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Big Week For Wal-Mart, Abercrombie & Fitch


Retailer earnings in spotlight.

As it turns out, my hunch about that vote over at Yahoo (YHOO) was on the money and the board didn't nearly get the vote of confidence someone (I won't say the company was aware of the mix up) wanted the public to believe. Instead the vote, which serves as a grading system for the board of directors, went from B+ to a D-, which usually means expulsion is the next step.

In the meantime, as the week went on the overall stock market enjoyed the exact inverse of Yahoo as the week shifted from potential disaster (a close under 11,400 would have been a clear sell signal) to significant success. The crazy thing about the market last week was that nothing changed, really. The housing market is still in the gutter, the economy is still shaky, wars are being fought, gas prices are still very high in a historic context and the bears still have the spotlight on Wall Street.

On the topic of oil, I continue to say it's stocks pushing around crude rather than oil going down and sending stocks higher. Just watch the tape minute to minute.

Last Friday, when earnings from Fannie Mae (FNM) hit the tape equity futures dipped and crude oil, already off $2.50, inched higher to being off only $1.50, proving my point. If there's a correlation between Fannie and crude oil it would be that weakness in the former would eventually bode ill for the latter.

Be that as it may, investors really have to grapple with the notion that the stock market is on the verge of leaving the station. I'm not talking about some great long term trek but a move that could be quite profitable. The one thing that has been consistent in the market for a long time is the sharp directional shifts. So-called "V" shaped reversals are commonplace on the upside and downside.

The longer term downtrend is still in place, which makes last week's bounce so intriguing: There could be a big time move higher that doesn't violate the overall direction of the market.

The S&P 500 just edged past its 50-day moving average and sees nominal resistance points up to 1,380. This would put the index at the long term trend line and right above its current 200-day moving average.

Georgia (Not) On Our Minds

If I'm the government of Georgia I have to wonder about the my position vis-à-vis Russia, because for all the talk of compassion from the rest of the world it's clear, in my opinion, that the only time geopolitical risks matter is if there is oil at stake. Just think: You're a small, breakaway nation at war with one of the largest and most seasoned war machines on the planet and you look up to see the Dow is up 300 points, gold was in the midst of moving down 1.7% and silver 6.0%.

Talk about being alone in the world. I wonder if the fabled Doomsday Clock actually moved further away from midnight.

I'm joking about the clock, but this is no joking matter. I'm worried that Russia, which wants to become aggressive in Cuba, has begun saber-rattling and acts like it's prepared to nationalize its best business prospects. If they bring back Pravda (officially closed on August 22, 1991) then we know it's back to the old USSR.

I feel the main reason Russia is giving Georgia the bum's rush is because the breakaway republic has expressed desire to become part of NATO. Right now, however, none of its North Atlantic friends are going to step up to the plate and help, which will only embolden Putin & Co. Capitalistic forces have become very powerful in Russia but the old school guys still pine for the good ol' days.

For the moment the writing on the wall is clear to me: There are geopolitical events that matter and geopolitical events that are mostly curiosities. I see so much potential in Russia as an investment but the series of events over the past month can't be ignored.


This week the retail space will be in the spotlight as a number of heavy-hitters reports their earnings results. Last week same store sales were a mixed bag. Some discounters did well, but, so too, luxury names and departments stores. On the other hand, some discounters, luxury names and department stores disappointed as well.

The Retail Index was up huge on Friday, surging through the 20-day moving average on respectable volume. Technically there isn't a lot of resistance up to 400.00 and then the ultimate breakout comes with a close above 430.

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