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Morning everyone! Hope you all had a great Thanksgiving weekend! Getting right to it today, the dollar fell against higher-yielding currencies after the United Arab Emirates’ central bank said it “stands behind” the country’s lenders, easing concern that state-owned Dubai World would default on its debt. Whether you believe this or not – the markets are not as bad as they were last week. Clearly member and I had a GREAT DAY on Friday with the markets selling off big! Let’s see if we can get some more profits locked in before the New Year! For now, here is what we are looking at on the S&P 500 intra-day.

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Americans may have had a few days off for the Thanksgiving holiday, but that doesn’t mean it was an uneventful week around the world. The big news from Thursday came out of Dubai, one of seven semi-independent emirates that make up the United Arab Emirates (UAE) federation. Dubai has been the poster child for excess development, funded by oil revenues and inflated real estate values. It seems the emirate is suffering from an all too familiar overindulgence: too much debt associated with real estate development. Dubai World, a state run fund, asked creditors if it could delay interest payment for six months on $60 billion. News of the potential debt default sent global markets sharply lower Friday, with Asian indices dropping nearly 6% and the Dow opening over 200 points lower. By the end of the session however, most of the reaction had been muted and while stocks in the U.S. closed lower, Europe finished higher by 1%. There can be no doubt that Dubai over did it. Dredging ocean floors to build palm tree-shaped islands, indoor ski resorts, and the tallest building in the world are the very definition of excess...

Seems like gold is on a non-stop rally of late. You have to think that at some point this roller-coster will end for gold – at least short term. Anyhow, here’s a great chart showing how high it has gone off of the breakout.

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I read an interesting report from the U.S. American Farm Bureau on the average cost of an American family's thanksgiving dinner.  The group's national survey stated that the average cost in 2009 for a family of ten for thanksgiving dinner will be $42.91.  That's down 4%, or $1.70, from 2008. The survey is based on a basket (no pun intended) of traditional thanksgiving dinner items including turkey, vegetables, pie, and rolls.  Apparently, lower fuel and transportation prices, combined with a little deflation in certain food item prices such as stuffing mix and sweet potatoes, will help Americans save some cash with this year's Thanksgiving feast.

There is an expectation building in the market that I just can't support – and it has everything to do with the American consumer. Retail stocks are trading at elevated multiples on expectations that the consumer is healthier then economic data suggests. But don't be fooled, these stocks are expensive and the last thing you want to do going into the New Year is buy an overpriced stock - especially when you should be bargain hunting. American consumers will begin to show their true colors when they make an appearance at their favorite mall or retail outlet this Black Friday - the official kick-off to the holiday shopping season. The Friday after Thanksgiving marks the day when many retailers can count on high store traffic as consumers hit shopping malls and web sites around the country. But it can also be a rather dark day for consumers who find themselves racing through isle after isle to get the goods, crammed elbow to elbow while they wait in the cashier's line, and sit in traffic with the rest of the county. While this may indeed be a Black Friday for retailers and consumers, I'm not expecting great results from the overall holiday shopping season. But don't tell that to the market, as it seems to think boon times are ahead for the retail sector. The stock market is pricing in a strong holiday shopping season according to the current price level of the S&P Retail Index (Chicago Options: ^RLX). The index is trading just 1.8% below the 52-week high it hit last Monday, and at levels not seen since September of 2008. And since the 2009 March lows, the index has outperformed the broader S&P 500 by 15%. For an industry that has experienced the negative impact of this recession first hand, it seems surprising that investors have flocked to retailers. Certainly the retail companies that have survived the downturn thus far are likely to remain in business through this economic cycle. But the dismal financial performance of many retailers makes it difficult to justify the recent run up in their share prices. And the recent rise of retail stocks tells me the market has priced in more than we should expect out of this year's holiday sales.

Often renewable energy products are a non-profitable segment of a larger company, or are owned by a small company that has yet to achieve profitability. In these cases, I often pass on the investment, but if I like the company I'll continue to watch for signs that it has broken out of the development stage.  Timing the investment properly can mean the difference between making, or loosing, a lot of money. This brings me to the topic of today's issue. A reader wrote in about an exciting company that just reported its first profitable quarter.  However, when I looked closer, the company's operation is actually funded by a subsidiary in an entirely different business.  This is a case where it really pays to do your homework: investors who jumped into this stock at its recent high are now down 50% in a period of weeks. That's not to say the stock won't go higher – it very well may.  But like I said, timing is everything, and this company makes for a good example of how to do your homework.  Since the company is interesting and may be a future pick, I'll share with you what I found...

On Thursday I stated that job creation will be one catalyst that will bring renewable energy infrastructure back into the spotlight in 2010.  This job creation is going to come from innovative, small-companies just like it has in the past – and that means small-cap stocks like Chinese wind turbine manufacturer A-Power Energy Generation Systems (Nasdaq: APWR).  I featured this company in yesterday's article.

Don't be fooled by this company's name, renewable energy is a global industry and even small foreign companies like A-Power are creating jobs for Americans.  A-Power's new plant in the U.S will employ over 1,000 workers, not to mention those who will be hired to engineer and build the factory, and those who will eventually install and service turbines on U.S. soil.

With the official rate of unemployment at 10.2% and the broader U-6 rate at 17.5%, President Obama is focused on real job creation going into 2010.  But the old rules from the last three decades of a consumer driven economy don't apply now – we are in an economy of slow growth that will only recover when value is actually created, not just consumed.

And several industries that have been reliable job creators – the auto, financial, and residential construction industries to name just a few – are unlikely to grow at a rate that will absorb the hundreds of thousands of unemployed...

I had mentioned previously that the markets would likely pull back this week in preparation for expiration today. In pre-market trading that’s exactly what they are doing! The /ES is down big time over night and headed for more losses. On the daily chart you can see that the next major support isn’t until the Green area.  Clearly it’s going to be another wonderful day for members and I with our shorts.

 

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 Today I'm going to tell you about the opportunity in small-cap companies that produce power – and specifically one Chinese wind turbine manufacturer that has seen its stock soar 182% already this year.   I know that there is a huge opportunity here for investors who want to establish a position in a company that is growing market share in this exciting industry.

In fact, I've recently put together a special report on three companies that will benefit from a renewed focus on alternative energy including wind, solar, and landfill methane.  You can read my Special Report: Alternative Energy Investing: 3 Top Stocks Set for Profits when you sign up for a no risk trial to SmallCapInvestor PRO. 

Renewable energy infrastructure is coming back into the spotlight 2010 for a few important reasons:

1) Job creation that the economy desperately needs

2) Reduction of pollution required to combat global warming

3) Need for independent, home grown sources of energy

All of these will require a range of energy producing solutions.   Tomorrow I'll write about job creation – today it's all about wind power.

Well, like I said last week – the markets are short term over-bought and due for a minor correction. Note the chart below. Clearly it’s a great day for Members and I as our shorts are picking up in speed.

 

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