Before The Bell: Crocodile Tears; Foreclosures Jump
The worst doesn't appear over in the housing sector.
Morning Perspective: Crocodile Tears!
Shares of Crocs (CROX) plunged 30% in premarket trading. The maker of rubber clogs cut 1Q guidance saying earnings would come in between $0.08 and $0.13 per share versus previous forecasts of $0.46. Analysts were expecting EPS of $0.45. 1Q revenues are expected to range from $195-200 mln vs. $223 mln consensus. Further Crocs issued downside guidance for 2Q with EPS in the range of $0.45 -$0.50 vs. prior forecasts of $0.79. The company also announced it will cut 600 of its Canadian plant workers. CEO Ron Snyder cited a "challenging" retail environment with a slowing in traffic and consumer spending. For more in retail, See Professor Jeff Macke's Retail Round-Up.
From the Bull Pen: Bulls looking for retail exposure can look to Costco (COST); sell-stops below $64.
From the Bear Cave: Bears will look for another opportunity to play the short side in CROX. In the meantime, Dillard's (DDS) may be an option; buy-stops above $21.60.
Bloomberg reports U.S. foreclosures jumped 57% and bank repossessions more than doubled in March from a year earlier. Data provided by RealtyTrac showed that more than 234,000 properties in the U.S. were in some type of foreclosure, or one in every 538 homes. Nevada led the nation with the highest rate of foreclosure filings with an increase of 62% affecting one out of every 139 households. Next on the list were California and Florida. Analysts believe the continued increase in filings compounded with approximately $460 bln in adjustable-rate loans resetting will continue to weigh on prices throughout 2008. Read Professor Mike Mish Shedlock's column Walking Away From Your Mortgage.
From the Bull Pen: Bulls looking for real estate exposure can play the upside in Home Depot (HD); sell-stops below recent lows ($27).
From the Bear Cave: Bears can play the downside in the homebuilders ETF (XHB); buy-stops in the near-term can be set above the 200 DMA ($22.30).
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Asian trading closed in the green with the Hang Seng +0.38%, Nikkei +0.57%, Sensex +2.19%, Taiwan +0.36% and Shanghai +1.57%.
A quick look towards Europe finds the CAC +0.95%, DAX +0.59%, FTSE +1.61%
As of 8:50 AM EST, S&P futures are higher +5.40 points to 1336, and Nasdaq Futures are up +9 points to 1805.
A Look At Commodities
Commodities are higher. Crude is up +1.40 to 113.13. Gold is up +9.8 to 935.20. Silver is higher +0.005 to 17.795, and copper is lower -1.7 to 390.95.
The dollar index is up +0.033 to 71.911.
On the Radar
Producer Price Index (m/m): vs. 0.6% cons.
Core PPI (m/m) vs. 0.2% cons.
PPI (y/y): vs. 6.2% cons.
Core PPI (y/y): vs. 2.8% cons.
Net Long-term TIC Flows: $72.5 bln vs. $60.0 bln cons.
Total Net TIC Flows: 64.1 bln vs. 72.5 bln cons.
1:00 NAHB Housing Market Index: 20 cons
Click here for the full trading radar.
Good luck and have a great day!
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