Let's look at the facts.

The recession is getting worse. The ISM manufacturing index set a new 26-year low. Black Friday sales were not enough to prevent November retail sales from being horribly down. 553,000 jobs were lost last month - the biggest drop since December 1974.

Valuations are not as cheap as they could be. The Dow Jones Industrial Average ($DJI) still trades a double-digit P/E. There have previous periods where the average has traded at single-digit P/Es.

On a technical basis, the Dow has been setting lower highs and lower lows - a bearish trend. My colleague, Kevin Matras, described the chart pattern as a "sloppy descending triangle"; in other words, a formation that suggests the average could fall lower.

Hope

Yet despite nearly every reason to go lower, the major indexes have been holding up fairly well, all things considered.

The only plausible reason is that traders are hoping that the economy will recover will sooner than later.

The bullish argument is centered on a few key points.

• The government is not letting most big companies fail. American International Group (AIG) was thrown a lifeline; albeit at a big cost. Citigroup (C) was given a safety net. The automakers are getting a second chance to explain why they deserve a bailout.
• The central banks are cutting interest rates. The ECB and the Bank of England slashed rates yesterday. The Fed could take U.S. rates below 1.0%.
• New stimulus is forthcoming. President-elect Obama wants to sign a massive economic package into law as soon as he takes office. The proposal being discussed includes new infrastructure spending as well as tax cuts.
• The perception at that housing market is near a bottom. Mortgage rates recently dropped and there were rumors about the U.S. government proposing a program that would allow for 30-year mortgages at 4.5%.

I do believe that the combination of central bank intervention and a big stimulus package will help, if both are used effectively. The big question is timing. If one buys into the argument that the markets look 4-6 months ahead, then late November rebound suggests a recovery could occur in late spring.

I think such sentiment is very optimistic. This said, nobody knows what the second-half of 2009 is going to look like. Therefore, investors would be prudent to follow a more conservative strategy as opposed to taking unnecessary risks.

Zacks Elite Portfolio Updates

In keeping with the theme of following a more conservative strategy, J.M. Smuckers (SJM) was added to the Focus List this week. The company owns or licenses a wide variety of well-known brands, including Smucker's, Folgers, Crisco, Hungry Jack and Pillsbury. The fundamentals look sound and the stock was trading at a historically low valuation.

I had hoped to add a second stock this week, but nothing that I looked at really excited me or the portfolio committee. One of the worst mistakes an investor can make is to buy a stock simply because he feels like he has to. It's better to sit on the sidelines a little longer than to force a trade.

The Markets

As I said before, the Dow is setting lower highs and lower lows. Though this is a bearish pattern, the one caveat to any chart pattern is that it only holds until it doesn't. In other words, sooner or later, a new pattern will emerge.

The 12-month chart of the S&P 500 (SPX) is not showing us much new. We fell out of the trading range a few weeks ago, and then came right back into it.

There seems to be trading opportunities based on the index hitting oversold and overbought levels. However, understand that the current market environment makes timing strategies very risky. I'm merely pointing this out trading opportunity to show you what I'm seeing.

Charles Rotblut, CFA is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com.

"X54X" Free Stock Analysis: Buy? Sell? Hold?
"AQI" Free Stock Analysis: Buy? Sell? Hold?
"CCD" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Initial holiday sales are encouraging, though it is questionable whether the momentum will last or if the discounts will end up hurting profits.

The National Retail Federation estimated that shoppers spent an average of $373.57 over Thanksgiving weekend, an increase of 7.2%. Store traffic was higher as well at 172 million, versus 147 million last year.

comScore calculated that Cyber Monday sales totaled $846 million, a 15% increase over 2007. Nielsen Online said that Monday traffic to online retail web sites was 10% higher.

For both traditional and online retailers, discounts were the name of the game. Stores marked down everything from GPS devices to Jimmy Choo shoes. And many observers, including Zacks' Senior Retail Analyst Rob Plaza, believe retailers will keep discounting throughout the holiday season and beyond.

The better-than-expected performance last weekend was not enough to prevent many retailers from experiencing an overall decline in November sales, however.

The dual threat of lower margins and frugal consumers have caused brokerage analysts to cut earnings expectations on many retailers, including Amazon.com (AMZN), Men's Wearhouse (MW) and Target Corporation (TGT).

Economy Adds To Worries About Amazon

Amazon.com is perceived as being the biggest beneficiary from the increase in online sales. The company also appears to have a hit on its hands with the Kindle reader. However, the company's low price strategy has historically caused concern about its margins. And the recession is only adding another layer of fear.

