Thanksgiving Travel

Let’s face it; all travel industry and related components have been devastated by the effects of COVID19. Now, with the pandemic again spiking and anticipation of only worse conditions through the end of the year, it appears that the industry is poised to take a more significant hit.

Since June 1, crude oil futures have been trending sideways. It has been a ridiculously boring six months for this market, especially considering the unprecedented volatility back in the spring of this year. The below chart gives some indication of the oil supply. While it is starting to go back within historical norms, there remains plenty of supply, and with the COVID19, there doesn’t seem to be much demand ready to give this market a lift.

However, Thanksgiving week will give some fair early indications of how intensified the slowdown might be. Worse than expected travel rates could cause crude to begin to move downward, testing the current six-month range’s lower boundaries. With relatively low fuel and airline rates, better than expected travel rates could cause the same market to test that range’s upward limits. 

Historically speaking, as indicated below, crude bottoms sometime in early December. While historical price charts are less of an indication now than in prior years, I still speculate that if crude has any cause for a lift, even a minor one, that there are buyers in wait. If you want a currency to trade crude oil, then the U.S. dollar vs. the Canadian dollar (USD/CAD) is worth watching. Bullish crude oil will send this pair lower. Meanwhile, bearish crude will create buying pressure in this market.

Black Friday & Cyber Monday

Another hallmark of American capitalism is Black Friday, when retailers make significant inventory reductions in the hopes of launching a fruitful Christmas gift season. Of course, once again, COVID19 has hurt retailers. This year’s Black Friday, the day following Thanksgiving next week, is sure to look differently with people looking to avoid crowds.

Therefore, in our current internet culture, what may be more prominent is the Cyber Monday participation. There will be many offers launched for November 30th for online buying, which will likely benefit from the current social environment. It may be that retailers make unprecedented efforts in sales-related measures in the days and weeks to come.

As the retail season returns are tabulated, the U.S. stock markets and dollar currency pairs are sure to see an effect.

In Comes December

Coinciding with Cyber Monday is the final trading day of November, which brings in the beginning of December. Both of these days might present some fair risk indications to come, especially in the U.S. stock indices.

This period is historically bullish into December; however, nothing can be assumed or taken for granted with the environment this year. There is sure to be at least some portfolio balancing by funds as the calendar turns to the final month of the year. This year has had abundant opportunities but has simultaneously presented many challenges for institutional players. Market psychology suggests that some will be eager to take profits into December, securing a bonus, while others may get aggressive attempting to move into profit. And those with barely a profit margin may go flat, hoping that sideways performance in a year like this one might not look too bad to the client pool.

In closing, opportunities for 2020 are becoming more limited every day. Traders must be aware of what circumstances remain for this year, and prepare ourselves accordingly. There might be some other things you are watching between now and December 1, and I hope you will share your ideas in the comments below. Happy Trading!