Jamie Dlugosch

Is It Time to Celebrate?

by Jamie Dlugosch   12/01/08

Jamie Dlugosch takes a look at the hottest topics to keep an eye on throughout the day.

The market finished a half day session with its 5th straight gain. The Dow ended 102 points higher for a gain of more than 1%. The five days of gains were the largest on record since the 1930's. Is it time to celebrate?

Yes, Virginia there may be a Santa Claus, but don't be fooled by this market. We want to believe so bad, we really do. Unfortunately, despite the huge moves of the last 5 days, little was done in the way of constructively moving past the current malaise.

It would have been far better to see 3 or 4 up days of modest degree followed by 1 or 2 down days with small losses. Instead the roller coaster goes into hyper-drive. Now if the ride is a straight path higher we should all go out and buy stock.

Given that volume was nothing to write home about, it is apparent that buyers are still on the sidelines. Instead chalk up the last 5 days to aggressive end of the month short covering.

Hedge funds keep score on a month to month basis. Let's see how this plays out in the early days of December.

All eyes were on retail on the critical Black Friday. The day after Thanksgiving is a huge day for business. The importance was only magnified given the current state of the economy.

Most are predicting a weak holiday sales season. Will those predictions hold up? Well the early returns were surprising. Shoppers came out in droves on Friday beating back expectations of dire straights.

The problem of course is that huge discounts were needed to drive traffic. That means profits for business were surrendered to keep sales higher. More worrisome for the retailers is that the customers made the purchase of the sale item and then left. There was little more than browsing and window shopping.

Even worse, traffic may have fallen off the cliff on Saturday and Sunday. I know in my home town shopping mall parking lots were half full. Hmmmm. Half full and 50% down on the market. Maybe stocks are indeed efficiently priced given what is happening on the front lines.

OPEC held a hastily convened meeting in Cairo over the weekend. The oil cartel ended the session without announcing any new production cuts even though crude prices have fallen steadily throughout the fall.

Not to fear though as the group will meet again for a regularly scheduled get together on December 17. The decision not to cut in advance of that meeting was probably a wise one. Moving in advance may have resulted in a panic selling of crude as a signal that the cartel believes demand destruction is worse than currently expected by the market.