Economic calendar today 12/30/2009

nanosensor

The economic calendar is short for today, with the Chicago PMI and the EIA Petroleum status report the ones most likely to grab trader's attention.

At 7 a.m. ET, we will see MBA Purchase Applications. I tend to follow only the purchases component, as it indicates new activity versus refinancing. With the recent jump in rates, we may see refinancings come down.

Last week's numbers showed a sharp drop in purchasing activity, down to 213.3. A number that is higher than that reading by 5 percent or more would be seen as bullish, while a number equally below this reading would be bearish.

The SPDR S&P Homebuilders (XHB) exchange-traded fund, along with its underlying assets, will react most directly to the report. Banks with large mortgage exposure such as Bank of America (BAC), Citigroup (C), JP Morgan (JPM), and Wells Fargo (WFC) may also react to the news, especially on a sharp move in either direction.

The Chicago Purchasing Managers Index data will be released at 9:45 a.m. ET. The forecast calls for a small drop from the last report, to 55 from 56.1. A number below 50 would be very bearish, while one higher than forecast--especially if by 5 percent or more--would likely be seen as bullish.

The Industrial SPDR (XLI) and its component holdings typically reacts most directly to the report. Sharper moves from forecast in either direction can have broader and deeper market impact.

The EIA Petroleum Status Report will be released at 10:30 a.m. ET. A competing assessment from the American Petroleum Institute last night reported a surprise build of 1.725 million barrels in U.S. inventories, bucking expectations for a decline. Earlier API forecasts had called for a draw of -1.5 million barrels, the same projection for tomorrow's EIA number.

A larger negative number, indicating a larger than expected draw, would be bullish for crude pricing. A smaller negative number, indicating a lesser draw, or a positive number showing a build would be bearish for crude pricing. Given the recent strong run in oil prices, a build might be a very bearish surprise to markets.

The API and EIA reports do not always agree, and there could be additional price swings if that is the case. The U.S. Oil Fund (USO) and the Energy Select Sector SPDR (XLE), along with its underlying assets, may be active on the releases.