Note: This week's Market Outlook was covered by Optionetics.com's Chris Tyler.

Entering the week, investors will be focused on holiday sales data and whether "What happens in Dubai, stays in Dubai." For the five-day period, the SP-500 (SPY) is off a mild 0.23% but setting up a Grinch-like technical bag of coal for bulls on the weekly tea leaves.

THE WEEKLY NUTSHELL

• A "Mooving Monday" for a few bulls. Retest of highs in SP-500 as St. Louis Fed voices opinion on Fed extending mortgage back security purchases. Comments solidify low rate belief system in place, sending US Greenback back to YTD lows and reinvigorating bid in market after two day pullback. "Merger Monday Lite" reports of Hershey (HSY) considering upping its bid for Cadbury and Ciena (CIEN) buying bankrupt Nortel aid. Light volume cheer for surprisingly strong existing home sales data which puts inventory at 2.5 year low with 7 months of overhead.
• A "Turkey of a Tuesday" as a bevy of potential catalysts fails to inspire bulls or bears into action. In-line results for Hewlett (HPQ) which matches recent upward guidance results in modest profit-taking despite fresh $8.0B buyback. Backward-looking Q3 GDP drops from 3.5% to an expected / in-line 0.8% increase. S&P Case/Shiller essentially matches with -8.9% reading. Better-than-expected report on consumer confidence sparks some intraday strength as does FOMC minutes after Fed raises 2009 GDP target to -0.4% to -0.1%. Dollar nudges higher off YTD lows prompting bulls to yelp and stroke the sell button."Planes, Trains and Autos" take-off but Wednesday's market stays mostly grounded on low attendance fractional gainer. Pleasing income and spending and core PCE data. New home sales are surprisingly strong, up 6.2% vs. estimates of 0.4%. And weekly claims fall below 500K and Street views with figure of 466K, marking first slip below contraction / expanding payrolls benchmark in a year. Deere (DE) impresses bulls after conference call prompts re-evaluating mostly good overall report. Durable orders miss by wide margin but prior month's tally is boosted by similar margin and worthy of keeping bulls confident noshing on equities.
• An unexpected "Black Friday" sees investors dropping then shopping for some bargains under a cloud of raised credit market concerns. Out-of-control wheeling's and dealings of $59.0B in Dubai sends tremors into global financial markets as default possibilities and credit woes are reignited. Popular risk-averse carry trade finds commodity-based asset plays hardest hit as bulls look to unwind positions. Technical support of 1100 falls to wayside in SP-500 and VIX soars 30% from 20% to 26% at session highs as bulls gobble up protective purchases.

ON TAP THIS WEEK

Entering the week, retail sales estimates for Black Friday and the first weekend of the all-important holiday season, as well as continued trader reaction to Dubai's near $60.0B debt repayment extension request will be in the spotlight and impacting markets for better or worse.

With consumer spending accounting for more than two-thirds of the GDP but unemployment the most pressing problem for American's in three decades, analysts expectations coming into the holiday season are for a flat to very modest single digit gain over last year's sales for the period.

In a Catch-22 of sorts, slightly stronger spending could be a boon for the economy as now lean inventories could drive manufacturing, transportation and other sectors to some growth next year. However, according to ShopperTrak's scorecard, an increase of just 0.50% for this year's Black Friday following 2008's 3.0% increase and 2007's jump of 8.3% prior to the global credit crisis-seasonal good tidings for investors have begun with a disappointing bag of coal.

As for Dubai, many investors see the sovereign state's mountain of debt as a problem which can be handled by the United Arabs Emirates and not a situation with direct consequences for the United States. Related, over the weekend the UAE's central bank did set up fresh liquidity provisions for its commercial banks.

Hedge fund manager Dennis Gartman talked candidly on Friday about the developments in Dubai and sees the situation as having "legs" and "plenty of potential ramifications." Two areas putting the markets and global economy at risk would be waffling investor confidence in emerging markets and possibly US commercial real estate.

In an interview with CNBC.com, Mr. Gartman notes the fact Abu Dhabi didn't offer immediate assistance to its sister emirate, raises concerns and confusion and undermines the optimism associated with a global recovery that's still on shaky ground. Hmm, "What happens in Dubai, doesn't stay in Dubai?"

