Weaker Holiday Shopping Actually Helps 2 of Our Holdings
Plus, the White House doesn't veto the ITC decision to ban certain Apple Watches.
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* Stocks poised to climb further, good for our holdings but bringing few fresh opportunities
* Mastercard finds holiday shopping weaker than expected but good for our AMZN, MCD shares
* The White House doesn't veto the ITC decision to ban certain Apple Watches
As we gear into the last four trading days of 2023, a period that should see some of the thinnest trading volumes of the year, the market has reentered overbought territory with its RSI (relative strength index) back above 70. The general thinking is the market is poised to inch higher and end 2023 on a favorable note, and this morning's dip in Treasury yields isn't hurting that thinking.
Action Alerts PLUS team member Bob Lang sees the S&P 500 potentially challenging its all-time high at 4,818. That's a positive for our holdings, but it will extend the difficulty in finding fresh holdings for the portfolio in the near term. We will, however, continue to look for fresh Bullpen candidates, and graduate them to the portfolio when their risk-to-reward skews far more favorably for us.
In fellow team member Helene Meisler's view, the market should hold up until early January, but come early 2024 we'd be too overbought, and sentiment would be too bullish for us to keep on going. From a fundamental perspective that lines us with the start of the December quarter earnings season that arrives in force right after the Martin Luther King, Jr holiday has the stock market closed on Monday, January 15.
What we saw with last week's weak outlook from Accenture ACN , General Mills GIS , and Nike NKE paired with weaker-than-expected holiday spending findings from Mastercard MA increases the probability we are likely to see 2024 EPS expectations reset lower. We're not going to buy stocks just to do so, rather we'll remain disciplined investors, striking when the right opportunity emerges.
Mastercard finds holiday shopping weaker than expected but good for our AMZN, MCD shares
You are likely seeing a barrage of year-end sales hitting your inboxes, being flashed across web pages or TV screens. Target TGT announced its annual post-holiday shopping event, The Target Clearance Run, which kicks off today with "50% off clothing, shoes, beauty, toys and more while supplies last." Retailers are looking to capture that last round of holiday shopping fueled by returns and exchanges, while they also clear out product to make way for the spring season.
This raises the question as to how the holiday shopping season fared through Christmas Eve. Well, according to Mastercard's SpendingPulse, which measures in-store and online retail sales, US retail sales excluding automotive increased +3.1% year-over-year between November 1 through December 24.
That's weaker than the +3.7% it forecasted for that period, but Mastercard's findings support one of our reasons for owning Amazon AMZN shares. Online retail sales jumped +6.3% year over year far faster than the in-store, which rose a more modest 2.2%. The report, which also showed restaurant spending was up 7.8% year over year, was also bullish for our shares of McDonald's MCD .
The White House doesn't veto the ITC decision to ban certain Apple Watches
President Biden's administration declined to veto the US International Trade Commission's decision to ban imports of Apple AAPL Watches based on a complaint from medical monitoring technology company Masimo MASI . In our view as well as others, the impact on Apple should be minimal, especially as global 5G smartphone shipments look to become an even greater portion of overall smartphone shipments in 2024. That shift benefits Apple's all 5G iPhone lineup, which accounts for 50%-55% of its overall revenue with the higher margin and still growing Services business clocking in around 20%.
Action Alerts PLUS is long MA, AMZN, MCD, AAPL.