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The trend remains the friend of the consumer and discretionary stocks…..

Last weekend we highlighted the trend is gas prices as a potential stimulant to consumer spending or at least the trend might be less bad in the coming months……

I guess it should not come as surprise that confidence among U.S. consumers improved this month from the lowest level in 28 years. The University of Michigan index reportedly reflected a record drop in gasoline prices that gave temporary relief to household budgets.

The average price for a gallon of gas now stands at $1.69, 60% below the peak set in July 2008. Next to Financials, Consumer Discretionary stocks are the most heavily shorted stocks in the S&P 500. Next to Energy, Consumer Discretionary stocks are trading at the lowest valuations of any S&P 500 sector. Short covering rally?

I like continue to think there is some tremendous value in the oversold Casual Dining sector – think EAT and DRI.