Following the central bank actions of the past few days, the question begs to be asked, are we treating the disease or its symptoms... This rhetorical question clearly communicates the view of Wall Street Greek. Let's just hope the band-aid sticks long enough for the bleeding to stop.

The stubborn Fed and it's shell-shocked chairman seem likely to hold steady now regarding interest rates. We do not expect an emergency Fed action, however necessary we view it. Counterparties to this debate will argue that the global economy is healthy, and American economic growth is strong. My friends, to this we simply state that the easiest prognostication to believe, or to make others believe, is a continuation of the present environment. To intelligently go in another direction would require missing a golf round at the club or brunch at the Four Seasons, a serious disruption to the prognosticator day-plan. God forbid! So, the status quo is a safe bet, and the easiest to back off from when you're wrong.

Wall Street Greek believes the Fed must cut interest rates to help mortgage bearers navigate the minefield of their own making. It would stabilize the housing market, allow borrowers to renegotiate into manageable loans, and stabilize secondary markets for mortgage-backed securities. We anticipate the current path will do nothing to support flailing consumer spending, the linchpin of the American economy. The Fed's buying of MBS is helping the hedge funds and investment banks out of trouble, which is helping avoid a near-term market crash. But, this is just a symptom of the larger disease. The Fed has to recognize this before it's too late to avoid recession, in our view. However, the direction the central bank has chosen seems set.

Let's take a look at the week ahead...

Monday starts the week with the July retail sales data at 8:30 a.m. Since this particular edition of our week ahead was written and published on Monday, we already have the results for you. July retail sales came in up 0.3%, compared to the low-bar consensus forecast for a rise of 0.2%, as compiled by Bloomberg. Excluding auto sales, which were down, sales rose 0.4% and met expectations. Separating out autos, gasoline and building materials, sales climbed 0.6% after a 0.3% rise the month before. Even so, retail sales are currently trending below last year, and last week's individual retail reports indicated the consumer is not spending in the mall. This has led many to refer to this year's "back to school" shopping season as late. We wonder if they mean late, as in "not on time," or late as in dead. Seasonal sales should show an up-tick over prior months, but we need to study sales versus prior year results now to weed out the impact of back to school.

June Business Inventories were reported at 10:00 EDT on Monday, and they came in as expected. The rise of 0.4% compared to May's increase of 0.5%. While the data is valuable in isolation, the comparison of inventory to sales enhances the value of the metric. However, the ratio measured 1.27 in June, compared to 1.26 in May. We are looking backward with this figure, so we suspect July and August are probably not reflective of the environment that existed in June and May. We mean to say that we expect retail is weakening, and as a result business inventories should be rising based on light sales or falling based on conservative inventory stocking. Either event is bad, but the sales drop-off dynamic would be worse.

Monday's earnings schedule included American Railcar Industries ( NASDAQ: ARII), BIDZ.com ( NASDAQ: BIDZ), Bob Evans Farms ( NASDAQ: BOBE), Chart Industries ( NASDAQ: GTLS), Cinemark Holdings ( NYSE: CNK), CPI International ( NASDAQ: CPII), DeVry ( NYSE: DV), DTE Energy ( NYSE: DTE), Eagle Rock Energy Partners ( NASDAQ: EROC), Excel Maritime Carriers ( NYSE: EXM), Full House Resorts ( AMEX: FLL), GeoMet ( NASDAQ: GMET), Goldleaf Financial ( NASDAQ: GFSI), Harvest Energy ( NYSE: HTE), ICOP Digital ( NASDAQ: ICOP), Interoil Corp. ( AMEX: IOC), Knightsbridge ( NASDAQ: VLCCF), Landry's Restaurants ( NASDAQ: LNY), LanOptics ( NASDAQ: LNOP), Orbitz Worldwide ( NYSE: OWW), Pan American Silver ( NASDAQ: PAAS), Peoples Educational Holdings ( NASDAQ: PEDH), Petrobras ( NYSE: PBR), RG Barry ( AMEX: DFZ), Sears Holdings ( NASDAQ: SHLD), Sysco Corp. ( NYSE: SYY), The Blackstone Group ( NYSE: BX), United Capital ( AMEX: AFP), U.S. BioEnergy ( NASDAQ: USBE), Valspar ( NYSE: VAL), Xinhua Finance Media ( NASDAQ: XFML) and others.

Tuesday morning brings the weekly ICSC-UBS Same-Store Sales Report. Last week's data indicated a weekly same-store sales decline of 0.3% and year-over-year increase of 3.1% for the week ended August 4th. We continue to expect year-to-year comparisons to soften as 2007 progresses.

