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Black Friday and Cyber Monday

What is Black Friday?


According to History.com, in the early 1960s, the Philadelphia police complained about the motorists and pedestrians clogging the streets as they moved toward the Army-Navy football game and looking for deals to post-Thanksgiving, coined the day as Black Friday. The term signals the start of the Christmas shopping season. Black also refers to retail stores moving from the red or red ink denoting losses to the black or black ink for profits when accounting occurred by hand.


Why is Black Friday so popular?


Millions of shoppers tend to do serious shopping on Black Friday. It is one of the pivotal shopping days of the year, falling between November 23 and November 29. Although it is not an official federal holiday, many employees take off work and wait in long lines at ridiculous hours to enter retail stores to get the deals.


A shift toward online shopping


The Covid-19 pandemic that began in 2020 changed shopping. Because of the lockdowns, consumers turned to shopping online. The preference for online shopping exploded and became the dominant form of shopping. COVID-19 all but ended in-store shopping during Thanksgiving during the shutdown as most retailers closed for the day.


What is Cyber Monday?


The term describes the popularity of online sales on the Monday after Thanksgiving. It is the online counterpart to Black Friday, which tends to involve brick-and-mortar retail stores. Recently, Cyber Monday has become as popular as Black Friday due to the popularity of smartphones and the internet. Cyber Monday is famous for its low prices on tech-related products such as laptops, gaming consoles, software games, TVs, electronics, cell phones, cameras, etc.


Black Friday and Cyber Monday shopping and spending statistics


After two years of inflation, many consumers look forward to Thanksgiving week for promotions to help with savings and discounts.


It was a big weekend for retailers last year (2022). Black Friday and Cyber Monday 2022 broke spending records. While supply chain bottlenecks were not as bad as the year before, inflation remains influential on prices and consumption. Nonetheless, consumers spent $9.12 billion on Black Friday and $11.3 billion on Cyber Monday.


According to the ICSC Thanksgiving Weekend Intentions survey, consumers can expect to spend upwards of $130B during the upcoming holiday shopping weekend. It is a four percent increase from last year’s spending expectations.


Despite inflation concerns again this year, a Deloitte survey also suggests consumers plan to spend an average of $567 during Black Friday and Cyber Monday. If this occurs, shoppers will spend 13.4% more than last year’s average of $500. Nearly eighty-four percent of shoppers surveyed feel confident with their spending budgets from this September and plan to spend the same or more.


The National Retail Federation (NRF) predicts that 132 million Americans plan to shop this season. Sales are expected to be between $957.3 billion and $966.6 billion this year, an increase of 3% to 4% over November and December sales in 2022.

Consumer Spending, Confidence, and the U.S. Economy


While consumers anticipate inflation and rising prices will impact them this year, shoppers remain optimistic about the upcoming holiday shopping season. They also remain resilient in their spending habits and plan to utilize savvy shopping strategies to account for the current economic climate.

For example, seventy percent of shoppers plan to use promotions to stock up on everyday products. Another seventy percent plan to research prices before buying to ensure the best deals. Around 50 percent plan to use social media and apps more than in previous years for the best deals.


Black Friday and Cyber Monday are the start of the critical retail spending period of the year. Many retailers, including e-commerce, rely heavily on the sales generated during this period. The outcome will influence the yearly profitability of many retailers.


While Black Friday and Cyber Monday are separate shopping events. The lines separating the two are increasingly difficult to tell due to the popularity of online shopping and the shift toward technology-related products. As the digital landscape changed, e-commerce retailers adjusted to consumer trends and needs. More retailers and e-commerce continue to roll out Black Friday deals in late October to early November, pushing up their Cyber Monday sales earlier each year.


Whether consumers turn up to shop on Black Friday or Cyber Monday can impact the sales and revenues of brick-and-mortar retailers and e-commerce companies. Since consumer spending is 70% of the U.S. GDP, the sales and revenues reported during the Black Friday and Cyber Monday sales can offer early clues to the health and sentiments of consumers heading into Christmas. Like last year, inflationary pressures and consumer confidence will weigh on the minds of consumers and can influence consumer spending and retail sales growth.


S&P Retail Index (RLX) and SPDR S&P Retail ETF (XRT)


We recommend investors monitor the S&P Retail Index (RLX – 2,685.07) and the SPDR S&P Retail ETF (XRT – 63.43) as they are proxies for the retail sector, comprising some of the largest retailers. As of 11/22/23, XRT is one of the largest retail sector ETFs, with a market cap of $317.15 million.


It has been a challenging year for XRT as it fell 19.16 points or 25.57% from the 2/2/23 high (74.94), rebounding from a low of 55.77 (6/1/23). Technical damages have occurred in many retail companies. These retail companies will need a great holiday season in the crucial Black Friday/Cyber Monday to Christmas period to break even for the year.


The S&P Retail Index (RLX – 2,685.07) continues to consolidate its 2023 gains. The SPDR S&P Retail ETF (XRT – 63.43) remains in a technical base via a triangle pattern.


Both will need to break out above respective resistances to sustain intermediate-term rallies.


RLX must clear above pivotal resistance at 3,674-3,750 to confirm a breakout. A breakout signals a recovery toward the next resistance at 3,988.5-4,038 (Apr 2021 and Feb/Mar 2022 highs) and above 4,221-4,222.5 (Jul 2021 highs), 4,276 (Jan 2022 highs), and 4,521.91 (11/19/21 all-time high). Initial support rises to 3,570-3,582 (bottom of 11/14/23 gap-up and 11/16/23 low) and below 3,450-3,462 (11/2/23 gap-up, 10/12/23 high, and 50-day ma), and 3,266-3,288 (10/6/23 low and 200-day ma), and 3,142.55 (10/26/23 reaction low).


XRT also nears crucial initial resistance at 64-64.5 (Apr and Nov 2023 highs). A breakout confirms the Sept 2022 triangle and signals a recovery toward secondary resistance at 65.5-67.78 (Feb 2022 lows, late-May, Sept, Nov, and Dec 2022, and Jul 2023 highs), 71.70 (38.2% retracement from Nov 2021-Sept 2022 decline), and 73-75/76.77-77.10 (Aug 2022/Feb 2023 highs and Apr 2022 and 50% retracement). Initial support rises to 61.75-62.38 (Oct 2023 highs and 50-day ma) and below 60-61 (11/14/23 gap-up and 50-day ma), 57-58.5 (Sept 2022 uptrend, Dec 2022, Mar and Oct/Nov 2023 lows), 55.77 (Jun 2023 lows), and 54.23 (Sept 2022 reaction lows).


In summary, a healthy consumer, denoted by robust consumer spending, favorable retail sector performances, lower inflation, and falling interest rates, can prevent a recession from occurring next year.


Can this favorable development also hint at the resumption of the structural bull?


On the other hand, weak consumer spending, poor retail sector performances, higher inflation, and rising interest rates can also lead to a recession next year.


Can this averse condition warn of a structural bear or longer-term trading range environment?


Happy Thanksgiving and Happy Shopping!


Source: Chart courtesy of StockCharts.com

Source: Chart courtesy of StockCharts.com

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