rewrite this title The Daily Breakdown: The last week of the year

With markets closed on Wednesday for New Years, The Daily Breakdown looks at the week ahead and takes a closer look at Best Buy.

Monday’s TLDR

Four-day trading week
No jobs report on Friday
Best Buy bulls hope for a breakout

Weekly Outlook

We’re down to our final two trading sessions of the year and enter yet another holiday-shortened trading week. This time though, there is no half-day session before the New Year’s Day holiday on Wednesday. 

There are not any significant earnings reports this week, although earnings season will kick off later in January with the big banks. 

The same can be said for economic reports. Remember how several key data releases were moved from late-December to mid-December (like the PCE report)? Well, something similar is happening with the start of January. 

Usually the first Friday of the month is marked with the jobs report, but that’s not being released until next Friday (Jan. 10). It should be a relatively quiet week on the events front. 

One other thing to note: The late President Jimmy Carter, who passed away this weekend. Putting any political affiliations aside, RIP to a humanitarian hero. President Biden has declared January 9th as a National Day of Mourning, a day US stock exchanges typically close for. 

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The setup — Best Buy

Over the last few weeks, we have touched on a few retail holdings, like the XRT ETF (here) and Abercrombie & Fitch (here). I want to look at another retailer today, this time with Best Buy. 

At the October highs, Best Buy shares were up more than 30% for the year. After the recent dip though, BBY stock is up “just” 12% so far in 2024. Now bulls are wondering if it can break out sometime soon. 

Currently, BBY is below the 50-day moving average (in red) and downtrend resistance. If the stock can clear these measures, it puts a breakout in play. If it happens, more momentum can shift into the bulls’ favor. 

However, if the stock fails to break out, more downside is possible. For that reason, many investors will opt to wait for the breakout rather than buying now and hoping it happens soon. 

Options

Investors who believe shares will break out — or those who are waiting for the potential breakout to happen first — can participate with calls or call spreads. If speculating on the breakout rather than waiting for it to happen first, investors might consider using adequate time until expiration. Otherwise, they can wait for the breakout to happen first. 

For investors who would rather speculate on resistance holding, they could use puts or put spreads. 

To learn more about options, consider visiting the eToro Academy.

What Wall Street is watching

BA — Shares of Boeing are trading lower this morning after a deadly 737 crash in South Korea over the weekend. Currently, the stock is down about 3% in pre-market trading. Check out the chart.

QQQ — At Friday’s low, the Nasdaq 100 was down over 2% but thanks to a late-session rally, the losses were contained to a 1.3% decline. However, tech is back under pressure going into Monday’s session, with the QQQ ETF down over 1% and below Friday’s low. Let’s see if bulls can come to the rescue again or if more selling pressure comes into play.

Disclaimer:

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.