Within the past 30 days, 4 of the 20 covering brokerage analysts have cut their 2008 profit projections, while 5 have cut their 2009 forecasts. The downward revisions have resulted in AMZN being a Zacks #4 Rank ("sell") stock.

Price Competition A Problem for Men's Wearhouse

Men's Wearhouse said late last month that it expects a drop in fourth-quarter same-store sales. In addition to weaker demand, the company is also struggling with falling margins on clothing as many of its competitors are cutting prices. (I saw suits on sale just about everywhere on Black Friday.)

All of the covering brokerage analysts cut their full-year forecasts following the company's revised guidance. Perhaps more notable is that 3 out of the 4 analysts also cut their fiscal 2010 profit forecasts. MW is a Zacks #5 Rank stock.

Target's Sales Were Off The Mark

Target announced this morning that November same-store sales fell 10.4%, even after accounting for "stronger" Thanksgiving weekend sales. The retail chain has been losing market share to more aggressive discounters.

Nearly all of the covering brokerage analysts have cut their current-year earnings estimates within the past few weeks. Profit forecasts for next year are lower as well. TGT is a Zacks #4 Rank stock.

There Are Some Opportunities In Retail

Not all retailers are struggling. Two that stand out are BJ's Wholesale Club Inc. (BJ) and Carter's Inc. (CRI).

BJ's Wholesale Club announced this morning that same-store sales jumped 6.2% last month, excluding gasoline. The performance was well above the company's guidance for a 2%-3% increase.

The bullish result comes just a couple of weeks after the company topped third-quarter expectations. Nearly all of the 15 covering analysts raised their fiscal 2009 profit projections in response to the earnings results, and it is possible that further upward revisions could be forthcoming. BJ is a Zacks #2 Rank ("buy") stock.

Carter's enjoyed third-quarter same-store sales growth of 6.1% at its namesake stores and 13.2% at its OshKosh stores. Orders from merchants were strong as well. CEO Michael Casey credited an average unit price of "less than $8" for helping sales.

Two of the 3 covering brokerage analysts have raised their full-year forecasts in recent weeks, and 1 of the 3 also raised his 2009 earnings estimate. CRI is a Zacks #1 Rank ("strong buy") stock.

Zacks Premium and ZacksElite subscribers can view the Zacks Industry Rank List at http://www.zacks.com/zrank/zrank_inds.php. This interactive list allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. Shown below is the Zacks Sector Rank List, which shows the trend in estimate revisions on a broader scale.

Sector Rank as of Dec 7
Sector	This Week's Zacks Rank	Last Week's Zacks Rank	FY09 Revisions Ratio	FY09 Estimates Revised Up	FY08 Estimates Revised Down	FY08 Revisions Ratio
Medical	2.52	2.57	0.65	400	616	0.80
Aerospace	2.83	2.98	0.38	20	53	0.68
Computer and Technology	2.92	2.91	0.20	219	1092	0.33
Business Services	2.94	3.00	0.21	33	156	0.59
Transportation	2.99	2.98	0.42	87	206	0.70
Consumer Discretionary	3.00	2.98	0.21	78	375	0.40
Utilities	3.05	3.01	0.21	59	279	0.44
Consumer Staples	3.09	3.10	0.18	44	251	0.34
Construction	3.10	3.21	0.09	11	121	0.19
Retail-Wholesale	3.16	3.18	0.10	70	692	0.20
Finance	3.17	3.19	0.13	174	1312	0.34
Industrial Products	3.20	3.22	0.11	30	278	0.33
Oils-Energy	3.27	3.24	0.20	179	900	0.42
Basic Materials	3.34	3.30	0.10	35	362	0.21
Auto-Tires-Trucks	3.60	3.49	0.09	9	96	0.13
Conglomerates	3.67	3.41	0.03	2	65	0.15

Charles Rotblut, CFA, is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com.

"BJI" Free Stock Analysis: Buy? Sell? Hold?
"DNC" Free Stock Analysis: Buy? Sell? Hold?
"AMZN" Free Stock Analysis: Buy? Sell? Hold?
"SUIT" Free Stock Analysis: Buy? Sell? Hold?
"CRI" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Before we begin, let's explain the contrarian stance that makes Schaeffer's so unique. When searching for a bullish pick, we like to see heavy skepticism toward an outperforming stock, as this leaves ample room for upgrades or other positive catalysts to fuel the stock higher. When searching for a bearish pick, on the other hand, contrarians are looking for significant bullish sentiment toward an underperforming stock, as we believe an excess of optimism is a sign that everyone has already bought into the stock and sideline money is virtually tapped out.

