The American consumer is dead? Retail holiday sales are going to be awful? Unemployment, and the threat of things getting worse, is going to bring the economy to a grinding halt? Yeah, they were all things beings said recently. Funny thing though, if people really think that way, they sure aren't acting that way.

1. Black Friday's sales were better than expected, coming in 3% better than last year's black Friday according to ShopperTrak.

2, Black Friday plus the next Saturday's were up a combined 1.9% (Saturday's sales fell 0.8%, but the net combined increase for the 2 day period was still positive), again according to ShopperTrak.
E-commerce sales were up 11.8% on Friday and Saturday of last week. That may be the reason 'Cyber Monday' was actually a bit of a disappointment, though not bad.... Cyber Monday's sales were down about 0.5% compared to last year.

3. All in all, spending was actually up, yet the market rejected what that strength meant. The irony is that retail has seen worse years in better environments, and investors didn't even bat an eye. It just goes to show you that sentiment - which is horrible right now - is a major determinant when it comes to assigning value to a stock, or to an entire stock market.

My bigger point, however, is using this reality as an excuse to repeat something I've said a few times lately - fundamental only matter when people want them too. Expensive stocks weren't a problem in late 2007 when the market was euphoric. Cheap stocks aren't to be touched now though, since things are bad and going to get worse. I'm not saying it doesn't make any sense. I know precisely why it's happening. I'm just saying the irrationality isn't consistent, which is irritating to most investors who don't understand that reality.

So, here's the lesson to be learned. Fundamentals matter, sentiment matter, and charts matter. They all three matter simultaneously. We've focused mostly on charts and sentiment, as they work far better for us than fundamentals do. However, we'd never deny that a company's fundamentals are frequently reflected on their stock's chart.

As far as this year is concerned, I think even mediocre to not-too-awful retails results would have relative victory. The average consumer said he/she was cutting back a lot. So far though, we haven't seen the major spending cuts. Perhaps the consumer isn't as strapped as they said they were, which means retail stocks may be undervalued.

On a semi-related note, if markets (real estate, stocks, credit, auto, you name it) are supposed to get worse before they get better, can someone explain to me how...

-- Home construction stocks are up 11% today
-- Auto-maker stocks are up 65% for the last week and a half
-- Building materials stocks are up 19% for the last week and half
-- Insurance stocks are up 7% today

Call it a dead-cat bounce if you want (because it is), but somebody's buying something. Regardless of whether they're 'worth it' or not, if there are more buyers than sellers then the stock's going higher. I'm not going to be a martyr just to prove how certain I am that stocks are overvalued right now.

It's a case where the consumer/investor is saying one thing, but doing another. That's why charts are so important.

Caveat: I'm personally not bullish yet. I'm just making a point. I'll be bullish if we can break above last week's highs, which will get us past a lot of resistance. That may even start the next cyclical bull market... not sure yet. Bigger picture, I still think we're in a secular bear market, but that's another discussion.

Price Headley is the founder and chief analyst of BigTrends.com.