Economic Calendar for week 21st - 25th January 2008

All times GMT

Monday Jan 21st:

UK - 00:01 - Rightmove House Price Index M/M.
GE - 07:00 - PPI M/M.
UK - 09:30 - M4 Money Supply M/M.
UK - 09:30 - Public Sector Net Borrowing.
UK - 09:30 - BSA Mortgage Approvals.
US - ALL - Holiday: Martin Luther King Day

Tuesday Jan 22nd:

US - 15:00 - Richmond Fed Index.

Wednesday Jan 23rd:

FR - 07:45 - French Consumer Spending M/M.
UK - 09:30 - GDP Q/Q.
UK - 09:30 - MPC Meeting Minutes.
UK - 09:30 - Index of Services Q/Q.
EU - 10:00 - Industrial New Orders M/M.

Thursday Jan 24th:

GE - 09:00 - Ifo Business Climate Index & Business Expectations Index.
UK - 09:30 - BBA Mortgage Approvals
US - 13:30 - Unemployment Claims.
US - 15:00 - Existing Home Sales
US - 15:30 - Crude Oil Inventories.

Friday Jan 25th:

GE - 07:00 - Consumer Confidence.

EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany

The week ahead.

Last week stock markets continued to follow the path of least resistance, with the FTSE posting its worst January since 2000. From the 2007 highs the FTSE has dropped as much as 13%; the S&P 500 16.7% the Nasdaq 18.8% and the wider Russell 2000 over 22%.

Last weeks Philly Fed figures came in at 20.9%, which according to some analysts indicates a severe economic contraction. Following this, Fed Chairman Ben Bernake failed to calm the US equity markets by not delivering the emergency rate cut that had been rumoured to be forthcoming. A lack of decisive action has been a common criticism of the US central bank.

Friday opened up positively as traders looked for a rebound. The catalyst was IBM and GEs better than expected earnings announcements on the back of strong overseas growth. However, markets soon reversed as Bush revealed his Governments plan for economic stimulation. Wall Street was clearly unimpressed, with many believing the plans to be too little, too late and perhaps more importantly aimed at the wrong part of the economy.

Oils pullback from $100 per barrel may have also helped allay some inflationary concerns, though the pull back has coincided with a drop in the share price of oil majors such as Exxon Mobil and BP.

Next week has few top line economic announcements from the US with Thursdays existing home sales the stand out event. In addition, the US stock markets are closed on Monday for Martin Luther King Day. The currency markets could still see some action following North American announcements though, this time from Canada. The loonie(as the USD/ CAD exchange rate is called) could be significantly affected by Tuesdays BOC Interest rate statement and retail sales.

On Wednesday the UKs MPC release their minutes from the last meeting. They disappointed investors at their last meeting by keeping rates the same, so analysts will be keen to discover just how close that decision was. UK GDP figures are released at the same time.

Going forward, the big question is whether the bulls can mount a meaningful fight back for the first time in 2008. On the positive side, there are some statistics that point to the possibility of some relief.

According to research from Fusion IQ when the % of stocks above their 200 day moving average falls below 20, an intermediate term low could be imminent. The statistic was reasonably accurate at calling the 1998 and 2002 lows. Stocks are currently trading around this marker, but it is unlikely that this will call a bottom to the day.

In addition, according to Bespoke Investments the S&P 500 is currently 3.5 standard deviations from its 50 period moving average. This condition has occurred just 17 times since 1980. 20 days later the S&P is positive 61.5% of the time.

While a waterfall style plunge may still be on the cards, recent market performance could indicate that a short term low may not be too far away. An up or down trade returns a profit if either of two barriers are touched and is effectively a volatility trade. The VIX options volatility index is still well below its August spike, which could indicate that there is further volatility to come, particularly with the next FOMC interest rate decision due at the end of the month. By placing the upper of the two barriers further away from the spot price compared to the lower barrier, a trader could benefit from a quick snap reversal while providing exposure to some further selling. An up or down trade with the barrier levels set to 1295 and 1365 could return 14% over 12 days on the S&P 500.