Thursday, December 2, 2010

Rally: Day 2

Markets rallied for the second day in a row today with the Dow up 106 points, NASDAQ and S&P both up over 1%.  The continued rally was a surprising number in November same store retail numbers.  This showed us that the consumer was out and shopping more than expected, as I previously guessed in earlier posts such as "Playing the Consumer This Holiday Season".

The day began with some disappointing news on increase in unemployment benefit applications which again shows the reality of the jobs situation, as I described in yesterday's post.

However, great news on the housing front.  Pending home sales role 10.4% last month and real estate corp, Toll Brothers (TOL) returned to profitability for the first time since early 2007.

This is huge news for the housing sector which has just been a downer debby of a sector for a while now. Finally, we get some good news and Toll Bros, who was hit pretty hard in the beginning of the housing fall, finally returned to profitability.

European Crisis Update:
We like to keep readers up to date on the latest events that are occurring overseas, as they will have an impact on the US markets. 

Today's update is S&P's announcement that they may be cutting Greece's debt rating sometime over the next three months.  Greece's current rating is a "BB+" which is really not all that good.  S&P says they have seen little progress with Greece's handling of their debt since their mini crisis back in March and April of this year.  This is right within my estimates that I outlined in yesterday's post in terms of what could happen to Europe.  I am reiterating to buy put options on: iShares MSCI Ireland Index (EIRL), iShares MSCI Spain Index (EWP), iShares MSCI Italy Index (EWI) which were recommended last Saturday.

As far as the American economy is concerned stick with the recommendations from the past few weeks that I have been giving you, stick with strong retail stocks: Best Buy (BBY), Nordstrom (JWN), WalMart (WMT), and Amazon (AMZN).  Best Buy (BBY) reports earnings on December 14 so watch for those earnings to be quite good.

Disclosure: Long BBY

Disclaimer: Invest Chief is not held accountable to any loses sustained by stocks recommended. It is always important to do your own research of the stock before you invest. These trades and ideas are the opinions of the crew of Invest Chief. Invest Chief receives absolutely no compensation from companies that are recommended. We are a private organization, dedicated to promoting financial well being and prosperity.

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