Two Ways To Play: SEC Says, "Go Long!"
Strengthen your portfolio in good times and bad.
New Securities and Exchange Commission rules regarding short selling went into effect last night. According to Reuters, short sellers and their broker-dealers must deliver securities by the close of business on the settlement date.
Broker-dealers not in compliance will be prohibited from further short sales in the same security unless the stock is pre-borrowed. Options market makers will also be required to locate stocks and deliver them by the settlement date. The rules now govern all, as opposed to the temporary rule imposed last summer that just covered 19 financial institutions.
From the Bull Pen: The rules certainly make it more difficult to short stocks. Banks could see a rally into expiration Friday. Goldman Sachs (GS) with sell stops set near $105 may be an option.
From the Bear Cave: Investors must recognize the short sellers are here for a reason. The ultrashort S&P (SDS), on a pullback towards the $67-70 range may be an opportunity.
Dim Forecast for Retailers
Quietly slipping under the radar has been the relative performance of retailers. But just this morning the Wall Street Journal reports consulting firms Deloitte LLP and TNS Retail Forward are out with grim forecasts for the 2008 holiday season. TNS predicts a fourth-quarter retail sales bump of just 1.5%. Deloitte says sales, less vehicles and gasoline, will rise 2.5% to 3%, compared with 3.4% last year (Deloitte includes restaurant and grocery sales while TNS doesn't). Overall, it's expected to be the weakest sales gains in the retail sector in 17 years.
From the Bull Pen: Amazing how Costco (COST) filled the gap and plunged. But this company continues to have a favorable business model. Sell stops can be set in the $64-65 range in the near term.
From the Bear Cave: Is Sears (SHLD) a downside opportunity at $100? Buy stops can be set above $105.
For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.
Quick Check Around the World
Asian trading closed mostly lower with the Hang Seng -0.03%, Nikkei -2.22%, Sensex +0.40%, Taiwan -2.74% and Shanghai -1.72%.
A quick glance across the pond finds the CAC +1.02%, DAX +0.81%, FTSE +1.44%
As of 8:30 a.m. EST, S&P Futures are trading +10 points to 1173 and Nasdaq futures are off +13 points to 1660.
A Look At Commodities
Commodities are higher. Crude oil is +2.79 to 99.97. Gold is +33 to 880.20, silver is +1.158 to 11.620, and copper is +9.15 to 316.25.
The dollar index is lower -0.640 to 77.450.
On the Radar
8:30 Initial Jobless Claims
8:30 Continuing Claims
10:00 Philadelphia Fed: -10.0 cons.
10:00 Leading Indicators: -0.2% cons.
Click here for the full trading radar.
Happy Thursday! Good luck!
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