Stocks Jump on Strong Black Friday Sales
NASDAQ – Stock index futures are higher in overnight trading on stronger-than-expected sales numbers to kick off the holiday shopping season. Forecasts were calling for “Black Friday” sales to be below last year's $9.5 billion mark, but consumers came out in full force and initial estimates put Friday's sales figures in the neighborhood of $10 billion. Analysts were expecting the rising cost of fuel and tighter credit standards to keep customers away from the cash registers. But deeply discounted electronics turned out to be the main driving factor, with big name retailers like Best Buy and Circuit City rolling out specials and zero percent financing. These are risky moves for retailers in the recent credit climate, as they cut into profit margins. Tech and electronics companies figure to get a boost from the initial figures, and online retailers such as eBay and Amazon are expected to show strong sales on what has become known as "Cyber Monday.” The December e-mini NASDAQ is trading above the 9-day moving average in the early going, and a close above the average could signal some short-term bullishness. Tempering this is the fact that momentum is staying flat, while prices and the RSI indicator are climbing, which can be seen as bearish near-term. The market has been trapped in a triangle/wedge pattern on the chart, showing indecision among traders. Price action indicates that the market is moving higher this morning with some restraint, initially backing off when approaching 2050.00. Support comes in at 2014.00 and 2000.00, while resistance can be found at 2060.00 and 2100.00.
Crude Oil – Crude Oil futures are higher this morning, but the market was reluctant to push above contract highs in the early going. Prices fell after last week's inventory figures, which were bullish on the surface, showing a large drawdown, but the report also showed a large build in the key Cushing, Oklahoma port – the delivery point for NYMEX Crude. Funds and large traders took some profits off the table ahead of the Thanksgiving holiday, which drove prices lower following new highs. Strong sales to kick off the holiday shopping season along with a weaker dollar are both bullish factors for the market. January Crude futures were reluctant to make a push to new contract highs in early trading and prices are now below 98.50. Momentum is showing bearish divergence from the RSI, suggesting that traders' enthusiasm may be wearing a little thin after the recent run-up. It also suggests that more fundamental news may be needed to drive prices higher. Support comes in at 96.15 and 95.00, while resistance can be found at contract highs of 99.29 and 100.00.
Gold – Gold futures are higher this morning on a weaker Dollar and higher Crude Oil prices. Unlike Crude, which has backed off considerably from overnight highs, the Gold market appears resilient due to the slumping greenback. Traders are not convinced that the strong weekend sales figures are going to boost the slumping economy, which may lead to another Fed rate cut in December and, more than likely, a weaker U.S. currency. With energy prices near all-time highs, the Crude Oil market may labor to move higher, as the high costs may cut demand. This may be a chance for the Gold market to detach itself from energy prices and, once again, become the main inflation hedge for investors. December Gold has rebounded solidly after flirting with the first Fibonacci support area – in theory a market could rally to prior highs or make new highs after bouncing off of this key support area. December Gold closed above the 50-day moving average and resistance at 819.40 on Friday, which is considered bullish medium-term. In contrast to these bullish indicators, momentum is beginning to show some bearish divergence from the RSI and prices, suggesting that the market may consolidate or correct. Support comes in at 820.00 and 807.00, while resistance can now be found at 837.50 and 849.50.
Rob Kurzatkowski, Commodity Analyst
