Cyber Monday

Today is one of the biggest on-line shopping day of the year.

Everyone goes to their offices today and takes advantage of bosses who are on extended weekends, using the T1 access at work to pick up all those little items they missed in the weekend buying frenzy. You would think this weekend was a big disappointment according to the WSJ and the spin I'm hearing from Clueless Narrators Bashing Consumers who are fixating on the item that per person spending is down 3.5%.

As I said in member chat, this is a ridiculous statistic with overall spending up 8% as it's like the bears are saying: "The bad news is we're being attacked by an army that's 8% larger than we thought but the good news is they're moving 3.5% slower." All that means is that, if the bears start running now, they just might get away and that's what the retail bears are trying to do with this spin campaign. The bears are also making much of the discounting but it's the same issue. Perhaps people are spending 3.5% less this weekend because their cars are full as 96.5% of their money is buying more this year!

I'm far from declaring a retail victory but the stats we're seeing so far are very much in-line with the heads up we got from the PSW Retail Survey which indicates a major victory for Apple this season. Game stores (GME) and anyone who makes stuff for the Wii should also do well and even CC may mount a bit of a comeback as consumer electronics are clearly hot, hot, hot. The high-end, by contrast was not, not, not and it will be interesting to see if the luxury buyers are paring back or if they are just a little slow out of the gate. Based on the 1,000-point drop in the Dow leading into this weekend, it's really no surprise that the Nordstrom's crowd may have taken the weekend off to check their lists twice before going to town this year.

A luxury shopper is more prone to reallocate their spending, as most items they are buying are very discretionary, than a low-end buyer who NEEDS a talking Dora or a web-kin and MUST buy one by Christmas so a sale will bring them running to the stores. Luxury retailers may have been lulled into a false sense of security by summer buying patterns and were not aggressive enough out of the box this weekend. Barron's has been bashing COH but that is one of the high-end standouts we've been seeing so let's make them our high-end retail play with the May $37.50s at $3.70, we can sell $40 calls against them when they get to about $1 but there is no hurry as we have 2 earnings reports ahead of us.

Also, speaking of Apple, we're going to grab a round of AAPL $180s, currently $5.35 today to offset a run out of our Applefly range. Generally we should be looking for about 1/3 of whatever we have committed on our butterfly plays. We can also take out existing callers rather than buying new calls and add back the lower leg on a downturn but I won't be around today so buying more calls is easier for me as the money we make if Apple goes back to $165 outweighs my potential loss if I don't get an Apple breakout over $175 on the new calls. Of course we'll roll the AppleFly if it keeps going up, but this is a good initial move.

While I'm pleased we are back in our target range I'm still maintaining a cautious posture until we get a clear break-out. We'll re-examine the Big Chart tomorrow but Happy Trading has posted some excellent views on the Nasdaq and S&P, which are going to have our attention for today:

Look for the S&P to be led by GOOG, GS and the energy sector today. We should watch BSC as a possible dark horse – if they are forgiven and get back over $100 then surely the financials are getting back on track. I still love BSC at this price and can't think of any reason not to buy the Jan '10 $100s for $22.50 when you can sell Dec $105s for $2 but I'd rather scale in and wait for a pop than sell short early.

We're still looking for that Nasdaq leadership and it's going to be a must if we are to have a healthy rally. As usual, it isn't smart for the Nasdaq to head out without its SOX so we'll keep an eye on the semis for signs of a turn but it's hard to imagine things can get any worse for this beleaguered sector. I wanted to buy some IGWs to play a bounce but the price of those call options is pretty insane, which may indicate a lot of people are betting on a semi-recovery.

Asia seemed very pleased with our retail numbers and, of course, they should be as they make the stuff! It must be wonderful to have a manufacturing base – I wouldn't know, I'm too young to remember… Things are popping over in Asia as Dubai International Capital took a "substantial" stake in Sony, shooting that stock up 4.6% this morning. The Nikkei picked up 246 points to get back over 15,000 and looked strong until they gave up 1/2 the day's gains at the close while the Hang Seng gapped up 800 points at the open and closed up 1,085 (ho hum).

China ordered $15Bn worth of Airbus jets (160) which gave an early boost to EU markets and HBC is engaging in complex but significant moves to restructure $35Bn if SIVs and move them ONTO the balance sheets while the company claims "earnings won't be materially impacted, because existing investors will continue to bear all economic risk from actual losses. We believe that HSBC's actions will set a benchmark and restore a degree of confidence to the SIV sector, while providing a specific solution to address the challenges faced by investors in Cullinan and Asscher, the two SIVs managed by HSBC," the bank said in a statement.

This is at odds with the US banks' idea of setting up an SIV superfund but will be very interesting to watch as this deal moves forward. Another deal moving forward is RTP, who now are rumored to be in play with China's Sovereign Wealth Fund offering $200Bn for the company. This rumor de jour is brought to us courtesy of the "facts, what facts?" gossip rag at Can Not Be Checking.com who are quickly getting a reputation as the BS feed of choice for hedge fund managers looking to move a stock with stories that are too ridiculous to be picked up by bloggers.

One of my main problems with this rally is that a lot of movement is based on recycled bull stories. How many times will people fall for the same thing? How many variations can there be of the theme that China has an infinite amount of money and loves to waste it by overpaying 50% OVER the price that’s already up 80% from the last BS rumor that RTP would be bought at the top of the market? They say there’s a sucker born every minute but this stock going from $240 on Aug 15th to $436 with copper actually LOWER than it was in August indicates to me that we are mass-producing suckers on a level that would make PT Barnum cry.

European stocks are also up on rumors that China will be blessing them with mountains of cash and, as soon as China spends any of the $200Bn they are waiting to deploy, expect the rumor mill to start running full blast in whatever sector they favor. I'm going to call this the Shanghai Clause Rally ™ and we'll be looking for signs of irrational exuberance based on a story we've been tracking since the summer – very old news indeed!

There are still many, many bad things out there including runaway inflation in Singapore, bad bond signals, slowing EU growth, still-weak dollar and, of course, CitiBank, who now are announcing massive lay-offs, indicating they're not expecting to bounce back anytime soon.

So let's watch our levels closely, not get too excited by a little rally until we get some strong closes and some better economic data than the crap we've been getting lately. It's still a low-volume day and I'll be traveling today but back in the chair for tomorrow's open, hopefully the runes will line up by then and we can get some capital deployed but, for now, I'm happy to be well-balanced as it's still very much up in the air.

We finally found a way to get rid of Trent Lott – threaten his payoffs! It seems serving the people isn't as important as serving his wallet as the Republican Senator from Mississippi will quit the Senate rather than fall under the rule that takes effect January 1st that will prevent Senators from becoming lobbyists within 2 years of leaving the Senate. I'm sure that contributors who have given Mr. Lott tens of millions of dollars over the years (he was just re-elected last November) are just thrilled he will throw it all away to secure a fatter paycheck for himself next year. As I often say, you get the government you pay for!