Traders Look To Black Friday For End Of Year Forecasts

Out of the Red and into the Black!

Black Friday is one of the most anticipated days on the retail calendar. It officially marks the beginning of the holiday shopping season and it’s eyed by retailers, consumers and investors with a keen interest. When people think of Black Friday, the first thing that invariably comes to mind is frenzied shopping. While this is generally true for retailers and consumers, there’s another interest group that is eyeing Black Friday sales with equal interest – investors. During this time of year, Americans will be celebrating with friends and family during the week of Thanksgiving which falls on November 27 and Black Friday which falls on November 28. At the end of month, with winter ready to bite, shoppers will be braving the Arctic temperatures across large parts of the country to seek out deep discounts at their favourite retailers. Strangely enough, the name ‘Black Friday’ is used because retailers bank on this day to turn their financial fortunes around, moving from the ‘Red’ into the ‘Black.’
Is Black Friday the Best Time to Get Great Deals?

According to research from Time Magazine, Black Friday is not the best time to score bargains. In fact, many retail industry pundits advise shoppers to cash in on the weeks leading up to Thanksgiving. Deals have been available at major retailers and smaller ones too since September and the momentum gradually builds until it reaches a fever pitch on Black Friday. There is now a growing school of thought that Black Friday is largely symbolic, but not reflective of what the holiday season shopping mood will be. Marketing gurus point to the fact that many shoppers complete their bargain-hunting purchases before Thanksgiving. Nonetheless, in much the same way as Christmas Shopping is done before Christmas, Black Friday shopping is now being pushed back several weeks before and on Black Friday. This has not dampened the enthusiasm that the country and the markets have for the shopping frenzy.

According the WSJ (Wall Street Journal) the biggest discounts are available on the weekend before the Thanksgiving holiday. According to Adobe forecasts, 2014 Black Friday discounts of up to 24% are expected at the top retailers like Wal-Mart, Best Buy, Target, Macy’s, Verizon, Toys R Us and others. Items that typically price really well are TVs, computers, kitchen appliances, gadgets and toys. Most retailers will be punting a small selection of limited doorbuster deals – the types of deals that leave hundreds of people braving the cold and camping out overnight in anticipation of scoring a bargain. But what many shoppers fail to realize is that the prices on many other products are raised to hook those shoppers who dipped out but still have intent to purchase. As you are reading this article, retailers on Amazon are frenetically adjusting their prices in anticipation of hooking Black Friday shoppers.

How Black Friday Impacts on Investment Activity
According to Banc De Binary, it is possible to gauge the holiday season shopping trends by forecasting Black Friday spending. Although it’s a one-day marathon shopping event, it is for all intents and purposes a bellwether for the holiday season. For investors, this is particularly important since forecasts and speculation are big drivers of market sentiment. As a general rule, if Black Friday proves auspicious, the holiday shopping season will be met with bullish sentiment on the equities markets. By the same token, a lacklustre Black Friday will generally result in bearish sentiment from investors heading into the final stretch of the year. In between these potential outcomes, there is plenty of room for profit. Since Black Friday falls in winter, the actual retail sales figures can be severely impacted by blistering cold weather. If people stay away, owing to the Arctic storms, it is likely that the forecasts may be less optimistic. With lower retail sales forecasts, it is easier for retailers to perform above expectations and drive up stock prices.

However it should be remembered that Black Friday is one of the most important economic indicators for retail shopping at the end of the year. If consumers are more liberal with their spending, overall economic activity will blossom. But if consumers are seen to be saving more of their money, this will have a contractionary impact on stocks of major retailers like Walmart, Apple, Verizon and others. Whether or not people take the whole weekend off will also impact on overall retail shopping figures. More free time translates into more dollars spent at retailers which will help to drive up stock prices on Wall Street. The net-effect of Black Friday should not be overstated and most economists concur that it is best suited to short-term traders. Binary options trading markets are likely to see higher volatility in the final week of November and stock trading will be buoyed by the shopping spree.

The Black Friday Fire Sale for Investors
At precisely this time of year, Wall Street investors are taking a long and hard look at their financial portfolios. And what they’re searching for are their worst-performing stocks. It’s known as tax-loss harvesting and it’s nothing new. The reason they do this is to deduct their biggest losers from their portfolios and claim them as capital losses for the year. This reduces the overall tax burden and it also impacts on stock prices. If a large retailer has been underperforming, many investors will likely dump some or all of the stock. This will drive down the price of the stock and make it more attractive to buyers looking to cash in. It can be viewed as a minor correction and it benefits buyers, sellers and the companies themselves. When this occurs it appears as a major selloff, but its effect is temporary. This lends further support to the notion that stock prices are affected by many factors other than fundamentals. Bargain hunters will be able to score great deals on the stock markets and in the stores when Black Friday rolls around!