Comtex SmarTrend(R) Morning Call -- December 1, 2008

Dec 01, 2008 (SmarTrend via COMTEX) -- WSM | Quote | Chart | News | PowerRating -- The market indices edged up slightly on lighter volume in the shortened trading session on Friday, just enough for some SmarTrend(R) market indicators to become overbought and in need of consolidation at this level. The DJIA is expected to pull-back this morning and top out later this week despite better-than-expected retail weekend sales.

The critical question for the DJIA is whether it has enough impetus to rise up to, and even above its ceiling, now down to 9,200 and continuing to decline slowly. Friday's short session did provide the third day in row of polarized-to-the-upside stocks changing trends, registering daily SmarTrend(R) uptrends to downtrends at 478:1. This occurrence is not likely to repeat itself for the fourth day in row; nevertheless, it generated a jump up in the Trend Ratio, although the IBDI was flat. There remains solid evidence that the intermediate-term uptrend continues its shallow, but supportive ascent. Whether it will provide enough of a boost for the long-term downtrend, now into its 13th month, to bottom is not likely to be answered definitively until 2009. In the meantime, this week the intermediate-term uptrend is expected to boost the near-term uptrend before it tops out between this Friday and next week.

Two of the near-term trend indicators reached their overbought levels on Friday, the SmarTrend(R) Ratio and the NBDX. The two indicators related to money flow, the NBDI and NBDV, pulled back slightly, mostly in response to Friday's lighter volume. There are signs that the near-term uptrend will resume this week, and perhaps carry the DJIA up above 9,200. Climbing above that ceiling of resistance will be an important test of the stock market's resolve to establish a long-term bottom at current levels.

Typically, trend bottoms (or tops in uptrends) are established by shorter-term trends bouncing up and down across a level later seen as a chart valley (or peaks in uptrends). The near-term trend is the shorter trend measuring stick for the intermediate-term trend, and the trade-term trend is the shorter trend measuring stick for the near-term trend. During most of last week the trade-term trend confirmed the near-term uptrend; by week's end it had become somewhat overbought, along with signs the near-term uptrend will soon top out.

This uptrend-confirming phenomenon was a departure from recent months when the trade-term trend was very erratic and caused wide market swings as the near and intermediate-term term downtrends leveled as they began to bottom out. The trade-term trend has not completely lost its penchant for creating market volatility; any unexpected news can trigger a change in direction of the intraday market, and possibilities are outlined below. For now the trade-term trend appears ready to correct down this morning before the near-term uptrend can finish its current cycle and top out later this week or early next week; expect a definitive tug-of-war as the DJIA climbs toward 9,200. To review the continuing list of stocks changing trends in the last week, please click on http://www.mysmartrend.com.

Consumers and investors alike revealed a penchant for bargains, providing the S&P its best week since at least 1980, rising 12%, and giving retailers a 7.2% four-day, Thanksgiving sales boost from last year's levels. The rally in equities sent stocks higher for five straight sessions, albeit Friday's 1% advance was marked by low volume in the half-day session. Nonetheless, the bulls had at last raised their heads, looked beyond the week's supply of dismal data, and sent the DJIA up 9.7% and the Nasdaq 10.9%, on a $306 billion Citigroup (NYSE:C) rescue, a proactive President-elect, and the Fed's $800 billion plan to bolster loans among homebuyers, consumers, students and small companies. Still, the year's tally shows stocks have plunged 39% year-to-date, with the DJIA dropping 33.4% and the Nasdaq losing 42.1%. For November, stocks fell 7.5%.

In 2008, S&P sector action revealed there has been nowhere to hide on the floor of equity exchanges. All sector groups have marked double-digit declines, with only consumer staples down less than 20%, off 16.4%, and utility and health care sectors down less than 30%, losing 28.8% and 29.4%, respectively. Besides the relative strength in traditionally defensive plays, the slaughter has been led by a 56.2% deterioration in financials and a 44.5% plunge in material sector shares. The price action has been borne out by the economic numbers, which last week showed a downward revision in third quarter GDP to a negative 0.5% from a negative 0.3%, a 6.2% fall-off in orders for durable goods, still-unwinding housing numbers with existing home sales off 3.1% and new home sales down 5.3%, and personal spending off 1%.

