We want to address the market pullback that happened this past Friday. It was one of the worst days for the market this year and it was due to the concerns of the new Coronavirus variant. One thing to point out is that, historically, the Friday after Thanksgiving is lightly traded, which makes it’s more susceptible to big price swings up or down on any headline. In fact, the NASDAQ saw its lowest volume of the year on Black Friday, with only 3.4 billion shares being traded. That’s well below the average this year of 5.1 billion shares being traded daily, so it wasn’t surprising that the market had a big sell-off with the variant news. It’s also important to note that over the weekend market futures were positive so it’s very likely we will see buyers come in and take advantage of the pullback. Here’s the point, just like we did in March of last year when COVID caused a big correction, we are trusting our technical, fundamental, and momentum indicators as news of the new variant hit the headlines. Our indicators take the emotion out of the market and the reality is that this isn’t the first or the last variant of COVID that the market will have to deal with. There’s still a lot to like in the market with corporate earnings still very strong, rates are still historically low, and numerous parts of the economy, like manufacturing, are at highs. We’re watching everything carefully but keeping an eye on the indicators.
Even though we had a short day on Friday, it was very volatile. We closed the week with the S&P 500 sitting at a price of 4,594 which gives us a new resistance level price of 4,630 and a support level of 4,570. The 50-day moving average is currently sitting at a price of 4,527. It’s important to not make knee-jerk reactions in moments like these because even though we saw a very big day on Friday with the markets going down, we saw the 50-day moving average still push up. This is creating a base for us heading to the end of 2021 and is something to keep an eye on from a technical standpoint.
The holiday season is finally upon us and what better time is there for us to talk about retail sales. Black Friday was this past Friday and early indications show that foot traffic in stores was up 47.5%. One interesting shift according to a survey done by the National Federation is that 46% of consumers have started shopping earlier this year than usual. It also showed that 28% of consumers had completed their entire holiday shopping by early November this year. Supply chain issues could have a lot to do with that. People are scared that they won’t be able to get gifts in time for Christmas, but also Black Friday deals aren’t just Black Friday anymore. Stores have had Black Friday sales going on the entire month. We will keep an eye on this as Cyber Monday is in full swing. Happy shopping!
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