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Two Ways To Play: POSCO Steels Spotlight

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Strengthen your portfolio in good times and bad.

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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

Economics

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!
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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