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Credit Concerns Trump Mixed Black Friday's Trend

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After posting gains early in the session on mixed Black Friday sales reports, stocks finished at their lows of the session as credit concerns weighed heavily on this year's holiday sales trends and U.S. economic outlook.

The S&P 500 Index (SPX.X) 1,407.22 -2.32% threatened to post its first back-to-back session gain for the month as stocks opened mixed-to-higher at the open on some conflicting retail sales trends and industry analysts comments.

The National Retail Federation trade group said on Sunday that there were 4.8% more shoppers out over the four-day holiday weekend (Thursday-Sunday), but the average customer spent 3.5% less than last year's four-day comparison.

A more optimistic report had research firm ShopperTrak RCT saying that retail jumped 8.3% on Friday versus last year, and 7.2% for Friday and Saturday combined. ShopperTrak said the two day sales trends were "absolutely stronger" than anticipated. In addition, ShopperTrack said it had forecast total sales for the holiday season as rising 3.6% versus last year.

"I had one store manager tell me: "If it had a plug on it, it did well" said Jefferies & Co analyst Daniel Binder, who commented that early trends at some of the nation's large discounters had electronics as big sellers over the weekend.

Mr. Binder thought Wal-Mart (NYSE:WMT) $45.11 -1.35%, Target (NYSE:TGT) $55.22 -3.41%, Costco (NASDAQ:COST) $65.38 -2.37% and BJ's Wholesale (NYSE:BJ) $33.96 -1.27% were "in the sweet spot" as high-definition televisions become cheaper and accessible to the mass market.

Needham & Co analyst Christine Chen said "I think this holiday is going to be very promotional," pointing to chains like Talbots (NYSE:TLB) $13.18 -4.90%, AnnTaylor (NYSE:ANN) $30.53 -5.18%, Chico's FAS (NYSE:CHS) $10.21 -1.82% and Coldwater Creek (NASDAQ:CWTR) $8.04 -4.51%, which cater to mature women.

Ms. Chen said Talbots (TLB) and AnnTaylor (ANN) did not have what she would consider to be huge crowds of shoppers this weekend.

What Talbots and AnnTaylor may have lacked this weekend, Yahoo! Inc. (NASDAQ:YHOO) $25.22 -3.48% may have gotten too much of.

Yahoo! said its e-commerce system buckled under strain of a surge in online shopping, and left some merchants disappointed over lost orders. According to DowJones, Yahoo's network became overloaded at 05:30 AM EST.

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Hmmmm... go to the mall this weekend, check out some prices, then go to the 9-5 job, get a cup of coffee, turn on the computer, and check out on-line prices?

Having traded as high as $39.39 on 10/31/07, Overstock.com (NASDAQ:OSTK) $23.38 -2.70% might be worth a look as it closes just under its trending higher 150-day SMA at $23.45.

As the holiday shopping season begins, tomorrow morning's November consumer confidence reading at 10:00 AM EST will draw trader's scrutiny. Current forecast is for 91.5.

But just after 10:00 AM EST, buyers looked to have vanished faster than you can say "attention shoppers" as economic data had buyers clutching their wallets and purses.

The Chicago Fed said its National Activity Index dropped to -0.73 in October from September's -0.30. October's reading was the lowest since January. Production-related indicators came in at -0.39 in October, while employment-related indicators were also negative at -0.20.

Today's economic news had to have had some negative impact, as we'll get November's Chicago PMI on Friday. Economists are currently forecasting an expansionary reading of 50.5 after October's contraction measure of 49.7.

Financials gave back all of Friday's bounce after UBS downgraded mortgage-lenders Freddie Mac (NYSE:FRE) $24.50 -7.44% and Fannie Mae (NYSE:FNM) $28.92 -10.18% to "neutral" from "buy."

Senator Charles Schumer reportedly urged regulators to examine the risks involved with the increased lending by the Federal Home Loan Bank of Atlanta to Countrywide (NYSE:CFC) $8.64 -10.46%, where that report seemed to accelerate today's weakness in the financials.

Citigroup (NYSE:C) $30.70 -3.15% did see trade under the $30.00 after CNBC reported the banking giant is on the verge of announcing a large layoff that could have 45,000 positions eliminated.

Despite a weaker dollar trade again today, NYMEX January Crude Oil futures (cl08f) settled down 48-cents, or -0.49% after CNBC said Saudi Arabia had boosted output ahead of OPEC's December 5 meeting.

