Stock Market Bulls Excited But Not Asking The All Important ‘Pay Later’ Question
Benzinga – by The Arora Report, Benzinga Contributor.
To gain an edge, this is what you need to know today.
Investors Excited
Please click here for a chart of SPDR S&P Retail ETF (ARCA:XRT).
Note the following:
- The chart shows that the retail stocks have been rallying on strong consumer buying. Please see yesterday’s Morning Capsule for details of the strong Black Friday sales. Earlier, Adobe had increased its estimate of online Cyber Monday sales to $12.2B from the prior $12B. Now, the estimate has risen to $12.4B.
- Investors are excited and believe that the retail ETF XRT is heading towards the resistance zone shown on the chart.
- Prudent investors should note that there is RSI divergence developing as shown on the chart. In plain English, this means that RSI is now lower even though the price has gone higher. The traditional interpretation is negative for retail stocks. This flies in the face of bullish expectations from investors.
- In The Arora Report analysis, after maxing out their credit cards, consumers are increasingly using ‘buy now pay later.’ As investors are excited about ‘buy now,’ they are not asking the ‘pay later’ question. When the bills come due early next year, will the consumer be able to pay them while continuing to splurge?
- Two important data points are ahead this week.
- PCE, the Fed’s favorite inflation gauge, will be released on Thursday at 8:30am ET.
- Powell is speaking in Atlanta on Friday.
- Consumer confidence will be released today at 10am ET and may be market moving.
- This morning, the stock market rally is pausing after S&P 500 rallied 8.5% this month. This is the fourth biggest monthly rally over the last 10 years.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Apple Inc (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Microsoft Corp (NASDAQ: MSFT), NVIDIA Corp (NASDAQ: NVDA), and Tesla Inc (NASDAQ: TSLA).
In the early trade, money flows are negative in Alphabet Inc Class C (NASDAQ: GOOG) and Meta Platforms Inc (NASDAQ: META).
In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (ARCA:SPY) and Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in the early trade. Smart money is
