The Week Ahead: Treasury Secretary Henry Paulson's statement that the economy slowed materially at the end of last year, and the Feds assertion that it stands ready to cut rates substantially as necessary were two important reality checks for the markets. The direction stocks go from here may depend on this weeks PPI and CPI numbers due out on Tuesday and Wednesday respectively. With the economy on the decline the jobless claims figures on Thursday will take on increasing importance.

Stocks to Watch: Consumer electronics giant Best Buy (BBY) December same store sales rose by only 1.5% signaling a weak Christmas season. The stock has broken through long term support. Jewelry retailer Tiffany's (TIF) November/December same store sales fell 2% indicating weakness even on the high end of the economy. Financial guarantor MBIA Inc. (MBI) rebounded after announcing $1 billion in surplus notes yielding 14% to help preserve its AAA investment status but its ratings watch is still negative.

Special Note: The downside leaders in the Dow Industrials make up a list of various industries giving more confirmation of a broad economic decline. The price action has now taken the DOW below the August lows as the 12,500-13,000 level is now setting up as resistance with the March 2007 lows below 12,000 as the next area of support. As noted earlier here on November 5, 2007 the stock market appears to be headed for a 3.3 year cycle low due approximately in March. More about this cycle here in future letters.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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