Record Black Friday Splurge But Data From China Tempers Stock Market Bullishness

To gain an edge, this is what you need to know today.

Record Black Friday

Please click here for a chart of SPDR S&P 500 ETF Trust SPY which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• The chart shows that the stock market is levitating right under the mini resistance zone.
• If the stock market breaks above the mini resistance zone, the next target is the resistance zone shown on the chart.
• The consensus among permabulls is that in December the stock market will rocket to the resistance zone shown on the chart.
• In The Arora Report analysis, there is a reasonable probability that permabulls will be right, but it will depend upon the new data that is ahead.
• Prudent investors should consider being neither permabulls nor permabears but depending on the data.
• Supporting permabulls’ case is that consumers splurged on Black Friday. According to Adobe Analytics, consumers spent a record $9.8B online on Black Friday. This is 7.5% higher than last year.
• Overall, Black Friday sales rose 2.5% year-over-year according to Mastercard.
• How are consumers paying for the splurge? In addition to maxing out their credit cards, consumers are extensively using buy now pay later.
• Foot traffic in retail stores rose by 2.1% year-over-year.
• Various reports estimate foot traffic in stores rising by 2% - 5% year-over-year.
• The expectations are for Cyber Monday to generate about $12B of sales online. This estimate is over 5% higher compared to last year.
• Investors are rushing to buy stocks of Affirm Holdings Inc AFRM and Shopify Inc SHOP.  Affirm is a large provider of buy now pay later services.  Shopify software runs a large number of e-commerce websites.
• Investor enthusiasm over the consumer borrowing more and spending record amounts is being tempered in the early trade by data from China.
• October Industrial Profits in China fell by 7.8% year-to-date.  Initially, U.S. stock futures were lower on the data from China, but then buying came in on enthusiasm about consumers’ splurge.
• Liquidity in the stock market is low.
• As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents.   Please scroll down to see the protection band.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc AAPL, Amazon.com, Inc. AMZN, Microsoft Corp MSFT, NVIDIA Corp NVDA, and Tesla Inc TSLA.

In the early trade, money flows are negative in Alphabet Inc Class C GOOG and Meta Platforms Inc META.

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust and Invesco QQQ Trust Series 1 QQQ.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade. Smart money is 🔒 in the early trade. To see the locked content, please click here to start a free trial.

Gold

Gold is above the psychologically important level of $2000.

The momo crowd is buying gold in the early trade. Smart money is 🔒 in the early trade.

For longer-term, please see gold and silver ratings.

The most popular ETF for gold is SPDR Gold Trust GLD. The most popular ETF for silver is iShares Silver Trust SLV. 

Oil

There appear to be several disagreements among OPEC+ members. This is pushing oil lower.

The momo crowd is selling oil in the early trade. Smart money is 🔒 in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF USO.

Bitcoin

Bitcoin BTC/USD is range bound.

Markets

Our very, very short-term early stock market indicator is 🔒. Whichever way the market starts moving, Wall Street machines will easily push it farther that way as liquidity is low. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding 🔒 in cash or Treasury bills or allocated to short-term tactical trades; and short to medium-term hedges of 🔒, and short term hedges of 🔒. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of seven year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the 2008 financial crash, the start of a mega bull market in 2009, the COVID crash, the post-COVID bull market, and the 2022 bear market.  Please click here to sign up for a free forever Generate Wealth Newsletter.