Market Rewind: Financials and Real Estate Show Strength

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(Glossary)

Markets built strongly on the prior week's reversal into the Thanksgiving holiday shortened week, leaving the S&P500 (SPY) up +19.1%. The period's biggest sector winners were Financials and Real Estate (XLF +34.8%; IYR +31.9%) on hopes of further credit easing and promises of federal consumer lending facilities (Washington Post - US Moves to Revive Spending). Among the tracked ETFs, only the U.S. Dollar (UUP) registered a slight decline of -2.0%.

Week 49 of 2008 holds a packed economic calendar, as follows:

• Yahoo! - U.S. Economic Calendar
• Yahoo! - U.S. Earnings Calendar

Analysts will no doubt be closely assessing "Black Friday" retail reports next week (MarketWatch - Sales Up +3%), as well as "The Big Three Automakers" part deux (NY Times - Three Plans). Meanwhile, eight out of 11 sector ETFs are highly overbought on a short-term basis. Also, as strong as this recovery has been, with 20-Day Trend Stability indicators universally in the twenties among equity indices [save Utilities (XLU)], don't forget that this remains an erratic market. Lastly, Precious Metals (DBP) and Bonds (TLT) are even more over-stretched on an intermediate basis.

I hope you enjoyed your extended weekend!

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