As Thanksgiving approaches, and with it the both beloved and maligned Black Friday, Wall Street turns its eye toward retail sales. How’s retail doing? MarketWatch reports the SPDR S&P Retail ETF has gained more than 5% this month, and the Amplify Online Retail ETF, “which only holds companies that get a sizable portion of their revenue from online sales, is up more than 40% so far in 2017.”
Goldman Sachs tells MarketWatch, “a third or more of annual retail sales come in the final quarter of the year, driven by holiday demand.” Individual retail companies, which have seen drops this year as consumers move toward shopping online, are especially affected by the holiday spending season.
While retail businesses hope the next couple of months boost their bottom line, Goldman Sachs tells MarketWatch that option investors should be positioning themselves to take advantage of the volatility that tends to come with this time of year—for example, with strategic straddle options.
Overall, sentiment is positive. According to Dave Fowler, president of Alliance Financial Partners, “If Thanksgiving and Black Friday meet or exceed projection numbers, this could be a strong indicator of a healthy spending year for the holidays, which in turn could bolster confidence.” Of course, political and legislative issues could also come into play, for better or worse. Let’s hope this weekend’s festivities and retail therapy signal a strong “Santa Rally” as we look forward to Christmas.
Sectors: Among Sector Benchmark ETFs, the average momentum score has remained around 8.36 for the last two weeks. Telecom increased last week, up 20 points. Utilities fell the most, down by 7. Telecom remained at the bottom, while cyclicals remained near the top, suggesting that the market has a continued appetite for risk. Telecom has been trending down due to a loss of subscribers. The spread between the highest and lowest decreased from 81 to 61.
Factors: The leading Factor Benchmark ETFs increased for the week, going from 13.82 to 16.55. Small Size gained the most, up 12 points. Low Volatility is the only position that lost, down 1. High Beta and Growth gained 5 and 3, respectively. Momentum and Growth led, while Fundamental and Yield remained at the bottom. Factor rankings continue to suggest a market appetite for risk. The spread between top-ranked and bottom-ranked securities stayed at 25.
Global: Among the leading Global Benchmark ETFs, the average score increased from 9.73 to 13.45 for the week. Latin America gained tremendously, increasing by 17 points. Canada and the Pacific lost the most, down2. China, up 10 points, leads the group. Japan, up 1 point, is in second. Emerging Markets, up 11, is in third. The Eurozone, UK, and Latin America are at the bottom of the rankings.
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