Minyanville's Before The Bell: Foreclosures Double, Customers Sprinting Away, Futures Point Lower
Futures point down a day after the Fed cuts. Housing foreclosures double and customer are running away from Sprint.
Morning Perspective: Subprime Slime Continues
Bloomberg reports U.S. home foreclosures doubled in the third quarter from a year earlier with subprime borrowers failing to keep up with higher payments on adjustable-rate mortgages. Data provided by Realtytrac showed there were 635,159 foreclosure filings in the third quarter with California, Florida, and Ohio accounting for 44% of the total. (From Bloomberg) Read Professor Linden's An Underappreciated Housing Number and Professor Shedlock's Housing Woes And Pain Avoidance for more.
From the Bull Pen: Those believing the negativity is overdone may look to tertiary housing plays such as Home Depot (HD) and Lowe's (LOW). Sell-stops below $30 and $26 respectively remain in play.
From the Bear Cave: After yesterday's FOMC release, homebuilders were left in the dust. Those wishing to play the downside may look to Meritage Home (MTH) with buy-stops above $18, or Hovnanian (HOV), buy-stops above $13, which has been an important resistance level so far in October.
Sprint Customers Run Away
Sprint (S) reported 3Q $0.23 EPS vs. $0.22 consensus estimates. Revenues fell 4.2% year-over-year to $10.04 bln vs. estimates of $10.23 bln. The company reported a net decline of 60,000 wireless subscribers in the third quarter but reaffirms guidance for FY '07 with revenues slightly below $41 bln vs. estimates of $40.77 bln. In addition, the company is laying off 5,000 workers in an effort to reduce expenses and weather customer defections. For more tech ideas, read Professsor Udall's Revisiting 21 Bullish Predictions For Tech.
The Bull Pen: Those believing the worst is over for Sprint may place sell-stops below the all-time low ($16.74). Tertiary plays include Verizon (VZ), near-term sell-stops below $43.89 (50-DMA), Alltel (AT) sell-stops below $69.67 (50-DMA), and AT&T (T), sell-stops below $40.85 (recent support).
The Bear Cave: Those believing the long-term trend will continue in Sprint may place buy-stops above $18, a pretty important resistance level.
Quick Check Around the World
Asian trading closed with the Hang Seng +0.45%, Nikkei +0.79%, Sensex -0.57%, Taiwan -1.17%, and Shanghai -0.68%.
Over in Europe, markets are lower with the CAC -0.46%, DAX -0.31%, and FTSE -0.42%. As of 8:30 AM EST, S&P futures are down 12 points and Nasdaq futures are lower by 11.5 points.
A Look At Commodities
Crude oil is up +0.82 to 95.35. Gold is up +5.0 to 800.3. Silver is up +0.14 to 14.40, and copper is higher +0.0135 to 3.4815.
On the Radar
Below is a list of economic data scheduled for today.
8:30 Personal Income: 0.4% cons
8:30 Personal Spending: 0.4% cons
8:30 Core PCE Inflation: 0.2% cons
8:30 Initial Claims: 331k prev
10:00 ISM Index: 52.0 cons
10:00 Pending Home Sales: -6.5% prev
5:00 Auto Sales: 5.1 mln cons
5:00 Truck Sales: 7.2 mln cons
Click here for Minyanville's full Trading Radar.
Good luck, Minyans! Have a great day!
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