Market Recon Monday

Good Morning,
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Cyber Monday.
                        Today, (as if you didn’t know) is known as Cyber Monday. The catalyst for this moniker was that plenty of folks (since the invention of the internet) went back to work on the Monday after Thanksgiving only to continue shopping on-line after kicking off their holiday season on Black Friday. These cute nicknames may persist, but consumer behavior has clearly continued to evolve. Surveys are starting to show that internet based shopping grew on Black Friday by more than 20% year over year, while actual foot traffic through brick and mortar retailers retreated an approximate 1%. In addition, less actual money may have been spent, as on-line (especially mobile) shopping seems to be more target specific, lending itself less to peripheral, or impulse purchasing. Remember, today’s 15 to 24 year olds are comfortable shopping this way. These kids also grew up in hard times. They don’t spend thoughtlessly.
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This Week.
                       Today may provide little in the way of earnings, or “red star” macro-economic events, but make no mistake, the week ahead is heavy in data.  Not only will the next four days pack together a Q3 GDP revision, the PCE Price Index, ISM manufacturing, the Beige Book, and at least seven Fed speakers from a domestic point of view, but there will be high-end external threats as well. Wednesday brings the OPEC circus to town, as well as Chinese PMI numbers, German Retail Sales, and European inflation data. Then next Sunday, Italians will vote in their constitutional referendum. OPEC (likely to disappoint) rumors, and polls (Don’t trust the polls) out of Italy will slap Crude prices, and currency exchange values around throughout the week. there could also be a safe-haven effect here.
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Sell The News?
                         We’ve already been buying the rumor. Where are these potential road blocks? What is the news?
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1) The OPEC meeting that will either fail completely or produce an agreement with so many holes in it as to be useless?
2) That Italian referendum that will either strengthen the Italian central government (and the Euro), or produce even more uncertainty?
3) The ECB policy meeting on 8 December when Pres. Mario Draghi either announces an extension to the ECB’s QE program or makes sure markets understand that they are going to have to?…. Then if that extension looks and smells like a tapering.
4) The FOMC policy meeting on 14 December when folks realize that more than one rate hike (more like a tightening cycle) is being priced in?
5) Donald Trump’s presidential inauguration on 20 January, when folks realize that his proposed policies may actually take a while to implement?
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Trader Focus.
                          Don’t get me wrong. There’s still plenty of reason for market optimism going forward, but those policies, such as lower corporate tax rates, and repatriated money are not right around the corner. On every position initiated you already have both a target price, and a panic point, right? (Trading discipline 101) Stick to your intent. What is immediate, in a broad sense is the investor sentiment that has brought us here. The US share of planet earth’s market cap is now at a 10 year high. Put protection (as to the SPY) is at a six month low. According to surveys I’ve seen, the percentage of individual investors describing themselves as bullish has more than doubled from less than 25% to a rough 50% just since the US election. The “America First” trade has undeniably been a rousing success. Danger lurks? Danger always lurks. Simply put, most of you suddenly have something to protect, but you have not yet protected it. There is money to take off the table, and a series of news events with the potential to rattle some cages.
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Publication Note: Sarge’s MARKET RECON will be moving to TheStreet as of this Thursday…. December 1st.
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Macro
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10:30 – Dallas Fed Manufacturing Index (Nov): Expecting 1.7, Oct -1.5. This item will not impact your day as a trader. There is, however… something interesting going on here. We look for the “headline” General Activity Index to print in positive territory today. The last time that Dallas actually hit the tape in a state of expansion was way back in December of 2014. To put it bluntly…. this series is trying to end a 22 month losing streak. On top of that, NY, Philly, Richmond, and KC have all already printed in expansion this month. The last time all five of these “major” Fed regional manufacturing data-points all printed positive together was one month earlier… in November 2014. (The Empire State was negative at the headline in December that year.)  Hopefully, conditions in Dallas are already as bad as they can possibly get thanks to the rebound in Crude prices since last year. We’ll see today.
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Sarge’s Cash Levels
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SPX: 2224, 2216, 2205, 2194, 2187
RUT: 1355, 1349, 1340, 1333, 1327
 
Monday’s Earnings Highlight
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After the Close: THO (1.23)