Stocks at an important short term techincal level
Steve Cook on Disciplined Investing

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Economics

   This Week’s Data

    The International Council of Shopping Centers reported weekly sales of major retailers down .8% versus the prior week and up a slight .4% on a year over year basis.  Redbook Research reported month to date retail chain store sales fell .8% versus the comparable period in 2007.  Clearly no follow through from last week’s somewhat better than expected results.

   Other

    Politics at the Fed:
    http://www.ritholtz.com/blog/2008/12/fomc-revolt/

    Consumer credit drying up:
    http://econompicdata.blogspot.com/2008/12/consumer-credit-drying-up.html

    A pictorial of the credit implosion:
    http://www.capitalspectator.com/archives/2008/12/pictures_from_t.html#more
   
    Another real estate sector bites the dust:
    http://calculatedrisk.blogspot.com/2008/12/lodging-investment-and-hotel-bust.html

    On the other hand, here’s a graph on total nonresidential construction versus residential construction:
    http://gregmankiw.blogspot.com/2008/12/investment-then-and-now.html

Politics

  Domestic

    More on Xavier Bacerra, Obama’s choice for US Trade Representative:
    http://www.ibdeditorials.com/IBDArticles.aspx?id=313373483205135

  International War Against Radical Islam

The Market
    
    Technical

    Cramer argues for the uptick rule:
    http://www.thestreet.com/p/rmoney/jimcramerblog/10452265.html

    More on the current market volatility:
    http://bespokeinvest.typepad.com/bespoke/2008/12/the-volatility-bubble-average-daily-change-now-above-4.html

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    The indices traded down (DJIA 8691, S&P 888) and closed virtually on the very short term uptrend line off the November 19 low (DJIA 8685, S&P 880) which I mentioned in yesterday’s comments.  A surprising number of stocks in our  Portfolios traded in a similar pattern; so I am thinking that at least the next couple of days’ pin action will be determined by how stocks negotiate this trend line, i.e. if they bounce tomorrow, stocks could be up in the following days and visa versa. 

The volatility index was up a little; but as I have said, at its current lofty level, the message is the same--defense.  Volume was down, keeping with the recent positive pattern of increasing on up days and falling on down days.

    This morning we watch the 8685, 880 levels.  If stocks hold above this very short term support line, our Portfolios may nibble a bit more.  If not, then I will be watching  the DJIA 8133, S&P 839 area which is the next visible support level.
   
   Fundamental
    
    The performance of oil versus the performance of oil stocks:
    http://bespokeinvest.typepad.com/bespoke/2008/12/oil-stocks-outperforming-oil.html

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    The discouraging thing from the fundamental point of view is that it looks like our elected leaders are going to make a mess of the auto industry bail out--the latest version seems leaves it to a ‘car czar’ to force management and labor to accept their responsibility for the mess in which they find themselves and suffer the requisite consequences.  I have no clue about the probabilities of that happening.  Here’s the press release this morning:
    http://apnews.myway.com/article/20081210/D94VQGEO0.html

    That said, it looks like the Market is going to open up on the news on the bail out.  I am going to let stocks open, see if they can hold to the upside.  If they do, as I suggest above, it is a positive technical sign and our Portfolios will probably nibble at some stocks.  I will be in touch via Subscriber Alert.





Posted 12-10-2008 8:23 AM by Steve Cook