Rally Goes On; So Does Consumer Trend

Stocks rallied further late-morning on word that President Obama may be willing to compromise on extending the Bush tax cuts for everyone, but have since come off their highs.

Extension of the tax cuts, along with the nonfarm payroll report, were the two major X factors for stocks this week. Traders continue to note that a print over 100,000 for nonfarm payrolls (60,000 is the consensus) will be a further boost to stocks.

More color on retail. Most retail stock traders told me they see little change in overall consumer trends:

1) higher-end stronger

2) accesssories better than general merchandise

3) lower-end general merchandise choppy

The consumer is showing up for events like back to school and pulls back during lulls.

Inflation: cotton/freight cost inflation has yet to impact monthly results.

Most analysts are still looking for holiday same store sales growth of roughly 2.5 to 3 percent.

One worry: Christmas on a Saturday creates one less day before the end of December to shop...and the day after Christmas being on a Sunday likely means less traffic than last year, when the day after was on a Saturday. Got that?

Holiday sales: Aspirational items like handbags, boots, watches, perfume, jewelry do well (think Nordstom and Saks ), but the lower end Target , JCPenney and Kohls not seeing a lift.

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