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It was a record-breaking week on Wall Street, as the

Dow industrials

skipped to three consecutive closing highs. Once again,

RealMoney's

bloggers were all over the market action, and we'd like to share the best of their commentary this week with readers of the

TheStreet.com

. These posts best capture the intent of these blogs, which is to provide intelligent discussion on the issues each writer sees as most pressing that day.

Let's take a look at

Jim Cramer

on why Wal-Mart is not a tell on the U.S. economy,

Rev Shark

on the dangers of economic justifications for investing,

Cody Willard

on his playbook going into 2007,

Steve Smith

on why Wal-Mart won't be the death of the drug-store chains, and

TheStreet Recommends

Tony Crescenzi

on surprising strength in housing-related employment.

Click here for information on

RealMoney.com

, where you can see all the blogs -- and reader's comments -- in real time.

Cramer's Blog: Wal-Mart as Interest-Rate Weathervane

Originally published on 10/5/2006 at 8:32 a.m.

Wal-Mart

(WMT) - Get Walmart Inc. Report

is trading in its greeters' clothes. It is scaling up its apparel. It's trying to be more cool with its presentation.

And it doesn't matter. It's not working, at least not yet. You can tell that the other retail chains have all figured out that Wal-Mart, formerly unbeatable, simply isn't attractive enough to shop at. The other stores have also found ways to cut costs, maybe not as low as Wal-Mart but within reason, and enough that you can avoid Wal-Mart if you have any money at all.

In the last few weeks I have been to Macy's,

Target

(TGT) - Get Target Corporation Report

and

Kohl's

(KSS) - Get Kohl's Corporation (KSS) Report

in a bunch of locations east and west and I have to tell you that they are not only

not

like Wal-Mart, they are places that make you feel rich without being rich.

J.C. Penney's

(JCP) - Get J. C. Penney Company, Inc. Report

no different. You feel poor when you shop at Wal-Mart, and that's not why Americans want when they go shopping.

I know that people will say that Wal-Mart is the U.S. economy. I come back and say that Wal-Mart is the carcass everyone's feeding on. It is a false barometer. But, the one good thing is that Alan Greenspan -- who probably never shopped there -- used it as a proxy for the economy. If Ben Bernanke follows suit, Wal-Mart makes a great case to cut rates here, even as we know it is a case of a store that is faltering badly and getting kicked in the rear by its rivals.

At the time of publication, Cramer had no positions in stocks mentioned.

Rev Shark's Blog: The Economy's Not the Stock Market

Originally published on 10/6/2006 at 2:09 p.m.

I'm hearing a lot of discussion lately about how the buoyant stock market may be a function of better economic conditions than many were contemplating. The thinking is that the collapse in housing has been overstated, inflation is under control and if the economy slows at all, it will do so softly and gently.

I'm certainly not an economist and have no idea where things are headed, but I'm not so sure that economists are either. As Harry Truman once said, "Give me a one-handed economist! All my economists say, "on the one hand ... on the other."

He was probably overstating the situation a bit, but the practitioners of the dismal science aren't known for their great accuracy in predicting the future. You can always find logical and quite compelling arguments for both sides of the argument.

My point is that it's tough enough to predict the market, but it is even harder to predict what the economy will do and then predict how that will influence the stock market. The stock market is only loosely correlated with the economy over the longer term and not at all in the short term. Even if you can predict that the economy will be good, you still have to figure out how that will move the market.

One of the factors that makes this process even more difficult is that the stock market is a discounting mechanism that attempts to properly price in what might occur in the future. The stock market isn't as concerned about what the economy is doing right now as it is about where it will be three to six months from now.

Be careful with using economic arguments to justify stock market investments. They are two very different things that act quite differently.

Cody Willard's Blog: Reviewing the Playbook

Originally published on 10/5/2006 at 12:15 p.m.

Most people who read my blog regularly know that I went mostly to cash and

Microsoft

(MSFT) - Get Microsoft Corporation (MSFT) Report

back on

May 10. I had

entered the year being aggressively long, and I have been

mostly patient in the months since May.

