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Two Ways: Retail in Retreat

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Strengthen your portfolio in good times and bad.

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US retailers had a tough day today. S&P 500 futures, already weak prior to the opening bell, took a turn for the worse when the Commerce Department reported lower-than-expected retail sales for the month of April.

According to the Bloomberg, said retail sales fell for a second consecutive month, dropping 0.4% from a month earlier. Economists were expecting an increase of 0.1%. March sales were also revised lower to reflect a decrease of 1.3% instead of the previously reported 1.2%.

In a separate report, the Commerce Department said business inventories fell 1% in March, marking the seventh consecutive decrease - the longest since 2001-2002. Some analysts believe a lower overall sales forecast caused companies to pull back spending.

For Trading Context, see Toddo's Randoms: The Path of Maximum Frustration.

From the Bull Pen: In retail, Costco (COST) could be tracing out an inverted head-and- shoulders pattern. One can set a tight sell stop near $44-$45.

From the Bear Cave
: For a downside play, bears can look to Starbucks (SBUX). Higher coffee prices and decreased consumer spending power mean tough headwinds for this coffee chain. Watch if the stock can reapproach $14 resistance. If it fails, it could serve as a downside entry.

Getting closer! Have a great night!

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No positions in stocks mentioned.

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