However, keep in mind that some optimism and pessimism is genuinely warranted and isn't always a contrarian indicator – like an outperforming stock with many "buy" ratings or an underperforming stock with a plethora of "sell" ratings.

The Unusually High Option Volume Screener

The filter is somewhat self-explanatory. It looks for stocks with single-day option volume in excess of their average volume over the last month. Why is this important? Simply put, this filter allows us to read how options players feel about a certain stock, and sometimes unusually heavy option activity can be the sign of an event (like earnings or merger-and-acquisition news, for instance) or, occasionally, a reversal of sentiment in the options pits.

Bearish bets build toward the builder

As mentioned above, OC caught my eye due to its unusually high put volume on Wednesday. Heading into the Thanksgiving holiday, the construction king saw more than 4,500 puts cross the tape – nearly quadrupling its average daily volume of fewer than 1,200 contracts.

After additional research, however, it seems that options traders' recent affinity for bearish bets is nothing new. During the past 10 days on the International Securities Exchange (ISE), the security has seen more than 80 times as many puts than calls bought to open. What's more, this lofty ratio ranks in the 100th annual percentile, suggesting that options players on the ISE haven't been more leery of OC at any time during the past year.

As a result of the recent influx in pessimistic positions, the stock's Schaeffer's put/call open interest ratio (SOIR) – measuring options slated to expire within 3 months – has shot higher during recent trading sessions. The ratio now rests at 0.96, which is in the 75th annual percentile. In other words, short-term options speculators have been more skeptical of the security only a quarter of the time during the past 52 weeks.

Now, I have only 2 questions: Why the recent surge in put volume? Is the pessimism warranted?

A Booyah-related boost?

Searching for a potential catalyst behind the swelling in skepticism, it seems that Owens Corning could've landed on traders' radars after a shout-out from Jim Cramer on CNBC's Mad Money program. The Baron of Booyahs recently opined that the shares of OC were oversold, but cautioned that the current market environment could push the security even lower. Should the stock continue inching into the red, Cramer said, investors should consider picking up some shares.

As a result of the recognition, the equity muscled higher right out of the gate on Monday, Nov 24. The shares of OC continued their journey up the charts throughout the rest of the week, eventually perforating double-barreled resistance from its 10-day and 20-day moving averages – a duo of trendlines the stock has closed only 2 sessions above since mid-September. Further demonstrating OC's technical strength of late, during the past 20 trading days, the security has outperformed the S&P 500 Index (SPX) by nearly 7%.

From a more historical perspective, however, the shares of OC could face a potential roadblock in the 16-to-18 region, which played the part of support in early 2008. This neighborhood could now reverse course and act as resistance for the stock.

Word on the Street

However, should the stock capitalize on its recent wave of buying pressure, continuing its voyage into the black, the shorts could get spooked. At the security's average daily trading volume, it would take almost 7 trading days for these pessimistic positions to be repurchased – providing ample fuel for a short-covering rally to exacerbate the stock's recent gains.

In addition, Zacks reports that 4 out of 7 ranking analysts deem OC a "hold" or worse. Should the shares penetrate potential resistance, a fresh round of upgrades could place additional buying pressure on the stock.

The bottom line

OC advocates should keep an eye on the stock's 10-day and 20-day trendlines. These formerly resistant moving averages pressured the shares lower in recent months, but could now play the part of support. On the flip side, investors should note the 16-to-17 region as possible resistance, as this area is home to the stock's early-2008 lows.

More importantly, however, OC followers should note the sentiment surrounding the shares. With options players, short sellers, and analysts in the bears' lair, a continuation of the security's recent uptrend could motivate these skeptics to abandon ship. An unwinding of pessimism – whether in the options arena, via a short-covering rally, or a round of upgrades – could fuel the equity even higher on the charts.

"OCF2" Free Stock Analysis: Buy? Sell? Hold?
"STP" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

The picture was relatively bright for the performance of the ten-largest exchange-traded funds in November. After the two-month market rout of September and October, even among volatile conditions, seven of the 10 largest ETFs had positive performance in November, according to Morningstar data through Nov. 26. At end of day Friday, the S&P had posted its best week since 1974, so the numbers should improve even a little more once the last day of the month is added, at least for the majority of equit yportfolios among the Top Ten.

