Profit-Taking Could Be in the Cards This Week [Video]

Even the most bullish traders figure the market needs to pull back at some point before making new highs. Considering this week's round of earnings and economic data -- and the sketchy situation in Egypt -- the sessions ahead should offer ample opportunity for profit-taking.

"There are a lot of macro reports, and we'll certainly be looking at the Middle East. But I think the market is going lower because it needs to go lower," says Kenny Polcari, managing director at interdealer broker ICAP Corporates.

Among the macro data in focus will be personal income, personal spending and new vehicle sales, which the Street will dissect for a different perspective on inflation, the veteran New York Stock Exchange trader says.

Cairo, Egypt, protestors"We're seeing [inflation] in food and energy, which concerns me a bit because the government keeps saying inflation is trending down," Poclari says. "But Joe Q. Public goes to the gas station and the grocery store and sees higher prices. If inflation gets out of control and people get concerned about the outlook again, consumers are going to pull right back in."

Also adding to the economic picture will be the Institute of Supply Management's manufacturing and nonmanufacturing indexes, housing vacancies and homeownership, and a speech by Federal Reserve Chairman Ben Bernanke.

To top it off, Thursday brings initial jobless claims, and on Friday we get the mother-of-all reports, the monthly employment figures. Economists are looking for an increase of 150,000 nonfarm payroll jobs in January after a disappointing gain of only 103,000 in December. The unemployment rate is forecast to rise to 9.5% from 9.4%

With so much news landing this week amid so much geopolitical uncertainty, Polcari is looking for an extension of Friday's market retreat. "We've gone straight up," he notes. "In terms of a bullish trend, the market needs to correct a little bit before it goes higher."

For more on Polcari's take from the floor of the NYSE (NYX), see the video above.

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Mr. Burrows: The classical technical analyst would say there is still some upside potential. If your readers go to and input SPX... advanced charts... 6 months... daily... they will see a continuation formation which indicates to me that the bulls can possibly expect 1350 as their goal. Of course, technical analysis is more an art than a science, so, my comment should be taken advisedly!

February 01 2011 at 1:16 PM Report abuse rate up rate down Reply
Robert & Lisa

Our socialist public educational system has indoctrinated our children into believing capitalism and freedom is bad and socialism is good. If Socialism is so good, why does the long time socialist government of Mexico boast of being the #1 producer of silver, plenty of oil, and the richest man in the world, yet 99% of their people are in the poverty level making an average of less than 6 dollars a day. Corruption is rampant. The evil, ultra rich see Mexico and want to implement socialism here, where they can have all of the wealth and power and the middle class will now be among the poor. That is what their Demoncrat puppets in the white house and senate are doing to us.

January 31 2011 at 10:28 AM Report abuse +1 rate up rate down Reply

I guss OIL can that a FEW CWNTS HIT today. seeing as they went UP $3.70 Friday. GREEDY B_______!!!! EXOON prifits up 43 BILLION, What a JOKE!!!

January 31 2011 at 10:18 AM Report abuse +1 rate up rate down Reply

We can give this article a grade on Friday after the market closes. Typically when the prognosticators are wrong they hide or do the side-step. Good luck Mr. Burrows!

January 31 2011 at 9:45 AM Report abuse rate up rate down Reply