Shifting into the lower gear of being a patient, cautious investor has been quite a shock to my mindset. It reversed nearly four years of being a rather vocal unrepentant bull. I've channeled a lot of energy and thought into trying to remove the emotions around that change and to keep myself as objective as possible.

One primary reason for my shift into a lower gear was fear that the economy would cool from both a blowoff top in commodities and a downturn in housing. I can check both of those events off in my playbook now.

As commodities did blow their tops off and as housing has turned south, I

expected the market to tank, with the more volatile and higher-beta tech sector to lead any downside that might roll through the stock markets. That box was checked until that sweet intermediate-term bottom in July that I mostly missed.

Jim Cramer's post today about not succumbing to the ol' buy-the-dip saying hit a chord with me. I was talking to James Altucher about my playbook into year-end and into 2007. I explained that I expect another downturn in the markets -- especially in some of my favorite names -- between now and year-end. After all, housing's downturn has just started, the semi inventories are still causing some serious blowups, like the one at

Marvell

(MRVL) - Get Marvell Technology Group Ltd. Report

, and most commodities are still pretty much in free-fall, and that's likely to cause more

rolling dislocations at some point.

I'd expect the impact of the commodity collapse to help corporate profit margins to continue expanding. As housing gets weaker, the

Fed

just might cut rates. Such a cut, along with record cash balances and the new Vista/dual-core PC upgrade leveraging broadband ubiquity, would surely go a long way toward catalyzing a major tech spending boom in the enterprise world. And my "

echo bubble" just might kick in big time as the calendar pages of 2007 and 2008 are flipped.

So I explained to James how I'm starting to put money to work gently, but that I want one big downturn before I'll really start setting myself up for such a tech boom. But James reminded me of how many bulls who sell "too early" spend their time waiting for that "next opportunity." He's got a point -- am I being

too

patient?

Further complicating my setup is that it doesn't make much sense for me -- as a hedge fund manager who rode the big rally at the beginning of the year and went mostly to cash and Softee before the summer crash -- to get all aggressive. With the huge bet I made in Microsoft common stock and options when the stock was $5 lower than it is right now, it really doesn't make much sense for me to get all aggressive before year-end. In fact, that Microsoft position has spiked so far so fast, I need to trim it yet again, though it'll still be by far my biggest position.

Meanwhile, we're into the fourth quarter of 2006. And the

Nasdaq

and Softee have certainly started discounting some more boom times a'coming as I'm waiting patiently for either a downturn or the end of the year to get more aggressive.

Assuming my theories about a potential tech bubble are right, what are the odds that the timing of that trade setup will work out so well that I'll get that big dip before the boom? The markets rarely work out according to our playbooks, and I have to wonder if I'm going to get that big opportunity to load up. I might not.

So what does the right approach boil down to? Just as Cramer preaches in his column, I buy the names I want and look to buy a little more if they come in. I've got my playbook, but like Peyton, I want to be able to call audibles and tweak the plays as we move down the field.

At the time of publication, the firm in which Willard is a partner was net long Microsoft, although positions can change at any time and without notice.

Steven Smith's Blog: In a Stupor Over Wal-Mart's Drug Plan

Originally published on 10/5/2006 at 3:01 p.m.

News that

Wal-Mart

(WMT) - Get Walmart Inc. Report

will accelerate its rollout of low-cost generic drugs is whacking shares of

Walgreen

(WAG)

and

CVS

(CVS) - Get CVS Health Corporation Report

, both of which are down 5% today. This leaves people like me, who thought the selloff two weeks ago following Wal-Mart's announcement of its drug initiative represented a buying opportunity in Walgreen and CVS, in an embarrassing stupor.

Well, the bull put spread in Walgreen I described in

this video

and established for the

Option Alert

model portfolio has been stopped out and put to bed for an 80 cent loss; not too bad for being totally wrong and having a position that offered $1.50 maximum profit if the stock merely stabilized. But alas, I was wrong and maybe should have looked at these as "

broken stocks" and just considered selling calls.