Two important economic data bits will be reported at 8:30 a.m. EDT. June international trade is expected to show the trade deficit widened by a billion dollars to $61.0 billion, according to Bloomberg's consensus of economists. The July Producer Price Index is expected to show an increase of 0.1%, and a 0.2% rise less food and energy. Inflation concerns have kept the Fed from cutting rates to help the mortgage market. Since we continue to view food and energy prices important to consumers and driven by secular factors, not seasonal or cyclical, we'll be watching the headline figure. Ironically, economic concerns pressure energy prices lower, so if the market disagrees with the Fed, inflation as defined by the headline figure, should ease off a bit. We regard longer term (quarterly) trends more important as energy is volatile month-to-month, regardless of the secular trend.

The European Commission is scheduled to report its quarterly growth expectation for the region. Also, the Wall Street Analysts Forum kicks off its conference on Tuesday with presentations planned from Vista Gold ( AMEX: VGC), New Gold ( AMEX: NGD), Apex Silver Mines ( AMEX: SIL), U.S. Gold ( AMEX: UXG), Emergent Biosolutions ( NASDAQ: EBSI), Lakeland Industries ( NASDAQ: LAKE) and a few others.

Home Depot ( NYSE: HD) and WalMart ( NYSE: WMT) highlight the earnings schedule for Tuesday, but also look for reports from Agilent Technologies ( NYSE: A), Ansoft ( NASDAQ: ANST), Applied Materials ( NASDAQ: AMAT), Basin Water ( NASDAQ: BWTR), Big Dog Holdings ( NASDAQ: BDOG), Black Box ( NASDAQ: BBOX), Canadian Solar ( NASDAQ: CSIQ), Catalytica Energy ( NASDAQ: CESI), Crucell ( NASDAQ: CRXL), Eddie Bauer ( NASDAQ: EBHI), Elbit Systems ( NASDAQ: ESLT), Fortress Investment Group ( NYSE: FIG), Fossil ( NASDAQ: FOSL), G&K Services ( NASDAQ: GKSR), GigaMedia ( NASDAQ: GIGM), Globalstar ( NASDAQ: GSAT), Harman International ( NYSE: HAR), Impac Mortgage ( NYSE: IMH), Internet Gold ( NASDAQ: IGLD), Lifecore Biomedical ( NASDAQ: LCBM), Matrix Service ( NASDAQ: MTRX), Pressure BioSciences ( NASDAQ: PBIO), Regency Energy ( NASDAQ: RGNC), School Specialty ( NASDAQ: SCHS), StealthGas ( NASDAQ: GASS), The TJX Companies ( NYSE: TJX), UBS AG ( NYSE: UBS) and others.

Greek businesses are closed on Wednesday for the celebration of Assumption Day, as are markets in Austria, Chile, Poland, India and South Korea. I will miss celebrating the holiday with friends at one of the great fortress villages of my island ancestors. I ask my compadres to please spill a glass of ouzo for me, and to place one within the zeimbekiko circle alit with fire in my memory. I hope to rejoin you next year.

The Bank of England will publish the minutes of its August meeting. Central bank meeting minutes should start to become more interesting going forward. In other news, for those of you interested in playing the nuclear energy card, Van Eck Global launches its Market Vectors-Nuclear Energy ETF on Wednesday.

Economists will be closely attuned to the wire on Wednesday morning for a slew of economic data. The regular Mortgage Bankers Association Purchase Application report starts us off at 7:00 a.m. At 8:30, the Consumer Price Index is expected to post a 0.1% increase for July, and a 0.2% rise excluding food and energy prices. Also at 8:30, the Empire State Manufacturing Survey is expected to measure 18.0, versus 26.5 in July. Then at 9:15, monthly industrial production will be reported. Bloomberg's consensus is expecting a July increase of 0.2%, and capacity utilization of 81.8%. This compares to June's growth of 0.5% and capacity utilization of 81.7%.

At 10:30, commodity traders will be anxiously awaiting the weekly petroleum inventory report. Finally, at 1:00 p.m., the National Association of Home Builders will be set to report the Housing Market Index. Most will be expecting a gloomy mood and report from the industry players.

The Wall Street Analysts Forum will begin day two of its conference, with presentations from Mechanical Tech ( NASDAQ: MKTY), SatCon ( NASDAQ: SATC), Syntroleum ( NASDAQ: SYNM) and a few others. Reporting earnings, look for news from Adstar Inc. ( NASDAQ: ADST), CACI International ( NYSE: CAI), Cambridge Display ( NASDAQ: OLED), Copa Holdings ( NYSE: CPA), Daktronics ( NASDAQ: DAKT), Deere & Co. ( NYSE: DE), Ditech Networks ( NASDAQ: DITC), Employers Holdings ( NYSE: EIG), IAMGOLD ( NYSE: IAG), Longs Drug Stores ( NYSE: LDG), Macy's ( NYSE: M), MAF Bancorp ( NASDAQ: MAFB), Network Appliance ( NASDAQ: NTAP), PetsMart ( NASDAQ: PETM), Photronics ( NASDAQ: PLAB), Salesforce.com ( NYSE: CRM), Sara Lee ( NYSE: SLE), Tower Semi ( NASDAQ: TSEM), Yingli Green Energy ( NYSE: YGE) and a bunch more.

