Cyber Monday & the markets

Last week I noted that the market was setting up for a neartermed correction. In a nutshell: the VIX was at a potential inflection point, and my near-termed timing system was suggesting a short termed overbought market. Today, I note that futures are lower. No surprise, although it never ceases to amaze me how fast things happen on the markets these days compared to when I was a burgeoning stock broker in the early 1990’s. .

Thanksgiving & cyber Monday week sales are off to a good start. Which is bad.

One of the factors that adds to market risk, beleive it or not, has been strong online retail sales of late. Adobe Analytics reported online sales in the USA hit a record $9.2B in Black Friday sales online. In fact, online sales doubled estimations. Online sales today, under the banner of “Cyber Monday”, are expecting to exceed the Black Friday levels with an expected $11.2BB in sales.  This would imply a total increase of more than 3% over the already robust sales in last years Thanksgiving-Cyber Monday sales cycle. “Buy now, Pay later” sales are up 81% YOY. The calm before the recession storm, perhaps.

Retail stocks (SRT ETF) are up. But they now meet a very significant resistance point on the daily chart. This mid-$60’s point, which has defined a nice base on the chart after a severe shellacking in this years bear market, will determine if the sector has any real potential.

More importantly:

Retail buying enthusiasm matters because it adds impetus to the FED for not being so dovish in their monetary policies as investors may have hoped for. Recall – your grade 10 business class lessons in supply/demand economics, and the effects on inflation. Of note, Powell is speaking this Wednesday. That may or may not offer clues to soon to come policy announcements. I’ve noted that the FED does tend to “hint” through such talks in order to ease the market-mindset ahead of actual policy decision announcements. So…more fuel to my “caution” flag noted on last weeks blog.

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China reopening will be key for commodities, and Chinese stocks

It started in Canada with the Truckers Freedom Convoy protests against the overdone restrictions in Canada (I Zoom-watched the Freedom Conference held in Toronto this weekend – eye opening). Now the Chinese are getting sick (pardon the pun) of their COVID lockdowns and mandates, too. Photos of the protests look eerily like those in Ottawa. Realize, that to protest against any totalitarian regime, it takes a certain level of courage driven by extreme frustration. It will be interested to see if Xi Jinping’s government is influenced to ease on restrictions, as was our government after the protests. This would certainly add to my comments in last weeks blog re: the continuing commodity cycle. Any positives coming out of China will result in rising commodity usage (and prices) along with a probable opportunity in Chinese equities.

China Covid: Protests erupt in unprecedented challenge to Xi Jinping’s zero-Covid policy | CNN

Here’s the CZH China Index going back to 2004. Its nearing a long-termed support level (horizontal line) within a prolonged period of ROC oversold status. Note my arrows on the chart roughly indicating periods of such oversold status for the index, and the eventual move back up.