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Two Ways To Play: GM Loses Weight


Strengthen your portfolio in good times and bad.

GM's New Strategy

Bloomberg reports General Motors (GM) is delaying the redesign of its SUVs and trucks and will be focusing their efforts on lighter, fuel efficient vehicles. A spokesman for the company said engineers who had been assigned to overhaul models like the Chevrolet Tahoe have been transferred to other projects.

GM, the biggest automaker in the U.S., recently said May sales of pickups, vans, and SUVs dropped 37%. Professor Glenn Curtis mentioned GM in Is Green the New Gold?

From the Bull Pen: The move is a logical one for GM, but it will take its toll on the company's profits. Bulls can consider plays elsewhere. AutoZone (AZO) may be an option; sell-stops can be set near the $113-$115 range.

From the Bear Cave: Bears can consider downside plays in Harley Davidson (HOG). Buy-stops can be set near $39 in the short term.

FedEx First Loss in 11 Years

The Wall Street Journal reports FedEx (FDX) announced its first quarterly loss in over a decade. Including a one-time $696 mln charge for changing the name of the FedEx Kinko's unit to FedEx Office, the company reported a net loss of $241 million, or 78 cents a share. FedEx issued downside guidance for FY09 saying conditions aren't likely to improve for another year. But CEO Frederick Smith told analysts that cost reductions and increased use of alternative-fueled vehicles "will hopefully" help the company offset the cost challenges and resume profitability in FY2010. For more, read Professor Jeff Macke's column If You Prick Tiger Woods, Does FedEx Bleed?

From the Bull Pen: In the Transportation sector, bulls can consider Burlington Northern Santa Fe (BNI); sell-stops can be set in the $97-100 range.

From the Bear Cave: FDX might see accelerated selling pressure should the stock fall below $80. Bears can press the downside in FDX, if and when it breaks that level.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed with the Hang Seng -2.26%, Nikkei -2.23%, Sensex -2.17%, Taiwan -2.07% and Shanghai -6.54%.

A quick check of Europe finds the CAC +0.25%, DAX +0.14%, FTSE +0.29%

As of 8:30 AM EST, S&P futures are higher +3.90 points to 1342, and Nasdaq Futures are up +1.50 points to 1963.

A Look At Commodities

In commodities, crude oil is lower -0.99 to 135.70. Gold is higher +0.40 to 891.30. Silver is lower -0.155 to 17.190, and copper is higher +8.70 to 374.55.

The dollar index is up +0.145 to 73.585.

On the Radar


Initial Jobless Claims: 381 k vs. 386 k last week.

Continuing Claims: 3060 k vs. 3136 k last week.

10:00 Leading Indicators: 0.0% cons, 0.1% prior
10:00 Philadelphia Fed: -12.0 cons, -15.6 prior

Click here for the full trading radar.

Good luck today!
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No positions in stocks mentioned.

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