Thursday will likely be keyed by two important economic drivers, housing and jobs. At 8:30 a.m., Housing Starts for July are expected to report a running annual pace of 1.41 million, compared to 1.467 million in June. Consolidation in the housing industry is now happening at a fast pace, and we expect to see further bankruptcy and property write-off in the near-term. However, we believe we may now be nearing an opportune time to pick at a housing stock, and we have one in mind. If our due diligence supports our theory, we will tell you which one soon enough.

Also at 8:30, the Labor Department will report Initial Weekly Jobless Claims. Bloomberg's consensus expects 315k for the week ended August 11. We expect consumer softness and retail weakness to soon have this number on the rise, but first look to the monthly Employment Situation Report to show lower levels of new hiring.

The EIA will report natural gas inventory at 10:30 a.m. as usual, and at noon EDT, the Philadelphia Federal Reserve will report its region's manufacturing survey. The August reading is expected to be 8.0, compared to 9.2 in July. Finally, money supply will be reported as usual at 4:30 p.m. All of a sudden, this is a mainstream news bit, thanks to recent central bank activity.

The Wall Street Analysts Forum will close on Thursday with presentations from Lexington Realty Trust ( NYSE: LXP), Omni Financial Services ( NASDAQ: OFSI), Mercantile Bancorp ( AMEX: MBR), Duke Energy ( NYSE: DUK) and American Electric Power ( NYSE: AEP).

Earnings reports are anticipated from a few of the major retailers, including Kohl's ( NYSE: KSS), Nordstrom ( NYSE: JWN) and J.C. Penney ( NYSE: JCP). Also look for reports from Autodesk ( NASDAQ: ADSK), BEA Systems ( NASDAQ: BEAS), Elizabeth Arden ( NASDAQ: RDEN), Fannie Mae ( NYSE: FNM), Flowers Foods ( NYSE: FLO), FTD Group ( NYSE: FTD), Hewlett-Packard ( NYSE: HPQ), NuCO2 ( NASDAQ: NUCO), Red Robin ( NASDAQ: RRGB), Royal Gold ( NASDAQ: RGLD), Estee' Lauder ( NYSE: EL), Smith & Wollensky ( NASDAQ: SWRG), Watson Wyatt ( NYSE: WW), Zygo ( NASDAQ: ZIGO) and a few others.

Friday wraps up the busy week with the University of Michigan's Consumer Sentiment Report for August. Bloomberg's consensus is looking for a reading of 88.0, compared to July's 92.4. We think the measure could be worse, and we expect it to certainly trend lower in months to come, but this is not new news, as the overriding trend through the year has been on the downslide. In other news Friday, St. Louis Fed Chief, William Poole, is scheduled to address a group about U.S. export opportunities. Poole has been vociferous about keeping the Fed funds rate unchanged, and has become sort of the archenemy of CNBC's Jim Cramer.

Friday's earnings reports include Concurrent Computer ( NASDAQ: CCUR), Delta Apparel ( AMEX: DLA), J.M. Smucker ( NYSE: SJM), Lancaster Colony ( NASDAQ: LANC), Torch Energy ( NYSE: TRU), Yanzhou Coal Mining ( NYSE: YZC) and a few more. We hope you found value in this week's copy, and look forward to providing you value-added work all week.

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Filed under: Deals, General Electric (GE), Options, Technical Analysis

General Electric Co. (NYSE: GE) opened at $39.45. So far today the stock has hit a low of $39.09 and a high of $39.77. As of 10:50, GE is trading at $39.51, up $0.22 (0.6%).

GE surged yesterday and has reached a new one-year high today after the company's GE Energy Financial Services unit bought a stake in natural gas processor and distributor Regency Energy Partners (NASDAQ: RGNC) from HM Capital Partners for $603 million. Though GE is a notoriously flat stock lately, Warren Buffett saw potential for long-term growth when he bought nearly 8 million shares in the low 30's in Q1 2006. With its new step into the energy sector, some analysts think GE is poised to break free of its flat pattern. Recent technical indicators for GE have been bullish but deteriorating slightly, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $35 range. GE hasn't been below $35 since April and has shown support around $37 recently. This trade could be risky if the stock ends its moderately bullish run, but even if that happens, this position could be protected by its 200 day moving average, which is currently at $36 and rising.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent controls a long, hedged position in GE. He does not own or control a position in RGNC.

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