Separately and according to bond giant PIMCO's co-CEO Mohamed El-Erian, while Dubai's situation isn't likely the onset of a new crisis, it is the type of trigger to cause a correction. "This is a catalyst for repricing of markets across the board which have gone too far on pure liquidity" provided by global policymakers to fight off the credit crisis; but money which has still failed to find its way into smaller and midsized businesses and the lifeline of economies.

Traders will also have their hands full with a decent caseload of officially-sanctioned economic data, as well as a calendar of Fed speakers. Kicking the week's reports off is regional manufacturing data from the Chicago PMI. For investors willing to wait but we don't blame you if you don't; Thursday's confirmation hearing for Fed Chief Ben Bernanke followed by Friday's monthly November jobs data are viewed as two of the week's most important regularly-scheduled market movers.

On Thursday, market watchers are expecting the Fed's steadfast "extended period of low rates" message to come under scrutiny due to policymaker's more optimistic forecast which sees growth ahead for the economy. More immediate and possibly coming to Bernanke's defense, on Friday nonfarm related job losses are expected to drop to 120,000 with an estimated range of 100,000 to 150,000 viewed as being in the ballpark and supportive of current Fed policy.

Weekly Calendar of Key Reports

Monday:
Economic Chicago PMI (53.0)
Earnings Guess (GES), OmniVision (OVTI)

Tuesday:
Economic ISM (54.8), Construction (-0.4%), Pending Homes (-0.5%), Auto / Truck, FedSpeak
Earnings Beacon (BECN), Staples (SPLS), Universal Tech (UTI), Copart (CPRT), Shanda (SNDA), Shanda Games (GAME)

Wednesday:
Economic Challenger & ADP (NA, -148K), Weekly Crude, Fed Beige Book, FedSpeak
Earnings Pantry (PTRY), Aeropostale (ARO), Collective Brands (PSS), Sigma Designs (SIGM), Synopsys (SNPS)

Thursday:
Economic Weekly Claims (483K, 5.51M), Productivity (8.5%), ECI (0.4%), ISM Services (51.5), Bernanke Hearing
Earnings A-Power (APWR), Del Monte (DLM), Toll Bros. (TOL), ArcSight (ARST), Diamond Foods (DMND), Marvell (MRVL), Novell (NOVL)

Friday:
Economic Jobs Report (120K, 10.2%), Factory Orders (0.1%)
Earnings Big Lots (BIG), Sirona Dental (SIRO), Focus Media (FMCN)

TECHNICAL PICTURE

Figure 1: S&P500 (SPY) Daily Chart

According to Dennis Gartman on CNBC Friday morning, "Icarus flew too close to the sun and so did Dubai." Based on stateside investor reaction that same day, "What happens in Dubai, stays in Dubai" as bulls did manage to cut hard hitting percentage losses in half. What investors also managed to do was confirm a bearish "Fifth-Fifth" EW5 attempt that failed to clear the key 50% retracement from all-time-highs to the March lows. The price action also sets up a combined double doji high on the weekly chart.

Is the third time the charm for bears? After a historic rally and failure at the 50% level, the bears will be looking to break the 50-Day SMA successfully after two prior attempts highlighted in Figure one. Elliott's EBOT signal line is in agreement as it's positioned slightly below the institutional support line.

For the bulls and as discussed prior, a close above recent highs could prove a powerful event for bullish momentum due to a large technical air pocket in conjunction with the seasonal winds of "the best six months." For the time being though, the described pattern analysis and associated risk-to-reward favor the more cautious to bearish delta until larger corrective action makes its way into the market's charting tea leaves.

MARKET LAB

Bullish Technicals

• Breakout of daily / weekly downtrend from Sept 2008 highs DIA.
• Weekly Inverse H & S being breakout from October lows. "MM" of 117 - 123.
• FTD on day six of rally per outfits like IBD.
• November thru April strongest six months for equities historically.
• One man's bearish "Fifth-Fifth" is "still" another's uptrend.
• VIX Stretch of 15.50% intraday Friday.

Bearish Technicals

• 1930 Bear Market Rally repeat states EW Intl
• At 68%, market's run has "Come a long ways, baby." Green Shoots priced in.
• Mostly long-term overbought market conditions/weak internals.
• Q3 "Recession is over" data confirmation.
• Estimated minimum corrective support zone 99.50 - 102 testing.
• "Fifth-Fifth" SPY W5 weekly double doji confirmation stalls out at 1100 & 50% retracement, divergent oscillator and distribution.

Chris Tyler
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler's Forum

The information offered here is based upon Christopher Tyler's observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.