With the annoucement from Toll Brothers (TOL)in the homebuilding sector, fundamentals in the consumer discretionary sector continue to deteriorate. The recent rally among many of the retailers was due more to a dramatic oversold condition, rather than a new uptrend.

The S&P 1250-1300 is looking more and more like the most logical point to exit the market. At this level, I would only want to be 40% invested.

Sure, the retail sector can continue to run, but I suspect as we get deeper into the month of November, weekly retail sales numbers may start to affect the sector sooner rather than later.

I am willing to hold our two retail stocks, Wal-Mart (WMT) and Best Buy (BBY) a little while longer. My main reasons for doing so are as follows:

1) When consumers begin to feel pinched, they tend to shop at discount retailers like Wal-Mart rather than full priced department stores.

2) In the case of Best Buy (BBY), they appeal to a broad spectrum of consumers wants. In this day of the me,me,me, consumer, they would rather miss a payment or two on other debts, than miss buying what they want at BBY.

As the homebuilding sector sold off, you could see the ripple effect throughout many of the industries that support the sector. Also included were many natural resource companies. Here is a list of some companies that felt the pain after todays news:

BUILDING MATERIALS (BMHC) 81.65 -9.07 -10.00%
EAGLE MATERIALS INC (EXP) 108.62 -5.61 -4.91%
DYNAMIC MATERIALS (BOOM) 22.64 -4.41 -16.30%
ST JOE CO (JOE) 64.57 -3.29 -4.85%
FLORIDA ROCK IND (FRK) 52.2 -2.94 -5.33%
SOUTHERN PERU COPPER(PCU) 54.26 -2.68 -4.71%
WHIRLPOOL CP (WHR) 78.45 -2.52 -3.11%
VULCAN MATERIALS (VMC) 64.95 -2.15 -3.20%
ETHAN ALLEN (ETH) 32.80 -1.76 -5.09%
JACOBS ENGINEERNG (JEC) 62.80 -1.75 -2.71%
POTASH CP SAS. (POT) 83.40 -1.47 -1.73%
LOWES COMPANIES (LOW) 60.50 -1.45 -2.34%
BUILDERS FIRSTSOURCE(BLDR) 17.86 -1.05 -5.55%
READY MIX INC (RMX) 13.39 -1.01 -7.01%
FURNITURE BRNDS (FBN) 17.81 -0.95 -5.06%
HOME DEPOT INC (HD) 40.57 -0.93 -2.24%

THE MARKET: 4:05 P.M. ET

DJIA: 10,539.72, down 46.51
S&P 500: 1218.59, down 4.22
NASDAQ: 2172.10, down 6.20
Russell 2000 656.23 -5.01 -0.76%
NYSE Comp 7489.72 -29.70 -0.39%
CRB Index 318.24 +0.79 +0.25%
Dollar Index 91.37 +0.08 +0.09%

30-Year T-Bond 4.759% -0.069%
10-Year T-Note 4.565% -0.074%
5-Year T-Note 4.481% -0.067%
2-Year Note 4.408% -0.042%

Energies

Crude Oil Dec 05 59.73 +0.02
Brent Crude Oil (SCZ5) Dec 05 57.80 -0.24
Gasoline Unleaded Dec 05 1.5650 +0.0027
Heating Oil (HOZ5) Dec 05 1.7755 -0.0030
Natural Gas (NGZ5) Dec 05 11.844 +0.051

Metals

Gold Dec 05 462.2 -0.1
Silver Dec 05 766.0 +3.5
Copper Dec 05 183.15 -0.65