Leading the way among equity ETFs was the iShares MSCI Emerging Markets Index (NYSE Arca: EEM), up 12.70% for the month.The Thanksgiving week was also kind to EEM, when the ETF surged 10.24%, through Wednesday the 26th. 

The best performer overall was the SPDR Gold Shares (NYSE Arca: GLD) up 14% for the month as market volatility continued to favor the long-time safe haven asset class.

EEM and GLD were the only ones among theTop Ten ETFs with double-digit performance for the month—at least, double-digit positive performance.

Amid the continued financial stock meltdown, the Financial Select Sector SPDR (NYSE Arca: XLF) was down 11.11% for the month. The situation did improve in the last week of November, however, as Citigroup's agreeing to a bailout plan by the government allowed XLF to gain 18.17% through the first three days of the week.

The only other funds among the Top Ten innegative performance territory for the month were the PowerShares QQQ (NASDAQ: QQQQ) and the iShares Russell 2000 Growth Index, down 0.66% and 1.02%, respectively. IWO, along with XLF, had large one-week gains in the Thanksgiving week. IWO surged 13.08%, only surpassed by XLF's gain of 18.17%.

Even with a healthy helping of positive performance in November, the Top Ten were still showing woeful year-to-date performance.

Here are the year-to-date numbers, through Nov. 26, as well as the rest of the performance picture for the Top Ten ETFs, which controlled more than $200 billion of the industry's $488 billion at the end of October, according to the National Stock Exchange:

Source: National Stock Exchange

In the spirit of Thanksgiving, I thought I would pull together a list of 10 ETFs I'm have earned my thanks. The list could be much longer: 20, 30 or even 50 ETFs might qualify. But these ETFs have helped shape the ETF industry of today, allowing millions of investors to build better portfolios. As a journalist, they've been fun to write about, too.

1) S&P 500 SPDR (NYSEArca: SPY): SPY was the first ETF in the United States and set the stage for everything that followed. It remains the largest and most-traded ETF in the world, delivering complete exposure to the S&P 500 for an expense ratio of just 0.0945%. What's more, it trades at super-tight spreads and hasn't paid a capital gains distribution since 1996. What more do you want?

2) PowerShares NASDAQ-100 QQQQ (NasdaqGM: QQQQ): This ETF has slipped recently from being the #2 or #3 largest ETF in the world down to the #6 slot. But QQQQ is still hugely important ETF, and played a tremendous role in the history of ETFs. Back in the 1990s, when SPY was still primarily an institutional tool, QQQQ started seeping into the broader consciousness, catching fire with the retail and trader communities. Without QQQQ, the modern ETF industry wouldn't exist.

3) Vanguard Total Market Index Fund (NYSEArca: VTI): This one is all about costs. VTI is the cheapest retail share mutual fund in the world. For 0.07% per year, you can buy exposure to all the stocks in the U.S. That's beautiful. For the record, that is 1/15^th the cost of the average mutual fund in the U.S.

4) Vanguard Emerging Markets ETF (NYSEArca: VWO): Again, this one is all about costs. VWO proves that emerging markets exposure needn't be costly. The fund charges just 0.25% in annual expenses, compared to 0.75% for the dominant iShares Emerging Market ETF (NYSEArca: EEM) and 1.62% for the average international equity mutual fund (per ICI). Saving 1.37% per year adds up quickly.

5) SPDR Gold Shares (NYSEArca: GLD): GLD marked a turning point in the ETF industry. It was the first commodity ETF listed in the U.S., and the first product ever that allowed investors to buy gold directly in a brokerage account. This lowered the cost and hassle of buying gold significantly, and brought a huge new group of investors into the ETF market; after all, you couldn't and still can't get this exposure in a mutual fund. Today, it has more gold than the People's Republic of China. Remarkable.

6) PowerShares DB Commodity Index Fund (NYSEArca: DBC): Like GLD, DBC was a ground-breaking ETF in the commodity space. As the first broad-based commodity futures ETF, DBC significantly lowered the costs of accessing commodities and helped move commodities from the fringes into mainstream asset allocations. While a lot of people have been burned by the commodities bubble, long term, I believe people will benefit from the diversification commodities offer.