Maybe I'm still a little groggy, but I still believe this selling is an overreaction and represents a buying opportunity in Walgreen and CVS. Again, despite the acceleration of Wal-Mart's rollout, it is still confined to a limited number of locations and only covers a limited number of drugs. And although WAG and CVS get some 65% of top-line revenues from prescription drugs, fatter margins and some 50% of profits come from over-the-counter or front-end sales.

Also, as Wal-Mart finds increasing resistance to entering urban areas, the premise of using lower-priced generics to drive store traffic really shouldn't pose too great a threat to CVS, Walgreen or even

Rite-Aid

(RAD) - Get Rite Aid Corporation Report

, which rely on their convenience to consumers for shopping for day-to-day staples without taking a long drive or negotiating a 50,000-square-foot big box.

This time, instead of selling a put spread, I'm going with a variation of the calendar spread strategy described in this morning's

opening post . The position I'm eyeballing in Walgreen: Sell the October $45 calls and buy the January $47.50 calls for a net debit of just 50 cents. The fact that I'm looking to sell a call with a lower strike should raise some red flags, but this position actually starts as delta neutral and would become more bullish as time moves forward. The danger is if WAG shares rebound above $47 in the next two weeks.

My rationale for assuming this short-term risk is that this stock is now indeed a bit broken and will need some time to repair itself, so the gains in the share price will be limited over the near-term. This will allow the position to benefit from the accelerated time decay of October options. It also allows flexibility to make adjustments, whether that be rolling up and selling a higher strike or, once October expires, selling some November calls to further reduce the risk/cost of the position.

Let's call this "take two" of my attempt at being bullish on Walgreen. Just don't call me too early in the morning.

Tony Crescenzi's Blog: Housing Jobs Held Up

Originally published on 10/6/2006 at 9:44 a.m.

Numerous details within the jobs report intrigue. For starters,housing-related jobs have not yet fallen. This is evidenced in the data onconstruction jobs, which rose 8k following gains of 23k and 5k in theprevious two months. The increase in construction jobs has much to do withthe strength in the nonresidential sector.

In fact, in September in one keycategory the losses that occurred in the residential sector were completelyoffset by gains in the nonresidential sector. Specifically, the residentialspecialty trade sector lost 17k jobs while the nonresidential specialtytrade sector gained 17k jobs.

Other areas of housing-related resilience are more difficult to understand, so many will be skeptical. For example, the number of jobs held bycredit intermediaries (a figure that includes mortgage bankers) rose 6k. Inaddition, real estate jobs (real estate brokers, for example) gained 400workers.

One of the better explanations for the resilience of residential housingjobs is the notion that the government is not capturing the weakness becausemany of the businesses that serve the residential construction sector are notlikely to be part of the payroll survey--the local plumber, for example. Ifthis is the case, weakness in the housing sector will be manifested in otherdata such as spending-related data, and will eventually be captured in thegovernment's benchmark revisions a year from now.

As for this year's benchmark revision, it was substantial. The governmentsaid today that there were 810k more jobs in the period ended March 2006than previously estimated. The revision helps to explain some of theresilience in the economy and the data now fit better with the personalincome data, which have been very strong.

The data also lend more weight tothe ADP survey on employment, which had seemed to overestimate the jobstally early in the year. The ADP captured jobs that the government is onlynow counting.

The 4.6% jobless rate will play well on Main Street. This, combined withthe recent decline in gasoline prices, could help to sustain some of thespending momentum apparent in September. This will go a long way towardpreventing any meaningful retrenchment in the factory sector. The joblessrate matched its lowest level since June 2001.

The Fed can't easily consider a rate cut with these data, so it isappropriate for the bond market to weaken. This is likely to continuethroughout October, which is not such a bad thing for the stock market,except in the short-run. I view these data as supporting a correction atmost, not a reversal of recent trends. Only if the data strengthen enoughto revive rate hike fears would the mood shift more materially.

David Morrow is editor-in-chief of TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback;

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