Thoughts From Your Valuation Source

The last few weeks have seemed to show an improvement in the economy but many economists are warning to stop looking for a silver lining. An article today in the LA Times had quite a bit to say about it.

Back-and-forth movements are typical when the market is trying to put in a bottom, said Scott Wren, equity strategist for Wachovia Securities. Plus, he said, "you're getting a lot of mixed news."

Last week, after seesawing, the Dow Jones industrial average finished down 0.6%. The Standard & Poor's 500 index ended the week up 0.1%, and the Nasdaq composite index rose 1.6%.

This week, investors will keep monitoring the energy markets and also see how the housing industry is faring in the National Assn. of Home Builder's index today and the Commerce Department's Tuesday report on July new home construction.

At the same time, Wall Street will be gauging the financial health of consumers in the earnings reports of retailers including Home Depot Inc., Target Corp., Gap Inc. and BJ's Wholesale Club Inc.

It has been hoped that the lowered prices for oil will help stimulate the economy again but inflation in other commodities seems to be picking up that slack. The job market is not helping matters either.

Because the job market tends to influence consumer spending even more than home, fuel or food prices, Wall Street has been nervous that the job market has shown few indications that it is improving.

The Labor Department disappointed the market last week when it reported a smaller-than-anticipated decline in the prior week's claims for unemployment. Another downbeat reading on unemployment this week could worry investors even more.

For every negative prediction there is a positive as well. It is anyone's guess where the economy will go from here.