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Before the Bell: Oil... for Food and Drugs?; No Net Gains, Literally


While bears will focus on the fact online sales were only up 19%, bulls will argue, "Hey, they were still up 19%!"


Morning Perspective: Oil… for Food and Drugs?

GlaxoSmithKline (GSK), the world's second-largest drugmaker, and AstraZeneca (AZN), the U.K.'s second-laergest pharmaceutical company, are being probed by the United Kingdom's Serious Fraud Office in relation to allegations that the companies may have breached the law regarding the UN's oil-for-food program. Philip Thomson, a spokesman for Glaxo, said, "GSK doesn't believe that its employees or its agents in Iraq knowingly engaged in wrongdoing regarding the oil-for-food program.'' On a tangentially-related noted, increased regulation for pharmaceutical companies worldwide has been one of Minyanville Professor David Miller's themes. Click here to read more.

From the Bull Pen: Bulls argue that GSK is a large, diversified drug company capable of riding out any UK regulatory actions. The stock may want to fill the gap higher from Nov. 23. Bulls can look to take advantage of weakness down to the 48 area, using a a close below 47.50 as a stop loss.

From the Bear Cave: AstraZeneca has been an underperformer among peers even as many made lows in mid-November. This "wounded gazelle" syndrome makes it an ideal target for bears. Press the downside on a break of 43 today, otherwise look to short any move to 45 using a close above 46 as a stop loss.

No Net Gains, Literally

According to Bloomberg, Internet sales by U.S. retailers rose at the slowest pace on record amid $3-a-gallon gas prices and the worst housing slump in 16 years. Online spending from Nov. 1 through Dec. 27 increased 19%, but that was well below last year's growth of 26%, and the worst gain since ComScore began tracking online sales growth in 2002.

From the Bull Pen: While bears will focus on the fact online sales were only up 19%, bulls will argue, "Hey, they were still up 19%!" Minyanville Professor Ryan Krueger noted recently that not all retailers are tied so heavily to online sales. He likes Dick's Sporting Goods (DKS). In the near-term a move below 26 should act a s a reasonable stop loss.

From the Bear Cave: While bulls may note that sales were up 19%, bears will ask how. The answer? Heavy discounting. Best Buy (BBY), for example, discounted heavily in the final run-up to Christmas. Take a look at shorting BBY with a close of 54 as a stop loss.

Click on Minyanville's Stocks To Watch for more company-specific ideas.

Quick Check Around the World

Asian trading closed with the Hang Seng +1.62%, Sensex +0.40% and Taiwan +1.30%.

A quick check towards Europe finds the CAC -0.39% and the FTSE -0.68%.

A Look At Commodities

Crude oil is higher this morning, up .34 to 96.34. Gold is lower, down a buck to 841.40. Silver is higher, up .1 to 14.99, while copper is down .0185 to 3.0535.

The dollar index is down -0.205 to 76.015.

As of 8:45 AM ET, S&P and Nasdaq futures were up 1.60 and 1.50, respectively, to 1487.10 and 2126.50.

On the Radar

10:00 Existing Home Sales: 5.0 mln cons

Click here for the full trading radar.

Happy New Year's Eve and good luck today and in 2008!

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No positions in stocks mentioned.

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