Black Friday Sales Lower than 2008

Black Friday Sales Lower than 2008

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)



Good day! After a disappointing end to the week on Friday, the U.S. index futures sold off throughout most of the premarket trade into Monday morning. The sharpest selling took place coming out of the 3:00 am ET correction period. The selling continued until just after 6:00 am ET, but began to round off after the first drop into 3:30 am on the 5 minute time frame. A change in momentum such as that is often a precursor of a trend change. This began at 8:00 am ET when the downtrend channel broke higher.

Buying increased into 8:30 am ET, but then fell back ahead of the open. At 9:45 ET, however, the Chicago PMI (purchasing managers index) was released. Businesses in the Chicago region expanded in November with an index reading of 56.1, compared to 54.2 in October. Any reading over 50 indicates expansion. Monday's data release revealed the highest reading since August 2008 for the index. It had been expected to fall, so it was a good incentive for market participants to continue the new uptrend with a second wave of buying on a 5 minute time frame (the first was the rally into 8:30 ET).

Dow Jones Industrial Average ($DJI)


The second wave of upside in the index futures that took place out of the opening bell was strong enough to recover the premarket losses in the S&Ps and Dow. This created a momentum situation, however, whereby the buying pace was akin to the premarket selling, making the most likely outcome a trading trading for the remainder of the day.

The indices held price support from premarket lows that hit shortly after 6:00 am ET and began to turn around into the afternoon. The downtrend off intraday highs broke coming out of the 12:00 ET correction period. Although volume was light, the market jumped into 5 minute 20 sma resistance. It then hugged hit resistance level on even lighter volume. This created a buy setup on the 5 minute time frame that triggered when the 5 minute 20 sma broke higher coming out of the 13:00 ET correction period. Despite the setup, however, volume failed to confirm the breakout and it got off to a weak start.

The initial Phoenix™ follow-through coming out of the broken 5 minute 20 sma continued into the 14:00 ET correction period. The indices then fell into a trading range along afternoon highs on light volume. This base continued with the market hugging 15 minute 20 sma resistance in all three of the major indices. The 5 minute 20 sma now became support, while the 15 minute 200 sma and 5 minute 200 sma would serve as resistance on a break higher out of the range. That breakout came as the 5 minute 20 sma was struck in conjunction with the 15:00 ET correction period.

Since the buying began slowly into the afternoon, the rounded lows allowed upside momentum to increase on the 15:00 ET breakout. The indices breached the 50% retracement level from the prior 15 minute selloff, thus confirming the larger trading range that the technical bias had suggested earlier in the day. The bulk of the late-day rally came within 35-40 minutes following the buy trigger. A slight shift in the buying pressure into the close allowed the market to fall back with the bell, but the index futures once again recovered as the night wore on.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) rose 34.92 points, or 0.34%, on Monday to close at 10,344.84. The financials were the top leaders in the Dow by the end of the day. J.P. Morgan (JPM) was the strongest with a gain of 2.81%, followed by a 2.46% gain in Bank of America (BAC), and a 2.42% gain in American Express (AXP). Alcoa (AA) was the biggest loser. It fell 1.11%.

Meanwhile, the S&P 500 ($SPX) rose 4.14 points, or 0.38%, and closed at 1,095.63. American Intl. Group (AIG) had broken lower on Friday with a daily Avalanche™ short setup. It continued strongly on Monday and was the biggest loser in the S&P 500. It fell 14.71%. Tenet Healthcare (THC) (-8.08%) and McAfee (MFE) (-4.43%) were also major losers. Most of the top gainers in the S&P 500 remained stuck in a daily range at low-level bases on the month despite rising by more than 5% on Monday. This included Huntington Bancshares (HBAN) (+6.41%) and Marshall & Ilsley (MI) (+5.89%).

The Nasdaq Composite ($COMPX) rose 6.16 points, or 0.29%, and it closed at 2,144.60 on Monday. eBay (EBAY) was the biggest gainer in the Nasdaq-100. It rose 5.38%. Amazon.com (AMZN) came in second with a gain of 3.17%. Garmin Ltd. (GRMN) was again under strong selling pressure and fell 3.64% to lead the losers.

Even though the indices posted a gain, decliners outpaced gainers by 1.1. to 1 on the NYSE and 1.5 to 1 on the NASDAQ. Crude oil finished the session higher on Monday at $77.28 a barrel.

Nasdaq Composite ($COMPX)


Overall, the market did not find a great deal of joy as the data for Black Friday started to come in. Even though the number of shoppers was 13% higher than last year, the average shopper spent 8% less according to the National Retail Federation. Online purchases accounted for a large portion of the day's purchases with sales up 11% from a year ago. Although AMZN was up sharply, Macy's (M) ended the session lower by 3.9% on Monday and JC Penney (JCP) was off by 2.8%. Even though the indices are pulling higher afterhours, the 60 minute charts have rounded off enough at their own highs that continued congestion under the 60 minute 20 sma can easily lead to a break lower with an Avalanche™ setup in the Dow.

Keep in mind that this week is going to be a busy one for economic data. On the jobs front, payroll provider ADP releases its jobs estimates on Wednesday. This will be followed on Thursday by the weekly jobless claims data. Then, on Friday, the Labor Department will reports its numbers for jobs lost the overall U.S. economy in November. Although they are still predicting a loss, it is expected to be by a lesser degree than seen in October. In other news, on Tuesday the Institute of Supply Management will issues its November manufacturing report, followed by its nonmanufacturing report on Thursday. Also on Tuesday is the National Association of Realtors report on pending home sales. Then, on Wednesday, the Federal Reserve's Beige Book, which offers the Fed's view of the economy.