Friday, November 25, 2016

Here’s a Black Friday play as retail stocks take a different turn

Critical information for the U.S. trading day

Getty Images
This year’s Black Friday buying is in full swing in Culver City, Calif.
Did you avoid politics-fueled family feuds at Thanksgiving? Your next mission, should you choose to accept it, is sidestepping this Black Friday’s notoriously aggressive shoppers.
You could instead take the “Buy Nothing Day” route — or just find yourself a trade that capitalizes on today’s nationwide spending spree.
Our chart of the day, from Bespoke Investment Group, aims to provide exactly that trade. It shows that retailers XRT, +0.49% typically outperform the S&P in the second half of the year — at least, until Thanksgiving comes around (the red dot on the chart below).

The retail group now tends to give up some of that ground as the year comes to a close, Bespoke’s analysts write.
They highlight the irony of it all: “While the holidays are the time of year where retailers make most of their money, it has historically been a time of year where investors in retail stocks underperform.”
Bespoke Investment Group
Retailing stocks typically underperform after Thanksgiving (red dot).
But this time could be different. No, really. Looking at the chart, the retail group’s relative performance this year hasn’t exactly followed the typical pattern, say Bespoke’s chart-slingers.
They suggest this is the key question: “Will the typical pattern hold, or will the big surge in consumer sentiment in the post-election period turn the tide?”
Our call of the day argues that it’s time for some caution, as the S&P 500 actually hasn’t executed a proper breakout. Not that stock futures are paying any heed, as they point to a higher open for today’s shortened session.
Key market gauges
Futures for the Dow YMZ6, +0.27%  , S&P ESZ6, +0.20% and Nasdaq-100NQZ6, +0.21%  are signaling a step up during this trading day, which ends at 1 p.m. Eastern. The Dow DJIA, +0.31%  , S&P SPX, +0.08% and Nasdaq CompositeCOMP, -0.11%  are on track for weekly gains of more than 1% in this holiday-shortened — yet record-setting — week.
Oil CLF7, -1.54%  , gold GCZ6, -0.01% and the dollar index DXY, -0.44%  are all lower. See the Market Snapshot column for the latest action.
The call
Despite all the hoopla, the S&P 500 has achieved only a very minor break to new highs, writes technical analyst Mark Arbeter of Arbeter Investments.
“I wouldn’t even call it a breakout yet, as I like to see the prior high exceeded by 1% for two consecutive days,” he says.
The S&P scored its first record close in three months on Monday, then notched fresh highs on Tuesday and Wednesday. But that has left it only 0.7% above its mid-August peak.
Arbeter said he hasn’t turned bearish — he still sees the S&P hitting 2,300 to 2,500 by mid-2017. But he is “throwing a tiny bit of caution around.”
“We could very well see a shallow pullback of a couple percent, potentially back to the 50-day moving average in the 2,150 area,” he says. “The chest pounding and back slapping by the bulls is getting to be a bit much once again.”
The buzz
An $18K Cartier watch from Wal-Mart on Black Friday? Yes, the retail kingWMT, +0.27%  is trying to attract wealthy shoppers.
Tisn’t the season for first-person shooter games? Slower sales growth is expected for the videogame industry GAMR, +1.04% — even taking into account virtual-reality gear, mobile apps and other digital products.
There has been buzz about copper HGZ6, +1.84%  — that metal with a Ph.D. — soaring to a 17-month high. Meanwhile, silver SIZ6, +0.94%  resembles a high-school dropout who ended up in jail, as it falls into a bear market.
On the political front, some Trump allies don’t want Mitt Romney as secretary of state, and Brexiteer and Trump fan Nigel Farage dismissed a report that said he plans to move to the U.S.
The quote
Everett Collection
They’re baaack.
Netflix NFLX, +0.25%  could have another hit on its hands with its “Gilmore Girls” revival that arrived today, as fans feel it’s a dream come true.
One worried enthusiast provides our quote of the day:
The economy
Ahead of the bell, an early look at U.S. trade in October showed a larger-than-expected increase in the trade deficit.
A report on the services sector is due shortly after the open.
The stat
A 61% drop — That is the year-over-year plunge in sales of nontraded business development companies, a much-criticized investment product. The figure comes courtesy of an InvestmentNews report.
This is good news, says the Abnormal Returns blog — presumably because critics like Josh “The Reformed Broker” Brown have blasted nontraded BDCs as unnecessary products that largely just provide high commissions to brokers.
Random reads
Florence Henderson, “The Brady Bunch” mom, has died at age 82, inspiring tributes:
This bystander dressed only in his underwear helped police arrest a runaway suspect.
If you’re shopping today, ponder the thinking behind slow checkout lanes for older folks.
It’s Rivalry Week, and Michigan-OSU is being called college football’s “biggest game of the year.”
The Corona founder didn’t actually make everyone in his hometown a millionaire.
A VC’s tip: Stay close to professions that create things, avoid derivative fields like finance.
Aussie YouTube stars set a Guinness World Record at a Swiss dam:
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