Was Black Friday A Bust?

Investment Research Dynamics

“We believe Thanksgiving shopping was a bust,” said analysts at SunTrust Robinson Humphrey in a note. They conducted channel checks in the New York metro area, New England and the Southeast region starting on Thanksgiving Day and throughout the night into Black Friday.  LINK

Retail sales fell .9% last December.  Currently the trend is not the friend of the consumer retail sales bulls (click on image to enlarge):

SunTrust retail analysts are already declaring Black Friday to be a bust.  Of course, our first clue this was coming was when the “Black Friday” sales events started two Mondays ago.   Anecdotally, I did some “boots on the ground” due diligence today (Black Friday) and found the stores to be eerily quiet.  And Denver is considered to have one of the healthier regional economies.

The bottom line is that the consumer is tapped out.  Obamacare premium rate hikes are starting to show up in mailboxes and that should really put a damper on holiday spending plans.

I have a new research report format that I am going to transition into a monthly newsletter service. The reports will have a couple ideas for making money – mostly by shorting or buying puts.  My first report featured two retail stock shorts.  One of them reported last Tuesday and anyone who read my report and shorted this stock ahead of the close on Monday (November 23), made a quick 16-20% the next day, depending on when and if they covered:

This stock still has plenty of downside left, as it sells into the middle/lower-middle income demographic, which has been particularly squeezed since the 2008 financial crisis.

My second idea in this report will release its earnings next Thursday (December 3).  This stock, in my opinion, has a very high probability of missing its earnings and doing the “earnings miss” cliff-dive.  It also has active options and my report has suggestions on using puts to play this stock.  It sells into the late teen/early 20’s demographic primarily – you get the idea:

I think this stock could easily drop 12-15% if it reports an earnings miss next Thursday.

You can access my report on these two stocks here:   Short Seller’s Journal – Retail Stocks  This is a new 2-page per stock idea format, with an overview of each company, reasons why I think the companies will miss earnings and why they make excellent risk/return short term trades or longer term short positions.