Profit Pregame

Don’t Let Black Friday Optimism Rob You Blind

Black Friday is looking different this year…

Many stores are coming forward to announce a Black Friday game plan.

What’s happening?

Typically, around this time of year, people across the country are beginning to prepare their Thanksgiving feast – but that’s not all they’re doing. They usually are rushing to plan their Black Friday shopping outing, trying to map out the best possible experience to score the best deal. Black Friday in itself has almost become a” family tradition “for many consumers.

But like many things this year, Black Friday looks a lot different. And it seems like every day, a new name is coming forward to announce that they won’t open their doors on Thanksgiving day.

Here’s what we’re currently seeing…

Where’s the money?

Walmart, Target, Best Buy, Dick’s Sporting Goods (DKS), Bed Bath & Beyond (BBBY), and other major retailers announced their decision earlier this year to be closed on Thanksgiving Day. Macy’s (M) announced in September that it would be closed on Thanksgiving. And more and more names continue to be added to the list.

The companies all came with different reasons for the closures – some citing safety reasons, others explaining that they were rewarding their employee’s dedication out of the last few months. But regardless of the reasoning, most stores won’t be receiving that spike in revenue that typically comes from the after Thanksgiving dinner rush.

And here’s how that could impact you…

How do I get some?

Regardless of retailer’s reasoning for closing their doors this Black Friday, it’s not surprising. With the rising Covid-19 cases across the country and the pressure that retailers have been receiving over the years to close their doors on the holidays – it was almost inevitable.

But surprisingly, these announcements have not impacted the stock prices of the companies making these decisions. In fact, retail names are actually trading close to an all-time high. But if I’m honest, I don’t think this upward momentum can continue for much longer. And I think many investors are about to end up burned by their Black Friday optimism.

And I think we could actually see this upward trend reversing in the next few weeks, given the weak sales numbers we’ve been seeing and will probably see even with Black Friday. But no worries – just because we might not see super-strong numbers, we can still profit off the retail sector. And the best way to do that? I would look into purchasing XRT put spreads. This will set you up to win big when we see the expected retail reversal.

In the spotlight: Vaccine, vaccine, vaccine…

Throw another name in the ring for a Covid-19 vaccine making progress. British pharmaceutical giant AstraZeneca announced yesterday that their interim analysis of clinical trials showed its coronavirus vaccine has average effectiveness of 70% in protecting against the virus.

This comes on the heels of good news from Pfizer and Moderna, which delivered vaccines with over 90% effectiveness. Here’s a quick breakdown of AstraZeneca’s trial: The AstraZeneca vaccine was developed by collaborating with Oxford University. The trial was done with two different dosing regimens.

One dosing regimen showed an effectiveness of 90% when trial participants received a half dose, followed by a full dose at least one month apart. The other showed 62% efficiency when given as two full doses at least one month apart.

The combined numbers from both dosing regimens found average vaccine effectiveness of 70%. No hospitalizations or severe cases of the disease were reported in participants receiving the vaccine, which is excellent news for this company.

Now, the race continues to heat up, and many are wondering which company will be the first to get their vaccine on the market. But the truth is, no one can honestly know, and that’s precisely why I’m not chasing every big announcement that hits the vaccine scene – and you shouldn’t either. So, with that said, I’ll be sure to keep you posted.

One More Thing…

Over the years, I’ve realized something that’s even more important than taking a patient approach…

Doing your homework.

That’s the best way to accurately anticipate the short- and long-term prospects of any stock, but who has time for all that?

Luckily for you, that’s exactly what my friend and colleague, trading veteran Shah Gilani, does for a living…

And to make it even easier for you, he’s presenting a stock-picking lightning round event where he’ll give you the inside story on over 50 companies.

He’ll tell you which ones to consider buying now, and which not to touch with a ten-foot pole.

Watch this one-of-a-kind presentation that he’s calling Buy This, Not That right here.

Community Tips

0 Comments
Inline Feedbacks
View all comments