A spate of mergers and acquisitions news had the major U.S. indexes trading higher at the open, but enthusiasm for over $10 billion in deals wilted throughout the day. Either that, or the market found another reason to sell-off as the S&P 500 and the Nasdaq closed slightly lower on the day while the Dow Jones Industrial Average and the Russell 2000 grinded their way to gains that would hardly be considered noteworthy.

Stats Table

Before getting into the M&A news, there is some economic news to discuss and it was another mixed bag. Starting off with the good news, the Commerce Department reported that retail sales popped 1.2% in October, good for the best jump in seven months and almost double the revised September increase of 0.7%. Auto sales surged 5.7%, perhaps good news ahead of the biggest joke, I mean IPO, that we have seen in a while and that is General Motors. Without the help of auto sales, retail sales were up just 0.4% last month.

Ten of 13 categories posted gains, but two of the three that did not, furniture and home furnishings and electronics and appliances, are obviously directly tied to the housing market, which apparently still needs some help.

Retail Sales Chart

The other key bit of economic data out this morning, the Empire State Manufacturing Survey, was not as rosy as the retail sales report. The index for current business conditions slumped 11.14, but future conditions rose to 54.55. Current new orders took a big dive, slumping almost 24.4, but future new orders increased to 53.25. So the survey is not great now, but it should improve in the future.

And before I review the M&A activity that is alive, one noteworthy deal officially met its demise on Sunday evening when BHP Billiton (BHP), the world's largest mining company, waived the white flag and withdrew its $38.6 billion hostile bid for Potash Corp. of Saskatchewan (POT). Not really a surprise after Ottawa blocked the bid earlier this month, but now it is official.

Meeting the net benefit requirements set forth by the Canadian government, whatever those requirements were, did not appeal to BHP. For its part, Potash issued a boring press release that reiterated its view that BHP was grossly undervaluing the crop nutrient producer and that global food demand will serve Potash well going forward.

In the near-term, there's little consolation for shareholders of either company. BHP said it will resume an old share repurchase plan that has $4.2 billion left on it though Morgan Stanley said the company could buyback up to $25 billion in the coming years. Potash is left on its own and the market did not like that news, at least not today.

Potash Chart

In news of deals that are merely being speculated on Massey Energy (MEE) gained almost 1%, but traded much higher than that earlier in the session, after the Wall Street Journal reported ArcelorMittal (MT), the world's largest steelmaker, might be considering making a run at the Virginia-based coal producer.

The synergies between a steelmaker and a coal producer that has ample metallurgical reserves, which Massey does, are obvious. After all ''met'' coal is a key ingredient in the production of steel. Massey has been generating a lot of speculation in the coal sector in recent weeks after announcing it was considering strategic options, including a possible sale.

We go into greater depth on the matter at OilSlick.com, but ArcelorMittal probably will not be the only suitor for Massey, assuming the company puts itself up for sale. A decision on that front is expected next week when Massey's board meets and the Journal reported today that Alpha Natural Resources (ANR) is in ''advanced'' talks with Massey.

All of this interest in Massey, a company whose safety record makes comparisons with BP (BP) not only funny in a sordid way, but also accurate, highlights expectations that global demand for coal will remain strong for the forseeable future.

Massey Chart

Staying with King Coal for a moment, Monday's big deal was Caterpillar's (CAT) $8.6 billion purchase of Bucyrus (BUCY), a maker of shovels, drills, draglines and other equipment that is integral in the mining of coal and other natural resources. The deal is the largest ever for Caterpillar, a Dow component.

Illinois-based Caterpillar, already the world's largest maker of mining and construction equipment, will pay $92 a share for Bucyrus, a 32% premium to where the shares closed on Friday. Caterpillar said earlier this year that it was going to invest at least $700 million to expand its line of mining equipment as customers had been asking the company for more mining-related offerings.

