5 Black Friday Earnings Trades to Watch VIEW IN BROWSER
By Michael Salvatore, Editor, TradeSmith Daily In This Digest: - Consumers are skittish heading in the holidays
- Our Seasonality software just got an important upgrade
- What it’s telling us about how to trade tech this week
- A busy week for our Earnings Season Pass subscribers
- If you’re going to buy retail stocks, put these five at the top of your list
Thanksgiving and stocks have a complicated relationship… The New York Stock Exchange is closed this Thursday and closes early at 1:00 pm ET on Friday. A short trading week like this is a double-edged sword. We can all use a break to spend time with friends, family… and a heavy dose of tryptophan from a perfectly roasted turkey. The break is even more welcome given that the tech-heavy Nasdaq 100 has dropped more than 7% since the start of October. I’ll gladly take a food coma over another smackdown like that. But because of this, many traders will be either checking out early or taking the whole week off, leading to low trading volume. And when trading volume is low, volatility can spike. That could have you reaching for the bourbon-spiked eggnog. Then there’s Black Friday. The U.S. retail sales report for September is on deck tomorrow after the government shutdown delayed its release. But the biggest shopping day of the year will have its own story to tell about the U.S. consumer. And with the University of Michigan Consumer Sentiment Index is at its lowest reading since the 2022 bear market, it may not be a happy story. 
Source: University of Michigan The index measures how U.S. consumers feel about their own financial situation, the overall economy, and their buying intention. With the stock market at all-time highs and U.S. GDP still growing, consumers feel about as bad today as they did during a bear market. Clearly, the vibes are off. | Recommended Link | | | | A controversial new law (S.1582) just gave a small group of private companies legal authority to create a new form of government-authorized money. Today, I can reveal how to use this new money… why it’s set to make early investors fortunes, and what to do before the wealth transfer begins on December 18 if you want to profit. Go here for details now – while you still have time to position yourself. |  | | But here at TradeSmith, we don’t put too much stock in vibes… Instead, we rely on cold, hard data. And if you’re still a bit bearish heading into this week, pay attention to what I’m about to show you… According to our new Seasonality dashboard, the coming three-day stretch of this month – and every month during post-election years – is one of the best times to own Nasdaq 100 ETF (QQQ). Regular readers know that Seasonality is one of our most popular software tools. It analyzes how stocks have historically traded through the year – down to the day. And our software helps you easily find the trading windows with the best history of making investors money. We’re about to launch an important upgrade to our Seasonality dashboard. It will be free to use if you’re one of our Trade Cycles subscribers – and we’ve got our Platinum members beta testing it already. We’ve taken this same historical data and sliced it even finer to show you even shorter-term opportunities and trends. For example, here’s what I’m seeing when I pull up our new Day of Month module for QQQ. 
This module is one of six new cycle tools about to launch on the Seasonality Statistics tab of our TradeSmith Finance platform. And it shows you which calendar days of the month have the best historical track records for any asset in our database. In this case, I had TradeSmith crunch numbers specifically on post-election years like the one we’re in now. As you can see, the next three days are some of the best of every month. The 24th has seen an average gain of 0.2% for QQQ. On the 25th of every month, it’s seen an average gain of 0.25%. And on the 26th of every month, it’s seen an average gain of just under 0.3%. Across all three days, QQQ has risen by an average of 0.74% – worth noting, given that this time around, we’re coming off one of the worst three-week stretches for the Nasdaq 100 since April’s tariff tumble. As we always remind you with seasonality, it should make up just one part of a multi-factor trading plan. Seasonality just tells you what’s happened in the past – it’s not a crystal ball for the future. In this case, going back six election cycles, investors had a pattern of buying QQQ over the next three days. Given the recent rout, this pattern looks like a good setup for a bounce back. Back to the consumer, it’s a week chock-full of retail company earnings… This year, the week of Black Friday coincides with earnings reports for popular retail brands such as Urban Outfitters (URBN), Abercrombie & Fitch (ANF), Burlington (BURL), Best Buy (BBY ), and Kohl’s (KSS). And those are just a few of the dozen earnings reports on Andy and Landon Swan’s scorecard for their Earnings Season Pass advisory this week. Regular readers are familiar with the Swan brothers’ approach to the markets. They use a gauge of consumer behavior called the Social Heat Score to tell them what consumers are thinking about brands like these. It combines real-time data from social-media posts, web searches, app usage, and brand mentions to produce a score of 0 to 100 – where 0 means virtually no consumer interest and 100 means a brand is breaking out. Understanding how consumers think about brands, as well as how often they’re shopping with them, can give you an edge you won’t find in balance sheets or price charts. Especially in the retail sector. One stock Andy and Landon recommended, shoemaker On Holding (ONON), has doubled since it lit up on the Social Heat Score. Their system spotted Crocs (CROX) gaining popularity with consumers ahead of the stock’s 200%-plus rise. And most recently, they closed out a win in Robinhood Markets (HOOD) for a 556% profit. Clearly, the Swans can use the Social Heat Score for a big investment edge. But they also use it to trade notoriously fickle earnings reports using a type of “asymmetric” options trade. By combining two options contracts in one position, this trade pays out more if they’re right than they risk losing if they’re wrong. It’s best used when their consumer demand data is stronger than what the market may expect. That’s how despite a win rate of 51.7% in Earnings Season Pass, the average return from trading these ideas – the winners and the losers – has been a 16.9% gain. This being a big week for retail earnings reports, I knew I had to tune in to what Andy and Landon were watching. And while I can’t share each of the 12 ideas from their weekly report out of respect for their paid-up subscribers… This call on Urban Outfitters (URBN) caught my eye: 
In each Earnings Season Pass report, Andy and Landon include every piece of data you’ll need to trade a company earnings report. The ones to watch above are: - Their proprietary Demand Growth & Happiness Growth – powered by their social sentiment data engine – as well as an Earnings Score, which factors in these metrics and others like investor expectations and prior earnings moves.
- Whether their Demand or Happiness Growth metrics have been predictive of prior earnings moves for that particular stock – in URBN’s case, the star in the Happiness Growth column means higher consumer sentiment has bode well for this stock in the past.
- The “Expected Move” – calculated by options pricing – along with the stock’s four most recent post-earnings moves. As we can see, URBN tends to make big, tradable swings after earnings. Even that smallest 7.7% move could have created huge options profits… let alone 20.4%.
- Recommended strategies for investors and traders – with links to resources showing how to execute each one. Given the volatility in URBN, the Swans recommend options strategies for longer-term oriented investors and trading their “Very Bullish Spread” options setup I talked about earlier.
URBN is just one of the Swans’ bullish calls this earnings season. Dick’s Sporting Goods (DKS), ANF, BBY, and BURL all get the bullish tilt from this week’s Earnings Season Pass. That typically means all their Demand and Happiness growth numbers are on the up, market expectations are relatively low, and past performance signals the stocks could move higher on a positive surprise. So if you’re going to trade any retail names ahead of Black Friday, put these stocks your shortlist. But there are still hundreds of earnings reports left to go – so to keep the Very Bullish (and Very Bearish) trade ideas coming, go here to check out Earnings Season Pass. To building wealth beyond measure, 
Michael Salvatore
Editor, TradeSmith Daily | 
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