DON'T EXPECT A SANTA CLAUS RALLY IN THE SHORT HOLIDAY TRADING WEEK AHEAD, BUT WE'RE WELL POSITIONED FOR 2008.

12/23/07 Sunday 5:40 pm CT

By Dave Harris

With no significant economic data or corporate earnings ahead, I expect little to generate the traditional Santa Claus rally on Wall Street. But although the fundamentals of late have been mixed, they're setting us up for a good start to 2008. The consumer is holding up as personal spending rose by 1.1 percent last month and that was better than expected. Holiday sales haven't been great, but they've been ok as of this writing. Maybe the last minute shoppers will bring in a little upside surprise. Inflation will continue to be a factor in the Fed’s actions as 2008 kicks in. The year-over-year PCE was a little high last week, up by 2.2 percent and above the so-called comfort zone. But I think the Fed will still find reason to back up further rate cuts early in the year because housing won't recover anytime soon.

The electronics store Best Buy (BBY) just reported a great quarter. Meanwhile competitor Circuit City (CC) disappointed with a big loss. I wouldn't buy either of these stocks here. I would opt for Wal-Mart (WMT) for the diversification (they have an electronics division among other items).

Shoe-maker Nike (NKE) had a great quarter with profit that grew by 10 percent. Sales are super hot overseas. Next year is looking great for the company, with worldwide future orders up by 13 percent. I would buy the stock, which closed up .26 cents on Friday to $66.27.

In the week ahead we have very little in terms of economic news and corporate earnings to give the stocks any real push. Monday is a half-day of trading on Wall Street. Tuesday the market is closed for Christmas. The restaurant chain Luby's (LUB) earnings will tell nothing about the broader market, nevertheless they will report Thursday. Initial jobless claims and last month's durable goods orders will come out that day. Then Friday it's new and existing home sales from the Commerce Department.

I wish you a Merry Christmas and Happy New Year. I hope you have a great holiday with family and friends.