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Two Ways To Play: Back To School Blues For Retailers


Strengthen your portfolio in good times and bad.

Dismal August Sales

Bloomberg states the nation's retailers reported monthly same-store-sales figures yesterday and results weren't very pretty. According to the International Council of Shopping Centers, industry sales for stores open for one year rose 1.7%, the smallest monthly gain since March's 0.5% decline. Consumers continued to shop at Wal-Mart (WMT) and Costco (COST) while cutting back on purchases from Gap (GPS) and Abercrombie (ANF). Some are also concerned that the back-to-school season may be the worst in seven years as consumers continue to cut back on non-discretionary items. See Professor Jeff Macke's Retail A Dying Bull.

From the Bull Pen: Costco may have the best upside, but note the resistance near $70. Sell stops can be set below $66.

From the Bear Cave: Bears can play the downside in Sears (SHLD); buy stops can be set above the 200 DMA ($94).

GE Sells Warranty Biz to Assurant

The Wall Street Journal reports General Electric (GE) has agreed to sell its warranty-management-group business to Assurant (AIZ) for $140 mln. As part of the agreement, Assurant will sign a new 10-year contract to market extended warranties and service contracts on appliances, and GE will pay Assurant $115 mln to assume certain obligations. The acquisition will lift Assurant's earnings in 2009 and is expected to close in the third quarter. Toddo talks about GE in Pirate's Booty.

From the Bull Pen: For a diversified manufacturing play, bulls can consider ITT Corp (ITT) if the stock can hold the $60 support. Sell stops can be set below that level.

From the Bear Cave: Previous support is now resistance for AIZ. Bears can consider a downside entry should the stock recover to $60. GE is also an option on a recovery back to $30.

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 -2.24%, Nikkei -2.75%, Sensex -2.79%, Taiwan -1.64% and Shanghai -3.29%.

Glancing towards Europe, we see the CAC -1.13%, DAX -1.62%, FTSE -1.06%

As of 8:20 AM EST, S&P Futures are lower 5.6 points to 1231, and Nasdaq futures are off 8.5 points to 1767.

A Look At Commodities

Commodities are down today. Crude oil is off -1.04 to 106.85. Gold is down -2.00 to 797.30. Silver is lower -0.206 to 12.650, and copper is off -9.20 to 320.50.

The dollar index is up +0.087 to 78.842.

On the Radar


8:30 Change in Nonfarm payrolls: -35 k cons.
8:30 Avg Hourly Earnings (m/m): 0.3% cons.
8:30 Avg Hourly Earnings (y/y): 3.4% cons.
8:30 Avg Weekly Hours: 33.6 cons.
10:00 Mortgage Delinquencies

Happy Friday! Good luck!
No positions in stocks mentioned.

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