Week In Review:

The stock market remains very nervous due to uncertainty over asset write-offs over the sub prime mortgage woes. Investors are having a hard time looking beyond the current crisis, and this makes for terrific opportunities for astute investors.

Less astute investors will be swayed by bad news, and this means they will miss out on some of the best buying opportunities I have ever witnessed in the financial sector. Many of our nations best banks now have dividend yields north of 6%.

Investors who wait for good news to appear will be buying financial stocks at prices much higher than they are today. Wall Street is bearish on the group, but we need to remember that an analysts time horizon is only 1-3 months since their biggest clients are Mutual Funds, Hedge Funds, and big institutions.

The performance of Mutual Funds and Hedge Funds are judged daily in the newspapers, and their results are posted at the end of every quarter, so institutions must own investments that are going to perform immediately. This is why their time horizon is so short, and this is why analysts have such short time horizons.

This morning, Tobias Levkovich, Citigroup's head equity strategist, said the U.S. banking sector "had taken some sharp hits due to the sub prime woes, there appears to now be a pile-on effect that seems to be overdone." he went on to say that the sector had been beaten down to a point where the valuations are now attractive.

Also this morning, insider buying continued at Wachovia (WB) as CEO Ken Thompson bought 100,000 shares at $39.19. Wachovia insiders have been very active of late.

I am sticking by my newest slogan; "Throughout our history, the track record is clear. Solutions to major problems always appear."

Year-End Rally???

I'm not sure what to call it, but yes I believe a rally is in the works. Call it year-end, Santa Claus, or whatever you want, but the sellers look close to being exhausted.

Some interesting events are taking place that are being overshadowed by the current market sell-off. First, the U.S. dollar is beginning to rally; Secondly, energy stocks are signaling that energy prices may be reaching a top.

Last week, the International Energy Agency (IEA) said that rising crude oil prices are beginning to slow demand. In addition, OPEC is now concerned that high oil prices will push the US and global economies into a recession.

Saudi Oil Minister Ali al-Naimi said he believes that speculators and not OPEC is the cause for high oil prices. This comment has been reiterated by many on Wall Street.

The latest CFTC Futures and Traders data revealed that large speculators have decreased their net long positions in crude, heating oil, and gasoline. I wouldn't be surprised to see energy traders begin to sell and lock in profits on this news. This in turn would drive energy prices down.

In its latest statistical report, the EIA inventory numbers for the week ending 11/09/07 showed alarger than expected inventory builds in crude and gasoline.

Crude Oil: Up 2.814 million barrels
Gasoline: Up 714 million barrels
Distillate: Down 1.965 million barrels

To show you that the small investor isn't alone when it comes to buying at the top, "Iranian President Mahmoud Ahmadinejad said Sunday that OPEC's members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar, which he called a "worthless piece of paper."

My best guess is the dollar has or is bottoming, and the Euro has topped. I would love to see these nations make their currency moves just as the dollar beigins a major rally, and the euro begins a major pullback. It will be fun to watch these panic moves blow up in their face.

Lower energy prices will help consumers and retailers as we get past the Thanksgiving holiday. Hopefully a sell-off in oil will happen before then, but you know as well as I do, traders will try to squeeze every drop of profit they can while consumers travel over weekend holiday.

Economic News

-October CPI rose 0.3%, the core rate (excluding food and energy) rose only 0.16%.

-October industrial production fell 0.5% as warm weather decreased demand for energy.

-The Producer Price Index rose 0.1% in October, and the core rate was unchanged.

- Jobless claims rose by 19,000 as 339,000 new claims were filed. The expectation was for 320,000.

The current Fed Funds Rate Predictions are signaling a 50/50 chance that the Fed will lower the Fed Funds Rate another .25 basis points to 4.25%.

The 3-month Treasury bill closed Friday at 3.40%, while the Federal Funds rate is at 4.5%. The Fed does not like to fight market rates, so if they don't cut in December, they will do so eventually. I betting they will cut in December.

Last week:

-Gold closed at $786.46/oz down from $834.60 last week and down from $809.30 two weeks ago.

-The Commodities CRB Index closed at 349.43, down from 354.54 last week, and after hitting a high of 359.05 on November the 7th.

-Crude Oil closed at $93.84/bbl down from $95.30 last week and $95.93 two weeks ago.

-The U.S. Dollar close at 75.86 up from 75.39 last week and 76.30 two weeks ago.

If the Dow closes below 12,500, or the S&P closes below 1400, we will raise our allocation to the stock market by another 5%.

This summer we raised our allocation to the stock market by 5% when the Dow dropped below the 13,000-12,800 mark, and the SPX fell below 1400.

In the mean time:

Our current asset allocation is as follows;

70% Equities: (Normally 95%) Aggressive
60% Equities: (Normally 80%) Moderately Aggressive
50% Equities: (Normally 60%) Moderate
30% Equities: (Normally 40%) Moderately Conservative
15% Equities: (Normally 20%) Conservative

At Dow 12, 500, or 1400, we will raise our allocation to the stock market by 5% to;

75% Equities: (Normally 95%) Aggressive
65% Equities: (Normally 80%) Moderately Aggressive
50% Equities: (Normally 60%) Moderate
30% Equities: (Normally 40%) Moderately Conservative
15% Equities: (Normally 20%) Conservative

At Dow 14,500, S&P 1575, we will reduce our allocation models by 5% to;

65% Equities: (Normally 95%) Aggressive
55% Equities: (Normally 80%) Moderately Aggressive
45% Equities: (Normally 60%) Moderate
25% Equities: (Normally 40%) Moderately Conservative
10% Equities: (Normally 20%) Conservative