Retail’s Conspicuous & Inconspicuous Consumption

It’s about that time of year again.

Soon is the time when consumer sentiment is about to go through the ultimate test-Black Friday.

Black Friday is traditionally the busiest shopping day of the year.

In 2018, traffic to stores fell as much as 9 percent from 2017. The number of people visiting stores in 2017 was 4 percent lower than in 2016.

Many retailers, including Amazon, offer deals way earlier, upstaging Black Friday itself. The competition is so fierce, stores are innovating new ways to get your dollar.

Online sales are the best on Thanksgiving Day, not Black Friday. The average discount is 24 percent.

Nonetheless, the true measure of the day that kicks off the holiday season, will come after Cyber Monday, or after the now 5-day event.

Many analysts and investors scoff at the notion that Black Friday has any real predictability for the fourth quarter or for the markets.

Instead, they suggest that it only causes very short-term gains or losses.

But I say, let’s talk to Granny as her chart tells her story.

The chart shows the weekly price action of Granny Retail XRT from 2016 until the present.

The black line or trendline sits at the incredible support XRT has had each time it reaches $38.00.

One could say that with 5 or more attempts to pierce that level only to see buyers come back, is nothing short of incredible.

Yet also noteworthy is the down arrows you see beginning at the zenith in October 2018.

Each subsequent arrow indicates a peak price that is substantially lower than the peak price that precedes it.

The last peak price happened the week of November 8th with a high of 45.41.

This series of lower highs is troublesome until (if) that pattern breaks.

That means we need to see a weekly price close above 45.61-a tall order.

Furthermore, with XRT below the 200-WMA (green line) yet still above the 50-WMA (blue line), the phase suggests the anticipation of another year of declining traffic this Black Friday.

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