a year. EARNINGS CENTRAL: Major companies reporting include several global autos, Kraft & Cisco. Monday: Ford, Clorox, Humana, Loews, CNA, Sysco, Dean Foods mid-session, Anadarko, Chesapeake Energy and Vulcan Materials post-close. Tuesday: Archer-Daniels, Emerson Electric, Cognizant, AmerisourceBergen, Rockwell Collins, Rowan Cos, MasterCard, Marvel Entertainment, Medco, Polo Ralph Lauren, Tenet Healthcare, Viacom & Vornado mid-session, Kraft, Pitney Bowes & Hartford Financial post-close. Wednesday: Time Warner, Total, Automatic Data, Baker Hughes, Becton Dickinson, Comcast, Devin Energy, El Paso, Foster Wheeler, Marsh McLennan, Molson Coors, Nissan & Transocean mid-session, Allstate, Murphy Oil, News Corp & Whole Foods post-close. Thursday: Toyota, Cigna, CVS Caremark, MGM Mirage, Sara Lee, Thomson Reuters, Unilever, Dynegy, Dr. Pepper Snapple, Teradata, Kimco Realty & Nasdaq OMX with Starbucks, Public Storage, NVIDIA, CBS, International Game Technology, Activision Blizzard, Crocs & Vera Sign post-close. Friday: Fortress, Mirant, Edison International & Smith/Nephew. T. W. Merryman Managing Director Interconti, Limited (Market Research Analysts) Chicago, IL 60604 e: intercon@intercontilimited.com w: www.intercontilimited.com