This week's numbers may prove little better reading. Today's calendar contains construction spending for October (10:00 AM ET), with the decline expected to have accelerated to 1.1% from last month's 0.3% drop, and the ISM manufacturing index (10:00 AM ET) for November, which is expected to ease to 38.0 from 38.9. Over the week, monthly auto sales and ISM Services figures are due for release on Tuesday, with the Fed's Beige Book of regional economic activity out on Wednesday. Of key interest is Friday's nonfarm payrolls release, which may do little to encourage investors, as payrolls shrink by an expected 320K in November, and the unemployment rate advances to 6.8% from 6.5% prior. Nonetheless, US automakers' bids for additional funding may reach friendlier ears this week as proposals have been shaped to offset previous Congressional disapproval.

The retail numbers may prove pivotal to an economy two-thirds dependent upon consumer spending. So far results have shown shoppers willing to mow down a Wal-Mart (NYSE:WMT) employee to unleash pent-up demand for goods. According to National Retail Federation data the average US shopper spent $372.57 more than last year over Thanksgiving, and according to Big Research over 15% more shoppers visited (and revisited) stores and online sites, turning the tables on sour numbers during the first several weeks of November. And eBay's (NASDAQ:EBAY) PayPal reported a 26% surge in "Black Friday's" e-commerce sales. Today's tally on "Cyber Monday" will also give investors a snapshot of holiday expectations for sales, although most still expect the full season to be about the worst in years. On Thursday and Friday, November same-store-sales are due for release, and may reflect the negative guidance recently offered by retailers. This morning's data showed declining PC and mobile phone sales pushed October global semiconductor sales 2.4% lower from a year earlier, and 2.1% from a month prior.

This morning's equity markets show Asian markets mixed. Japan's Nikkei dropped 1.4% on a higher yen. Japan's numbers revealed its industrial output fell at twice the expected rate. The Shanghai Composite gained 1.3%; Reuters reported the Chinese Ministry of Land and Resources advised plans to buy about $3 billion in tin, copper, aluminum, lead and zinc. India's Sensex rallied 1.8%, following the massacre of more than 192 in its financial capital. In Europe markets were widely lower, with the DAX off 3.1%; the FTSE off 2.1% and the CAC down 2.5%. This week is expected to reveal additional global stimulus actions, with rate cuts expected from Australia, New Zealand, British and eurozone central banks.

US futures are pointing to profit-takers on the prowl. Speeches of note include an economic and financial market update from Treasury Secretary Paulson and words on the economy from Fed Chairman Bernanke and Dallas Fed President Fisher. Oil prices moved lower towards $50 a barrel on news that OPEC ministers had decided to defer any action on production cuts until its December 17th meeting. The action was anticipated, and had sent DJIA component shares Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) down 1.2% and 0.9% on Friday. Treasury issues continued to demonstrate demand from safe-haven pursuers, also reflecting the Fed's decision to buy $600 billion in mortgage bonds, expected to generate mortgage refinancings and causing investors to buy the 10-year benchmark for mortgage rates as a hedge. This morning, the yield on the 10-year Treasury sank to its lowest on record, dropping below Friday's record to 2.86%.

Among corporate items of note, only 39 firms are slated to release earnings this week, including Inergy (NASDAQ:NRGY) on Monday; Beazer Homes (NYSE:BZH), Sears Holdings (NASDAQ:SHLD), Staples (NASDAQ:SPLS) and Marvell (NASDAQ:MRVL) on Tuesday; Del Monte (NYSE:DLM), Aeropostale (NYSE:ARO) on Wednesday; Toll Brothers (NYSE:TOL), Williams-Sonoma (NYSE:WSM) and Novell (NASDAQ:NOVL) on Thursday and Big Lots (NYSE:BIG) on Friday... Delta (NYSE:DAL) is reportedly revising its Boeing (NYSE:BA) plane orders to include fewer 787 Dreamliners and more 777-200LRs... General Motors' (NYSE:GM) directors met Sunday to review revised plans to request about $12 billion in government financing this week... AIG (NYSE:AIG) reportedly sold its private bank to an Abu Dhabi group for an estimated $247-$412 million... Chesapeake Energy (NYSE:CHK) plans to raise as much as $2 billion through a stock offering... United Healthcare (NYSE:UNH) offered 2008 earnings guidance of $2.95-$2.98 and for 2009 of $2.90-$3.15...

