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Two Ways To Play: Lehman's Loss


Strengthen your portfolio in good times and bad.

Lehman's Tough Quarter

Preliminary results are out for Lehman Brothers (LEH). According to Bloomberg, the company announced a second quarter loss of $5.14 per share, its first quarterly loss in history. The figure was below analysts' estimates of $4.92 per share. Revenues, which reflected negative mark-to-market losses, came in at negative $0.7 billion. The company also confirmed plans to raise $6.0 billion through sales of common and preferred stock. The results have Moody's saying it could likely cut the bank's credit rating, although it did add that the capital raise is a "positive step." LEH stock fell as much as -10% in the premarket. See Toddo's Random Thoughts from Friday.

From the Bull Pen: The contrarian trade (not investment) is to buy the financial sector ETF (XLF); sell-stops can be set near the 52 week low ($22.29).

From the Bear Cave: Bears might see accelerated selling in M&T Bank (MTB) if and when the stock breaks $80 support.

Breather in Oil?

According to Reuters, oil is trading lower this morning after Friday's record surge in price. Prices rose nearly $11 on Friday taking two-day gains to nearly $17 a barrel. U.S. light, sweet crude for July delivery fell $1.42 to $135.12 at 6:40 AM EST. But the $150 mark continues to be the target for investment banks. Morgan Stanley says prices could reach that level as soon as by July 4th and Goldman Sachs' global head of commodities research Jeffrey Currie says the likelihood of $150 oil happening sooner has increased "tremendously." Get Professor Lance Lewis' take in Gold, Oil The Real Deal.

From the Bull Pen: Bulls believe gold is the better trade here and can use the gold ETF (GLD). Near-term sell-stops can be set near $86 or $84 for those with a larger risk profile.

From the Bear Cave: A popular vehicle for bears that believe oil prices will correct is the Ultrashort oil & gas ETF (DUG). This stock tracks twice the inverse of the daily performance of the D.J. oil & gas index. Sell-stops can be set near $27.

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 +0.61%, Nikkei -2.13%, Sensex -3.25%, Taiwan -1.80% and Shanghai -0.66%.

A quick check across the pond finds the CAC +0.16%, DAX -0.02%, FTSE -0.08%

As of 8:30 AM EST, S&P futures are up +3.50 points to 1363, and Nasdaq futures are higher +6.75 points to 2995.

A Look At Commodities

In commodities, crude oil is the only group trading lower, down -1.21 to $137.33. Gold futures are up +7.10 to 902.50. Silver is higher +0.030 to 17.460, and copper is up +3.55 to 365.95.

The dollar index is lower -0.025 to 72.365.

On the Radar


10:00 Pending Home Sales

Click here to see the full trading radar.

It's good to be back! Have a great day!
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No positions in stocks mentioned.

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