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The trend to watch on this short trading week

The average price per gallon of gas dropped to $2.81 cents according to a report from AAA this morning. That's a drop of yet another eight cents over just the last week. The average price for a gallon of gas is down $0.47or 14% since 2013.

AAA expects 46.3 million Americans to travel more than 50 miles this Thanksgiving. 90% of those will be driving.
AAA expects 46.3 million Americans to travel more than 50 miles this Thanksgiving. 90% of those will be driving.

As you know I'm not a huge believer in the idea that lower gas prices stimulate spending in a huge way but this stuff does start to add up. AAA expects 46 million Americans to travel 50 miles or more for Thanksgiving and 90% of them are driving. Both road and air traffic will be at levels not seen since 2007. The experience of flying may have gotten a little less pleasant from a crowding and comfort perspective but fares are only up 1%.

Whether you're buying a new outfit for dinner at grandma's or stopping at Applebee's on the way, there are a million different ways the holidays lead to more spending and travel related expenses. It's bullish to have more Americans on the road with a little extra cash in their pockets.

Which brings us directly to holiday spending. Gallup is out this morning saying they expect holiday spending to be up about 3%. This is slightly lower than the National Retail Federation's 4.1% growth estimate but still good enough, especially compared to a lame 2013.

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As for stocks, and yes it always comes down to stocks, the market is starting to price in a strong Christmas. Last week saw huge breakouts in Target (TGT), Best Buy (BBY) and Staples (SPLS) - which is our online tell. The SPDR S&P Retail ETF (XRT) is still lagging for 2014 but it's catching up to the market in a hurry. We're late on the trade but I wouldn't fire against those stocks for the rest of the year.

The bottom line is that the stage is set for a big Christmas for retailers. The only reason I'm not pounding the table on spending growing more than 5% is that the stores have already started discounting. It's an unpopular view but we're living in a boom. Only after the economy turns lower will we be able to appreciate just how good things are. Ho Ho Ho.

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