Daily State of the Markets 11/30: A Defensive Stand, But...

Good morning. Sometimes it is best to keep things simple in this business. So in short, while Ms. Market can and will do anything she darn well pleases (usually in order to frustrate the masses), the bottom line result of Monday's action is the bulls' defense made a stand and the bears were stopped cold (well, for the moment anyway).

With a fired-up team possessing a fresh set of downs inside the red zone, the bears looked like a shoe-in to put the ball in the end zone in the early going Monday and to effectively break the game wide open. All that was required was for the bears to push the S&P below the 1178 line. But instead, the bear attack was turned away four straight times.

In English, what I am trying to say is the bears had an opportunity to take control on Monday but failed to do so. And from a big-picture perspective, this may be the most important takeaway on the day.

If you had been watching the headlines on Sunday evening, you might have expected to see the bulls enjoy a good start to the week. First, there was the announcement that the EU/IMF had reached an agreement to provide Ireland with enough cash to keep things afloat for a few years. And then, what was perhaps more important was the fact that the numbers from the opening weekend of the holiday shopping season were surprisingly good. Store traffic was up, the average amount spent over the Black Friday weekend was up nicely, and online sales are apparently booming. Thus, with Ireland out of the way and shoppers hitting the malls with abandon, one might have expected to see stocks rise on Monday.

However, those coming into the office on Monday morning adorned in their rose-colored glasses were quickly disappointed as it became very clear, very quickly that the European debt mess wasn't going away. While the EU had stemmed the tide in Ireland, there was already talk of problems is Belgium, Portugal, and even Spain. So, when it was announced that Italy's bond auction didn't go so well and that politicians in Germany would likely challenge the Ireland bailout, the spreads began to widen once again and the fear mongers were back in business.

Within minutes of the open (as in 4), the indices were down hard and traders were eyeing last week's lows. Then when Gartner came out and reduced their forecast for PC sales just before 10:00 am, things got ugly and it looked as if the bears were ready to break on through to the other side. At this point, any technician worth their keyboard could see that if the S&P was to move much below the 1178 area (or below 10,975 on the DJIA) additional chart-based selling was likely to begin.

But somehow, some way, the bulls were able to hold the line for four straight downs on Monday. Perhaps the big goal line stand had to do with the dollar or bond yields rising here in the U.S. (signaling that there was no panicked flight to quality occurring). Or maybe, just maybe, it was the action in the much maligned banks that got the bulls fired up. In any event, our heroes in horns did manage to make an impressive defensive stop and wil live to play another day.

Turning to this morning... Hold on a minute fans, there appears to have been a flag thrown in the corner of the end zone on the last play and it looks like the bull defense will be called for pass interference in the end zone. So, with sovereign debt contagion looking like it is starting to roll and declines in Asia based on policy tightening fears, it appears that the bears are looking at a new set of downs and will start on the one-foot line.

On the economic front... We don't have any economic data to review before the bell, but we will get the Case-Shiller Home Price Index at 9:00, the Chicago Purchasing Managers Index at 9:45, and the Consumer Confidence Index at 10:00 am eastern.

Finally, just for tun, try smiling at everyone you meet today...

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...

* Major Foreign Markets:
o Australia: -0.64%
o Shanghai: -1.61%
o Hong Kong: -0.68%
o Japan: -1.87%
o France: -0.95%
o Germany: -0.21%
o London: -0.35%

* Crude Oil Futures: - $0.81 to $84.92
* Gold: + $5.50 to $1373.00
* Dollar: higher against the Yen, Euro and Pound
* 10-Year Bond Yield: Currently trading lower at 2.762%

* Stocks Futures Ahead of Open in U.S. (relative to fair value):
o S&P 500: -11.26
o Dow Jones Industrial Average: -94
o NASDAQ Composite: -22.20

Wall Street Research Summary

Upgrades:

* Integrated Silicon (Nasdaq: ISSI) - AURIGA

* Kinross Gold (NYSE: KGC) - Credit Suisse

* Seagate (NYSE: STX) - Estimates and target increased at Deutsche Bank

* Western Digital (NYSE: WDC) - Estimates and target increased at Deutsche Bank

* Research In Motion (Nasdaq: RIMM) - Jefferies

* Altera (Nasdaq: ALTR) - Target increased at RBC Capital

* Las Vegas Sands (NYSE: LVS) - Estimates increased at UBS

* MGM Resorts (NYSE: MGM) - Estimates increased at UBS

* Wynn Resorts (Nasdaq: WYNN) - Estimates increased at UBS

Downgrades:

* Chesapeake Energy (NYSE: CHK) - Argus Research

* Shanda Interactive (Nasdaq: SNDA) - AURIGA

* Emerson (NYSE: EMR) - Bernstein

* eBay (Nasdaq: EBAY) - Piper Jaffray

Long positions in stocks mentioned: none

For more "top stock" portfolios and research, visit TopStockPortfolios.com

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