I could not find any reports as to what amount, but last week the Oil Movements consulting firm said that OPEC is expected to boost crude oil output by 720,000 barrels a day in the four weeks to December 8.

Just after todays close, the Energy Information Agency (EIA) said the average retail price for gasoline in the U.S. fell by $0.20/gallon last week to $3.097/gallon.

NYSE and NASDAQ Internals -

It is generally thought that the bulk of institutional traders take the day off on Friday and while Wednesday's final hour of trade saw a significant decline and lack of buying, Friday's session was up, up, and away with few sellers to be found.

Today's internals were negative at the a/d line and there was some "ooomph" behind it with the NYSE Short Term Trade (TRIN) never falling below 1.00 today, and rising to its close.

NASDAQ's Short Term Trade (TRINQ) wasn't overly bullish, but it at least wavered either side of 1.00. Buyers stepped aside in the final hour with TRINQ higher to the close.

Shorts do look as if they're doing some covering the last few days ad the number of new lows at both the NYSE and NASDAQ hover just above recent inflection points.

NASDAQ's number of new lows suggests greater stability to me.

While the 11/20/07 number of new lows (414) were just shy of the 445 new lows from 11/08/07, this subtle observation does suggest to me that institutional shorts are locking in some gains when they have an opportunity during weakness among four and five-lettered stock symbols.

Global Equity Benchmarks/ Dollar Index/ Oil/ Gold

You can probably do the math and see that today's trade for the major U.S. equity benchmarks (-2.32% for S&P 500) would have had the SPX pretty much "in line" with European bourses at their Monday closes.

If U.S. bulls are going to ramp things higher this week, we might just get a read from Britain's FTSE-100, Germany's DAX and France's CAC-40 when they finish up Tuesday's trade. If they're higher at tomorrow's close, then a stronger-than forecast consumer sentiment reading at 10:00 AM EST could really bring in some short covering for the major U.S. benchmarks tomorrow.

I've noted over the years that STOCK PRICES are one MAJOR influencing factor on consumer sentiment, and let's face it, the above table doesn't suggest an UPSIDE surprise regarding consumer sentiments.

Therefore, be ready for it!

World Bullish % Bell Curve - As of Friday's Close

If we think consumer sentiment may be damaged due to stock prices here in the U.S. (U.S. All Stocks), which includes stocks listed on the NYSE, NASDAQ and AMEX, where roughly 35% of the point and figure charts would show a point and figure chart "buy signal" associated with the chart, then Tokyo and European (Europe, London, XETRA/Frankfurt) would also suggest a negative tone toward equities.

I don't look at Dorsey/Wright and Assoc. World Bullish % Bell Curve each day, and once a week, if not once a month is sufficient. They tend to move slowly and methodically, but the above bell curve is telling as to the general weakness currently observed for many stocks around the globe.

S&P 500 Index (SPX) - 10-point box

At last Monday's close, the SPX was threatening a spread triple bottom sell signal at 1,430, and on Tuesday, that level was traded.

I must confess that I was a bit surprised that the SPX didn't just "cave in" with supply (O) quickly outstripping demand (X) to the 1,380 level and a next support level.

Here's a quick look at StockCharts.com's S&P 500 Bullish % ($BPSPX) and traders and investors can easily make the tie with the above chart and the 1,380 level as the $BPSPX also nears it mid-August relative low chart measure of 34%.

S&P 500 Bullish % ($BPSPX) - 2% box chart

According to StockCharts.com, roughly 37%, or 185 of the 500 stocks that comprise the broad S&P 500 Index currently show a "buy signal" still intact on their point and figure chart.

I wanted to update this widely followed bullish % (Dorsey/Wright's symbol is BPSPX).

Should we see a 32% measure, it would be deemed VERY BEARISH longer-term, and would have this market once again in "bear confirmed" status.

On 10/19/07, I do know for fact that Dorsey/Wright's BPSPX reversed back lower to "bull correction" status at 64.00%, and more than likely, StockCharts.com's $BPSPX reversed back lower around that time.

It takes some MEANINGFUL amounts of BUYING (X) and SELLING (O) to move these internal indicators of demand (X) and supply (O).

You can view other major market bullish % for FREE and StockCharts.com.

The VERY BROAD NYSE Bullish % ($BPNYA), the VERY BROAD NASDAQ Composite Bullish % ($BPCOMPQ), the narrower S&P 100 Bullish % ($BPOEX), the narrower NASDAQ-100 Bullish % ($BPNDX) are those most institutional traders and investors will follow.
 

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