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Two Ways To Play: Foreclosures Signal More Pain


Strengthen your portfolio in good times and bad.

Housing Downside Continues

Bloomberg reports foreclosures in the U.S. continue to increase. Filings jumped 65% and bank seizures more than doubled in April from a year earlier according to data provided by RealtyTrac. Over 243,000 properties were in some stage of foreclosure which was the highest monthly figure since the firm began tracking statistics since January 2005. Bank repossessions increased 145% to 54,574. The company said bank repos may average 60,000 a month through the end of 2008 and at that time about a quarter of all homes for sale in the U.S. may be bank-owned. For context see Professor Kevin Depew's Five Things You Need To Know.

From the Bull Pen: Given the economic conditions, bulls are favorable in consumer staples plays like General Mills (GIS); sell-stops can be set below the $59-60 level.

From the Bear Cave: Bears might find a downside play in Home Depot (HD) and see the $30 level as a possible downside entry.

Sony Sees Bright Picture

Sony (SNE) opened eyes this morning. According to Bloomberg, the world's second-largest consumer electronics maker said operating income would rise 20% due in part to the popularity of PlayStation 3 consoles. Sony said its games unit would post its first annual profit in three years compared with analyst expectations of a 40 billion yen loss. The company also beat estimates for 4Q with EPS of $0.28 vs. $0.15 consensus. Revenues rose 10.3% year-over-year to $19.53 billion vs. $19.22 billion cons. Also helping the company's outlook were a boost in sales of digital cameras and flat screen TVs. For context, see Professor Andrew Jeffery's column last week, Sony Goes Minimalist.

From the Bull Pen: For those bullish on Sony; sell-stops can be placed below $45 or $43 for those with a larger risk profile.

From the Bear Cave: Bears might see a downside play in Xerox (XRX); buy-stops might be set above the 100 DMA ($14.80).

For more ideas, check out Minyanville's Spotlight Stocks.

Quick Check Around the World

Asian trading closed skewed to the upside with the Hang Seng -0.08%, Nikkei +1.18%, Sensex +1.35%, Taiwan +0.32% and Shanghai +2.73%.

A glance across the pond finds Europe mixed with the CAC +0.34%, DAX -0.15%, FTSE +0.07%

As of 8:45 AM EST, S&P futures are up +6.4 points to 1411, and Nasdaq futures are higher +8.00 points to 2014.

A Look At Commodities

Commodities are mixed. Crude oil is lower -0.26 to 125.55. Gold is down -0.30 to 869.50. Silver is higher +0.032 to 16.795, and copper is lower -1.95 to 374.55.

The dollar index is up +0.168 to 73.437.

On the Radar


MBA Mortgage applications: 2.9% vs. 15.6% last week.
Consumer Price Index (m/m): 0.2% vs. 0.3% cons.
Core CPI (m/m): 0.1% vs. 0.2% cons.
CPI (y/y): 3.9% vs. 4.0% cons.
Core CPI (y/y): 2.3% vs. 2.4% cons.

Click here for the full trading radar.

It's the hump. Good luck today!
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No positions in stocks mentioned.

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