Good morning. Although there were some minor distractions throughout the day such as Meredith Whitney talking trash about the consumer and the UofM's Confidence index tanking, it appears that the dollar once again drove the action in the stock market on Friday. In case you've been busy with other things such as waxing your skis for the upcoming season, the dollar has been leading the stock market around by the nose for some time now. The relationship is simple; a falling dollar causes stocks to rise and vice versa.

While much of the focus lately has been on fears that an improving economy or the Fed raising interest rates might cause the dollar to rally and trigger a mass unwinding of what Dr. Nouriel Roubini calls the "mother of all carry trades," the other side of this coin should also be explored. And with the U.S. Dollar looking like it might be looking to test the 2008 lows on a chart basis, the question that begs to be answered is: Just how low can the dollar go? And then correspondingly, how high might stock prices rise if the greenback continues its losing ways?

A quick rundown of the macro picture isn't exactly encouraging for dollar bulls. We've got the Administration printing money at a rate never before seen and a congress that has been talking about sending the printing presses into overdrive with another stimulus package. We've got the Fed pledging to keep interest rates low for an "extended period." We've got an economy that is likely to experience what is termed a "jobless recovery." We've got the potential for a generational change in consumer attitudes that will likely be a big drag on the recovery. We've got a bunch of countries talking about moving away from the dollar as the world's reserve currency. And we've got other economies around the world perking up nicely. All of which don't exactly bode well for the future of the dollar.

So if my rather simplistic mind can get this right, it would appear that the dollar carry trade is now the tail that is wagging the dog. Thus, as long as the dollar keeps going down, the stock market can continue to head higher, right? And therefore, as owners of stocks, it sounds like we should be rooting for more bad news about the economy, more government debt, more job losses, and more willy-nilly spending in Washington. Okay, I'll admit it; sometimes this business makes no sense at all.

Obviously the current game of a falling dollar leading to higher stock prices will end at some point. After all, if the economy remains weak, earnings will eventually be impacted. And let's fact it; earnings are what REALLY makes this game go. But since the current earnings season is winding down, if you are watching the action of the stock market on a daily basis, you'd best have a quote of the greenback (or some derivation thereof such as the dollar basket ETF - UUP) up on the screen.

So, with the dollar diving hard on Friday, it is little wonder that stocks managed to end up with green screens. And while we hate to be spoilsports, we need to point out that there continues to be a fairly substantial line in the sand on the charts of the S&P and NASDAQ. So, maybe if we can get some additional bad news, which, of course, would cause the dollar to fall (at least that is logical) and stocks to rise, the bulls might be able to push through that important resistance at 1100. Don't you just love this game?

Turning to this morning, Retail Sales for the month of October came in at +1.4%, which was above the consensus reading for +0.9%. However, the September totals were revised lower to -2.3% from -1.5%. Then when you strip out Autos, sales totals were less robust at +0.2% vs. expectations for +0.4%. And when you strip out autos and gasoline, sales came in at +0.3% vs. +0.3%.

Next up, the Empire Manufacturing Index (designed to indicate manufacturing activity in the New York region) was reported well below consensus expectations at 23.51 vs. 30.00 and below October's reading of 34.57.

Running through the rest of the pre-game indicators, foreign markets are higher across the board on better than expected data out of Japan. Crude futures are higher with the latest quote showing oil trading up by $0.72 to $77.07. On the interest rate front, we've got the yield on the 10-yr trading at 3.36%, while the yield on the 3-month T-Bill is currently at 0.06%. Finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a higher open. The Dow futures are currently ahead by about 60 points; the S&P's are up by about 8 points, while the NASDAQ looks to be about 12 points above fair value at the moment.

Wall Street Research Summary

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Long positions in stocks mentioned: GS, JWN, CVLT

* Report includes items that make comparisons to the consensus estimate questionable

Don't let success go to your head or defeat into your heart, and until next time, "may the bulls be with you!"