Stocks Face 2 Conflicting Factors

By "The Greek"

As stocks enter the final week of November, they face two conflicting factors which will pull on them until one is victorious in controlling market direction or is nullified. The best Black Friday on record, in terms of total sales, will now fight with reviving concerns about the fiscal cliff and also a resurfacing European financial crisis.

Whether it is a good sign or not is debatable in my opinion, since heavy Black Friday shopping simply indicates how deal dependent Americans are these days. I discussed this in my Black Friday piece. Indeed, the busy bargain season drew out historic sales figures, up 13%, to record $59.1 billion in receipts. Discounters like Wal-Mart (NYSE: WMT) continued to do better than others, as Americans sought out value. Web marketers like Amazon.com (Nasdaq: AMZN) continued to steal market share with online sales topping $1 billion for the first time ever. Amazon.com was the most visited retail website on Black Friday, with Wal-Mart second and Best Buy (NYSE: BBY) third. But a Reuters/Ipsos poll discovered that a majority of shoppers kept to their budgets. So, are they shopping more, or simply shopping smarter? If it’s the latter, which is what I am confident of, then overall seasonal sales may disappoint econo-watchers when the data is cleaned of population growth. I suspect that as this view gathers popular steam, it will weaken in its support of stocks against its stronger opponent.

Meet Your New Boss, Same as the Old Boss
All the nice talk was great, but Congress had better quickly follow its congenial accounting with some significant break-through before too long. Otherwise, the market will rapidly (like an avalanche) run right over their collapsing cooperation. Stocks are starting this day lower on just that overhanging issue, and on a revival of financial crisis fear in Europe. Over there, where a grand idea proved more difficult to follow through on in tough times, it seems the voters of Spain and Greece are rising up against roughened rules declared to put things in order. If the people won’t agree, then you have no accord and no resolution to your financial crisis. What may follow remains the complete collapse of the union.

So investors have these important issues to consider today, and as we move forward without permanent fixes to the weights against stocks, the direction should turn sour. How long Congress takes to solve its fiscal cliff crisis might just depend on how fast investors begin to express such doubt in their ability to do so. After rallying on hope and promises last week, the market representative SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA) and the PowerShares QQQ (Nasdaq: QQQ) are marking red ground ranging from 0.3% to 0.6% lower to start this week. Investors are advised here to begin revisiting hedges and counterweights against the market.

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