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Consumer, Europe and Economy Lead the Way

|Includes: EFA, iShares Europe ETF (IEV), XRT

The long weekend in the US for the Thanksgiving holiday permitted time for individuals to stop and be thankful, but now it is back to being worried about the financial markets. There will be plenty of economic data, earnings and news headlines to digest this week as they set the tone for both the US and global markets.

On Friday the worry over the EU surfaced again as speculations relative to Spain and Portugal financial conditions came into question. That sent the US markets down erasing some of the gains from Wednesday. The resolution of the Ireland bailout package from the EU over the weekend has helped resolve some of the anguish for now, but this remains a primary topic for the week. We have added EFA, iShares MSCI EAFE Index ETF and IEV, iShares MSCI Europe 350 to our Watch List for the week. The move lower for the broader EAFE index has been a result of Europe’s weakness and uncertainty. This could accelerate if Spain has to ask for help in the form of a bailout package. That would send the index lower. Definitely something to watch in the short term.

Friday was the infamous “Black Friday”, the biggest shopping day of the year. If what I heard from the gatherings I attended to watch rivalry week in college football were any indication of what was spent, retail should have a great holiday season. Unlike last year at these same events where some people went shopping “to check out the sales”, this year they “went shopping” and spent money! We start the week with “Cyber Monday” which is the online retailers equivalent or answer to “Black Friday”. Amazon will be the story to watch along with Ebay. Expectations are ramping up in the sector and the trend has accelerated to the upside. XRT, SPDR S&P Retail Index ETF was up on Friday while other sectors were lower. This is definitely a sector to watch in the month of December. The consumer is alive and well for now.

November comes to an end and that means more economic data. We will start with the ISM manufacturing data on Wednesday and the jobs report on Friday. The data will be closely watched to confirm the economy is improving as many have suggested and speculated over the last four weeks. The jobless claims have steadily dropped in November, will this show up in the jobs report on Friday? If so, good news for the markets. Housing and jobs have been the two remaining elements to show little to no improvement. If they can give some sign of hope it could be the catalyst for a holiday rally into year end.

Watch for the S&P 500 index to clear the 1200 hurdle of resistance this week. It could be an indication of things to come, good or bad. There is plenty of data and worry for investors to deal with this week. As usual it promises to be fun for all as we start the final month of 2010.


Disclosure: no positions