Good Monday to you. Hope you had an excellent Thanksgiving weekend. I completely stayed away from the shopping mania that has made Black Friday such a big Holiday tradition. Sure, I could have gotten some bargains, but I'll gladly spend a few more bucks later in an effort to preserve my sanity. To each their own. In the best interest of the Holiday spirit though, I do completely understand what makes it so much fun for so many Americans. We'll have a quick look at some of the Black Friday results below, but we've got a couple other pretty important issues to address first.
Last Tuesday, we suggested getting long Research in Motion (RIMM) for a number of good reasons. If you want to read last Tuesday's edition, go here. Since then, shares of RIMM have continued their stealth like move running as high as $12.12 on the open this morning before running into a little resistance. That represents a 23% gain in as little as four trading days. Congrats to those of you who jumped on the idea. More living proof we're serious and focused on continuing to give you real ideas you can not only profit from, but provide you with the type of returns to consistently beat the market averages on a year-over-year basis. While most of the major indexes are only up roughly 13% on the year, we've continued to provide SCN Members with ideas that have crushed the averages all year long.
Now that we're well in the money on RIMM, there's no reason to let this turn into a loss. There's a few ways you can play your winning position at this point. First, you can take the profits and have an excellent Holiday gift giving season, or you can set a trailing stop loss and let the trade continue to play out. Whatever you do, if you're going to make this a long-term investing idea, make sure at the very least you set your stop loss at your entry. This way, you have the opportunity to experience tremendous upside, while putting yourself in a no lose position. It's smart and it's savvy.
If you jumped into RIMM on our suggested entry for a short-term trade, taking profits now isn't a bad idea. We did mention there's a strong possibility of the stock moving as high as $16 per share before running into resistance, but that remains to be seen at this point, and the stock has made a tremendous move in a very short amount of time. Letting it come back a little may prove another excellent entry. I've included a daily chart of RIMM here for your review. You can see the stock has quickly gotten away from the 3X3 DMA, so there's a decent possibility RIMM may consolidate for the rest of the year in an effort to build a base for another sharp move higher. This could shake some of that overly exuberant volume from Friday and provide us with even another great entry. However, if your strategy is long-term in thinking, which we'll never criticize, then hanging on to shares of RIMM and letting it ride could prove very rewarding down the road.
The Bigger Picture - NASDAQ Hits Target. Black Friday Concerns.
The indexes reached our short-term target pretty much right on the nose Friday with the NASDAQ Composite continuing its relief rally efforts to close out Thanksgiving week. The Comp. closed at 2966 Friday, only eight points ahead of our estimated short-term target of 2958. Not a bad move all things considered. The NASDAQ has retraced a perfect 3/8 of the complete selloff that started back on the 21st of September. If you got long some index call options for a quick swing trade somewhere between the 16th and last Wednesday, you may want to close them out and lock in your profits now. What the markets decide to do from here won't be as easy to predict as last week's rally was.
Now that we've gotten some relief, this is where the bulls' conviction is going to get tested. We mentioned previously we'd like to see a fair amount of volatility around current levels to suggest a fairly decent foundation is being put into place. Right now, the indexes have gotten their relief, however, this is where a lot of short-term profit taking will take place, in addition to the bears coming back in and testing the markets' strength. If we could get a decent pullback and then a break back above today's high, that would suggest a potential move to 3049 on the NASDAQ Composite. Another window of opportunity to the long side. If we simply continue higher from here without any volatility, that will actually be cause for concern. If we end up back testing the November lows, there's a good chance we're going even lower.
Bottom line is... we'd like to see some volatility around current levels without taking out the November low before breaking above today's high. Make sense? If the indexes simply continue higher from where they are now, that's probably only going to end up providing the bears with an even better entry to test the markets' strength, so tread lightly around current levels now. If anything, I'd pick up some index put options on the QQQs, SPYs or DIAs and use today's high as my backstop. It's up to you.
As for Black Friday numbers, I've provided some data below compliments of BIGInsight, Shop.org, National Retail Federation and ShopperTrak. I've bolded the two data points that I think are at least worth remembering in the event we start to see retail numbers from the fourth quarter look weak.
$423: Average amount consumers plan to spend on gifts, up from $398 last year.
137 million: Number of Americans who shopped last weekend or today. Amount equals 44% of the total US population.
$59 billion: Retail Sales over the weekend.
13%: Increase in total weekend sales over last year, down from 16% growth seen in 2011.
About 40%: Spending done on-line vs. in stores, an all-time high.
3.5%: Increase in number of store visits.
-1.8%: Drop in revenues at physical stores on Friday. It's the first decrease since 2008.
20.7%: Increase in on-line sales on Black Friday
While online shopping will likely continue to trend higher year-over-year, and the average dollar amount consumers plan to spend on gifts should also increase along with normal inflation, the two big numbers that could potentially be cause for concern are total weekend sales being lower than last year, as well the drop in revenue at physical stores on Friday. Yes, there's more online shopping than ever before, however, that's been the case year-over-year for quite some time now, so why all of a sudden do we get the first decrease in physical store sales from Friday since 2008? That's not so good.
As always, time will tell. However, one thing's for sure... good market, bad market, it doesn't matter to us, we're always going to be hunting for the next big winning idea. See you tomorrow.