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Before the Bell: Ugly New Homes and McDonald's Challenges


New home sales took a dip. McDonald's beats but shares fall...

Ugly December In New Home Sales

According to Bloomberg, new home sales in December fell to a 12-year low, capping the worst year since recordkeeping began in 1963. Sales came in at 604,000, far below expectations. Economists had forecasted that the figure would be unchanged from the 647,000 rate reported the prior month. Further, median home prices plunged to $219,000, down from $244,700 reported last December. For more, read Professor Kevin Depew's Five Things You Need To Know.

From the Bull Pen: Bulls with a higher risk profile see a short term upside trade in Pulte Homes (PHM) and Hovnanian (HOV). Trailing sell-stops may be placed below $12.65 for PHM, and $7.35 for HOV.

From the Bear Cave: Bears are paying more attention to the glut of supply in the housing sector and may choose to play the downside in the iShares Dow Jones Real Estate Index Fund (IYR). Entry at $70 with buy-stops above.

Mickey D's Challenges

McDonald's (MCD) reported fourth quarter earnings yesterday of $0.73 per share. The figure was $0.02 better than analyst expectations. Revenue rose 5.7% year-over-year to $5.75 bln vs. $5.61 bln consensus. Fourth quarter same store sales globally came in at 6.7% vs. 5.9% consensus but below expectations in the U.S, 3.3% vs. 4.5% consensus. Shares of the company fell 5.6% due to investor concern over the company's ability to weather a downturn in the global economy and other challenges such as increased food prices. Get Hoofy and Boo's perspective in Fast Food: Caveat Eator.

From the Bull Pen: Professor Jeff Macke stated yesterday on the Buzz that McDonald's was due for a pullback, but favors the stock in the longer term. Sell-stops may be placed below $48.

From the Bear Cave: Bears looking for a downside play in the dining space may see one in Cheesecake Factory (CAKE). Entry at $22, which coincides with the 50-DMA with buy-stops above.

For more ideas, see Minyanville's Spotlight Stocks.

Quick Check Around the World

The Turnaround Tuesday ticks line up for the snap as foreign markets are trading mostly higher.

Asian trading closed with the Hang Seng +0.99%, Nikkei +2.99%, Sensex -0.34%, Taiwan +1.21% and Shanghai +0.87%.

A quick look across the pond finds the CAC +1.37%, DAX +1.03%, FTSE +0.96%, ATX +2.01%, Swiss Mkt. +1.15% and Stockholm +0.69%.

A Look At Commodities

Over in commodity land, crude oil is higher +0.49 to 91.48 and gold is down slightly, -0.70 to 932.10 this morning.

On the Radar


8:30 Durable Goods Orders: 1.9% cons
9:00 S&P/CaseShiller Index
10:00 Consumer Confidence: 87.5 cons

Click here for the full trading radar.

Happy Tuesday, Minyans! Good luck!

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No positions in stocks mentioned.

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