Get Ready to Make Some Quick Profits on This Day
We are heading toward the key Thanksgiving “Black Friday” to “Cyber Monday” retail sales period, and if all goes well, there could be some quick profits to be made in the market.
In 2011, strong retail sales on Black Friday gave a boost to the stock market, as the S&P 500 climbed nearly nine percent between November 25 and December 7, 2011.
The same could happen this year, except we still need to deal with the pending fiscal cliff.
Yet I feel that a strong showing in retail sales during the four-day key selling period beginning on Friday could help to attract some buying from Wall Street—a near-term boost, at the least, for a market that is full of uncertainties.
Let me first say that this holiday retail sales season will be critical for retailers.
Retail sales have increased for three straight years, according to the National Retail Federation (NRF), and the hope is for a fourth year of increases.
The NRF is optimistic and estimates that this holiday retail sales season will generate sales of $586.1 billion, up from $563.0 billion in 2011 (Source: “Holiday FAQ,” National Retail Federation, accessed November 19, 2012.)
There is also optimism for those shoppers who choose to shop from the comfort of their homes or convenience of their mobile devices. I know I’m in that group.
According to Adobe Systems Incorporated (NASDAQ/ADBE), online sales on Cyber Monday, the Monday following Thanksgiving, are estimated to rise 18% year-over-year to $2.0 billion. (“Adobe Predicts Online Sales Will Reach $2 Billion This Cyber Monday, Growing by 18 Percent Over 2011,” Daily Finance via Business Wire, November 19, 2012.)
Again, my sense is that a strong showing in retail sales could drive up the stock market, resulting in some quick profits, as was the case in 2011.
The month of November has been a major disappointment so far, with the key stock indices down around four percent on average, while small-caps are down over five percent.
Yet there is some hope. Let’s say retail sales are strong and Congress can resolve the fiscal cliff dilemma. If you trust historical tendencies, it may be time to buy. Investing in the six months from November to May produces the best returns for stocks versus the June to October period, according to the Stock Trader’s Almanac. Of course, bear in mind the current abundant risk, including the financial crisis in the eurozone, fears of economic stalling and the leadership change in China, and the rising tensions in Gaza.
In my view, the next several weeks, running until the end of the year, could prove critical as stocks look for support on the charts.
At this juncture, stocks need a fresh catalyst to move higher, based on my stock market analysis, and this could be a strong retail sales season.
Bottom line: should Friday’s retail sales numbers turn out to be great, then there could be an ideal situation for some quick money here either via stocks or December call options.