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Old 11-26-2011, 11:25 AM   Nav to Top  #1
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Money Analysis of the Black Friday Trading Day

Today's Black Friday trading day was one that I am very glad I paid attention all morning. In full disclosure, I would never be caught dead going out shopping on Black Friday. First my ass is way too old, and I prefer to minimize my contact to crazy women fighting over the same thing since they have been up since 3am. I much rather shop from my quite computer with just about as good of deals and it can be shipped for free. Not to mention I do not have to deal with crazy shopaholic females! I still have to deal with my wife at the house, but I will take that anyday.

Overall, the Black Friday trading day traded poorly losing nearly a full percentage point from its highs to closing lows. In the pre-market we watched the Black Friday trading day start down nearly a percent on emotions from Europe. The CNBC started to talk about Black Friday and how stores seemed to be doing really well. Online purchases on this Black Friday trading day were up 20% over last year. CEO's from Best Buy, Macy's and other big retail names came on CNBC and said they like what they are seeing. Many stores saw their 2010 Black Friday trading day sales matched by noon. This repetitive positive news started to trump the horrible bond issuances in Europe. Shortly after the market opened, the DOW was trading with 90 point gains. All in all, it was determined that consumers in the US are spending pretty freely at the moment. This backs our thesis that the US economy has always been doing better than the economic data over the summer showed. Now we are getting good economic data coming in and Europe fears are more than trumping the US positive news.

Black Friday Trading Day - Technicals

Today's Black Friday trading day was very ugly as an early rally was greated with no support even with very solid retail sales numbers and projections. I feel most of the big money is scared to be long going into the weekend. European news is by far trumping any fundmental aspect of what the economic data is telling us. Investors are terrified of anther financial crisis with an epicenter in Europe. Auctions in all countries have been horrific recently making the cost to finance this debt much more expensive. Now with this negative view of the daily chart, there is a positive. The Oscillators and RSI both point into an oversold state with the 7 days of closing lower. This Black Friday drop adds to that making it more likely that we will get a bounce next week. Now the question of it being a bottom and we get some reassuring news out of Europe; or it is a dead bounce and Europe is getting worse; is unknown. Personally I am in the camp that Europe will not fail and markets will start to trade on fundamentals again sooner than later after this Black Friday trading day.

Black Friday Trading Day - Fundamentals

The fundamentals of the Black Friday trading day were much better as we heard over and over from CEO's today as well as the majority of the S&P 500 third quarter conference calls. If we did not have all of the global government red tape reducing the efficiencies of the corporate world, the DOW would be at 16,000 right now. Now yes that is aggressive and yes we do have a bunch of debt issues to work out in the developed world, but I think light bulbs will start to go off around the end of next year when hopefully we see a Commander in Chief in the US that understands business. Now on this Black Friday trading day, we also heard from JP Morgan Chase lowering their end of year target on the S&P 500 to 1350. Hmmmm, haven't we heard that target before? I thinkk that has been my target since April of this year, while calling the volatility (not to as severe of a degree in full disclosure. :)). The analyst on CNBC mentioned exactly what I have been iterating for months. The US economy is better than analysts thought. Consumers are spending more and using debt since they have been frugal for a few years. They are ready to buy something for themselves. Gasoline prices have stayed in the yellow range giving a few extra dollars to consumers. The analyst said that the 1350 target is still aggressive but feels once Europe has some resolution, the market will go on a tear.

Even if Europe has issues, some companies are extremely undervalued because their products are going to be bought no matter what. I personally know I have already spent a couple grand at the Apple store for Christmas presents. I have said that Apple at $350 is worth a trade. Better pin action off Apple are those semiconductor suppliers to Apple. Skyworks solutions, Cirrus Logic are two cheap names that will have big time growth. Google is now at $563 a share, this is dirt cheap in my opinion and I will add to my position at $550. The Google of China, Baidu, is trading at a discount now as well. I am pretty sure China will search online regardless of the European outcome. Even Amazon is now at $182 a share on the Black Friday trading day. $175 is an entry point. It was these names that took us up to the highs just a few weeks ago when we touched 12k on the DOW again. I feel these names will need to turn around and they should given their growth and earning forecasts!

Some other hidden gems to play for the Santa Rally given the expectations that this 20% greater holiday season will continue are Gamestop, Limited (Victoria Secret), and Soda Stream International. However, you position yourself this Black Friday Trading day, I am still pretty confident we will end the year strong. There are so many cheap stocks in the market today and after listening to the CEOs, analysts and researchers on the Black Friday trading day, I am confident we will have a bounce next week.


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