Crucial Week Before Fed Meeting

August had been a surprisingly good month for stocks. Speculation that the Fed might not increase the short time interest rate, a better outlook in oil inventory and consequent drop in crude oil price -- all contributed to that late summer rally.

And now is our turn to get cautious. This week we expect bearish trends taking over the market with traders opting to wait and watch the economic data and the mood in the street. Several key reports to be released this week will be keenly observed in order to gauge the mood the Fed memebers will have when they'll meet on 20th: (i) Tuesday: US trade balance (ii) Thursday: Retail Sales, Business inventories (iii) Friday: Consumer Price Index (CPI), Core CPI, Capacity utilization, Industrial production, University of Michigan sentiment index (preliminary).

A number of crucial earning reports from some of the bellweather companies will also be keenly observed this week to get a feel of the economy. The list includes: Best Buy (BBY), Goldman Sachs (GS), Lehman Brothers (LEH), Bear Sterns (BSC), Adobe Systems (ADBE).

So, be cautious and have some cash in hand. Keep your eyes on some good stocks or funds and purchase them on any weakness that might happen anytime this week or the next around the Fed meeting date.