7) WisdomTree Small Cap Emerging Markets ETF (NYSEArca: DGS): DGS was the first small-cap emerging markets ETF; since, at least three other funds have launched. DGS was important because it broke the mold of where index funds and ETFs could operate and where they could not. The old thinking said that index-based strategies couldn't work in illiquid corners of the market, and that active managers could outperform in these areas as well. DGS changed all that, showing that a thoughtfully structured ETF could provide low-cost access to those markets and help investor add a noncorrelated source of returns to their portfolios.

8) NETS Dow Jones Wilshire Global Total Market Index Fund (Ticker TBD): I'm including this ETF even though it has yet to launch. Why? When Northern Trust filed for this fund in 2007, it was the first public filing for a truly global equity ETF—one that held both U.S. and international stocks in a single portfolio. Since then, a number of issuers have launched funds, including the Vanguard Total World Stock ETF (NYSEArca: VT). But Northern Trust deserves the credit for breaking the mold, and helping to break down the problem of "home bias" in the investing community.

9) ProShares UltraShort S&P 500 (NYSEArca: SDS): Love them or hate them, the ProShares ETFs have reshaped the investment landscape. ProShares family of leveraged and inverse-leveraged ETFs has attracted nearly $20 billion in assets and huge amounts of trading volume over the past two years. SDS was one of the original ProShares, providing -200% exposure to the S&P 500. I fear a lot of investors misuse these funds, but at the same time, they are very well-designed and very empowering if used correctly.

10) iShares Lehman Aggregate Bond Index Fund (NYSEArca: AGG): Bonds are one of the fastest growing segments of the ETF industry, and AGG was one of the first bond ETFs to list. The fund provides broad-based exposure to the fixed-income market for just 0.24% in expenses. Its existence (and the existence of other broad-based equity ETFs) means you can create a full asset allocation portfolio using ETFs and ETFs alone.

That's 10. I could go one all day. How about the CurrencyShares Euro Trust (NYSEArca: FXE), for opening up the currency market? How about one of the alternative energy funds for completely opening up the alternative energy market, be it the PowerShares WilderHill Alternative Energy ETF (NYSEArca: PBW) or the globally oriented Market Vectors Global Alternative Energy ETF (NYSEArca: GEX). Or the Select Sector SPDR ETFs. Or the iShares MSCI EAFE ETF (NYSEArca: EFA). Or...

As an investor, ETFs allow me to create a significantly better portfolio at significantly lower costs with significantly less tax exposure than was possible five or 10 years ago.

I'll give thanks for that.

It's hard to take your eyes off of this train wreck of an economy we seem to be headed into. And the continuing wild market volatility as we head into Thanksgiving is not reassuring. Worse, the market seems to have priced in our immediate macroeconomic future, as it will do, and the picture is not pretty.

I've seen some panic in the streets, and I've seen some malaise, but never quite this combination of foreboding signs of protracted economic bleakness. Maybe I'm remembering things wrong, or maybe I'm succumbing to the forces of capitulation, but that is my sense headed into this Thanksgiving holiday.

So what do we have to be Thankful for?

Well, first let's start with Matt Hougan's witty and insightful writing. Let's give credit where credit is due. Matt has learned the economic pundit's axiom: If you keep bleating the same forecast and world view—in his case, one of doom and gloom—long enough, eventually you'll be proved a genius. So kudos to you Matt on urging on a 30% shearing of real estate prices and a sub-10,000 Dow.

And what else?

My favorite holiday. Nothing beats Thanksgiving. It's all of the family and none of the commercialism. It's a time to reflect on how fortunate we are (outrageously, it turns out, despite our declining economic prospects ... as in, how dare we complain when a good portion of the world is scrambling for food day by day). And finally—a chance to feast (a tradition built somewhere into every culture I've been exposed to) and focus on family, being together, gorging ourselves and then retiring to the sofa to watch some football, and maybe even throw a few around (this year in the snow) at halftime out in the front yard.

So happy Thanksgiving to all of the Americans, and best wishes to the rest of the world in weathering the storm we've created for you. There's plenty to be thankful for, regardless of the market.

The Six Unknowns That Are Roiling the Stock Market BusinessWeek asked stock market experts to identify the biggest unknowns facing investors. These factors will be crucial to clearing up a foggy outlook. Unfortunately, it could take months—if not years—to resolve them.

This from Smart Profits Report:

Here in the U.S., the mess continues unabated. The government had to reshape its bailout for AIG, including forking over an extra $40 billion. But despite the floundering company’s fourth consecutive negative quarterly report, the markets reacted positively to the story.

That didn’t help avert the crisis other areas, as Detroit’s automakers repeated their increasingly desperate pleas for some financial muscle and…