The deal is the largest in the mining equipment industry in the past five years and the 32% premium trumps the 28% average premium paid over those five years, according to Bloomberg data. Caterpillar said it expects the acquisition to result in annual cost savings of $400 million starting in 2015. Oddly enough, Bucyrus went bankrupt in 1994.

Bucyrus Chart

I mentioned in a recent OilSlick commentary that when one big deal takes place, it is practically a sport on Wall Street to speculate on who will be next to be acquired in the same sector. That was probably part of the reason why several of Buyrus's closest rivals shot higher today and all did so on volume that was well above their daily averages.

CNH Global (CNH) added almost 5.4% and Terex (TEX) gained nearly 3%. Joy Global (JOYG), Bucyrus's most direct competitor and Wisconsin neighbor, surged 7.45% on volum that was roughly five times the daily average. Heading into Monday, Joy Global was bigger than Bucyrus, so it is reasonable to assume it was cheaper for Caterpillar to acquire the latter.

With Caterpillar getting together with Bucyrus, it remains to be seen what the future holds for Joy Global. It could take out a smaller company like Terex, but I would bet that if Joy Global is a target, it will have to be a larger non-U.S. rival to do the buying. CNH actually fits the bill there, but is only $2.7 billion larger than Joy Global. The best I can do is to recommend keeping an eye on stocks like Joy Global or Terex because they do make for compelling acquisition targets.

Joy Global Chart

The tech sector was not absent from Monday's M&A activity, which is not surprising given that the group ranks third in terms U.S. M&A activity this year when ranked by dollar value. Data storage giant EMC (EMC) is getting bigger in a space it already dominates by acquiring smaller rival Isilon Systems (ISLN) for $2.25 billion in cash.

The deal values Isilon at $33.85 per share, a 29% premium to where the stock closed on Friday. Data storage has been a hot sub-sector of the tech world when it comes to M&A activity this year as EMC, Hewlett-Packard (HPQ) and International Business Machines (IBM) have all made deals to fortify their positions in the data storage arena.

Isilon had already gained 56% in the past 90 days as the company has frequently been the subject of takeover chatter. As is the case in every other sector, attention now turns to who might be next to be acquired in the data storage universe. Jefferies named Compellent Technologies (CML), CommVault Systems (CVLT) and NetApp (NTAP) as possible targets.

Isilon Chart

Looking at the charts, the S&P 500's mild decline today still has the index resting safely above the 1175-1180 support area. While it would appear disappointing that the S&P 500 was not able to hold its early gains on a day of robust M&A newsflow, this situation has occurred several times this year. Stocks disappoint on a Merger Monday only to react to the news in more positive fashion later in the week. Barring bad news our of China or Ireland, I do not see 1175 being tested this week.

S&P 500 Chart

Had Caterpillar been able to close at the high end of its intraday range, the Dow probably would have notched a better result because Caterpillar is the fourth-highest priced stock in the price-weighted index. The Dow still managed to eke out a close above 11,200, putting it 100 points above the beginning of the 11,000-11,100 support area.

Dow Chart

I will admit the Nasdaq was a bit of a disappointment today and I say that simply because Bucyrus and Joy Global are Nasdaq stocks as Isilon. The Nasdaq managed a close above 2500, keeping the spotlight on 2470-2500 as a key support range. Dell (DELL) reports earnings on Thursday and Apple (AAPL) is expected to make a marquee iTunes announcement on Tuesday that folks are saying involves the Beattles. Both could be be pivotal catalysts for the Nasdaq this week.

Nasdaq Chart

The Russell 2000 came to rest just below 720 and well above support at 700. A move below would likely represent a change in overall market trend and an opporunity to at least be short small-caps.

Russell 2000 Chart

I got an email from a reader recently that said he enjoyed the anecdotes that I find from time-to-time regarding market performance around certain events such as elections and movie releases, two of my recent anecdotes. With Thanksgiving approaching, history shows the S&P 500 usually trades higher during Thanksgiving week (next week) and builds on those gains the following week. Statistics also show it's safe bet the index will be higher two Fridays after the day after Turkey Day.