By Chip Brian, Editor-in-Chief, Comtex news Network

www.Comtex.com -- editor@mysmartrend.com

The following equities mentioned above include:

Comtex SmarTrend Alert ---------------------------------------------- Ticker Last Close Trend Direction Trend Price Trend Date ---------------------------------------------------------------------- AIG 1.95 Downtrend 2.04 10/10/2008 ARO 15.11 Downtrend 31.52 9/22/2008 BA 41.28 Downtrend 44.52 11/11/2008 BIG 17.70 Downtrend 17.65 11/7/2008 BZH 2.08 Downtrend 7.41 9/18/2008 C 7.05 Downtrend 14.52 10/21/2008 CHK 20.24 Downtrend 18.25 11/20/2008 CVX 79.93 Downtrend 64.40 11/20/2008 DAL 8.42 Downtrend 6.87 11/20/2008 DLM 5.75 Downtrend 8.27 9/4/2008 EBAY 13.48 Downtrend 30.08 5/8/2008 XOM 80.89 Uptrend 77.49 11/4/2008 GM 4.81 Downtrend 9.82 9/26/2008 NRGY 15.52 Downtrend 18.43 11/13/2008 MRVL 5.80 Downtrend 15.17 7/11/2008 NOVL 4.51 Downtrend 5.55 9/15/2008 SHLD 37.15 Downtrend 48.84 11/12/2008 SPLS 17.36 Downtrend 15.26 11/19/2008 TOL 20.17 Uptrend 18.49 11/26/2008 UNH 20.98 Downtrend 20.82 11/11/2008 WMT 56.69 Downtrend 58.92 9/24/2008 WSM 7.46 Uptrend 6.71 11/25/2008

INX -- S&P 500: 896 Lo: 881 Hi: 896 Change: +8.56

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INDU -- DOW JONES: 8,829 Lo: 8,673 Hi: 8,831 Change: +102.43

http://www.mysmartrend.com/images/INDU20081201.jpg

QQQQ -- NASDAQ: 1,536 Lo: 1,512 Hi: 1,536 Change: +3.47

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This report is divided into three sections. The first deals with our 5 proprietary market indicators, the second section examines important economic and business happenings which are expected to affect U.S. Stock market movements and the third section describes specific company announcement and earnings releases. Experience demonstrates that when these 5 indicators reach extremes they can shortly be expected to change direction and move in the opposite direction. When such happens in all or most of the 5 indicators, on or about the same time, followed by a move from below an extreme (oversold) to above that extreme (or vice versa for overbought), a change in market direction is very probable. The near term market moves are measured to identify the best possible returns for traders/investors. Daily price/volume examinations provide the best data upon which to base such forecasts. In this report though, intraday indicators are examined to improve the point of entry timing for the expected move.

Comtex News Network, Inc. is not a registered investment advisor and does not provide investment advice. Investors bear complete responsibility for their own investment research and decisions and should seek the advice of a qualified investment professional prior to making investment decisions. SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright, Comtex News Network, Inc. 2008

Comtex News Network, Inc. ("Comtex") obtains information from sources deemed to be reliable; however, Comtex does not guarantee the accuracy of any of the information or commentary provided. Comtex makes no warranties, expressed or implied, as to the fitness of the information for any purpose, or to results obtained by individuals using the information. In no event shall Comtex be liable for direct, indirect, or incidental damages resulting from the use of the information. Comtex shall be indemnified and held harmless from any actions, claims, proceedings, or liabilities with respect to the information and its use. Comtex does not make specific trading recommendations or provide individualized market advice. The information contained in the Morning Call product is provided as an information service only.

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