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Two Ways To Play: POSCO Steels Spotlight


Strengthen your portfolio in good times and bad.

High on POSCO

Reuters reports POSCO (PKX) is expected to report strong results for its second quarter. The company is expected to show a 13% increase in net profit to $1.2 billion, its highest in three years with sales rising 26% to nearly $7 billion.

Expectations are high for the South Korean company as analysts feel the company can pass on costs more easily to its customers. The company raised prices twice in February and April, and put up prices again in July, taking the total increase up 63% for the year. POSCO kicks off the steel sectors' earning season when it reports this Friday.

From the Bull Pen: Is U.S. Steel (X) the better play? Sell-stops can be set below the 50 DMA ($149).

From the Bear Cave: With all of POSCO's pricing power, the stock hasn't been able to recapture its 200 DMA since it first fell below it in January. Bears can fade the stock should it rally towards the $130 mark.

Luxury Pains

Bloomberg reports luxury goods purchases, one of the last holdouts in consumer spending, may be collapsing under the weight of the U.S. economy. In an effort to combat the decline in spending, stores like Saks (SKS) are offering discounts of as much as 60% on high priced items. The move is further eroding the Saks' profitability with operating margins dropping from 5.3% in 4Q to 4.7% in the first quarter. International Council of Shopping Centers Michael Niemira projects that sales at U.S. luxury stores would drop as much as 2% this year. Read one of Professor Depew's recent Five Things You Need To Know.

From the Bull Pen: Even bad stocks have their days. Saks is registering a 13 DeMark buy signal. Sell-stops can be set below the 52 week low ($9.42).

From the Bear Cave: Another luxury play with more room to fall could be Coach (COH); downside entry should the stock approach $30.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed with the Hang Seng -3.16%, Nikkei -2.45%, Sensex -1.30%, Taiwan -3.94% and Shanghai +0.81%.

Glancing towards Europe, we find the CAC -1.78%, DAX -1.77%, FTSE -1.33%.

As of 8:30 AM EST, S&P futures are down 3 points to 1248, and Nasdaq futures are lower 1.75 points to 1830.

A Look At Commodities

Commodities are lower. Crude oil is down -1.25 to 140.09. Gold is lower -3.40 to 925.40. Silver is off -0.208 to 17.630, and copper is down -4.70 to 381.80.

The dollar index is up +0.081 to 72.749.

On the Radar


10:00 Pending Home Sales: -2.8% cons, 6.3% prior
10:00 Wholesale Inventories: 0.7% cons, 1.3% prior
15:00 Consumer Credit: $7.0B cons, $8.9B prior
17:00 ABC Consumer Confidence: -43 prior

Have a great day!
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No positions in stocks mentioned.

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