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Two Ways To Play: GM Gets Totaled

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Strengthen your portfolio in good times and bad.

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Dismal Results for GM

Bloomberg reports General Motors (GM) posted a $15.5 billion loss in the second quarter because of costs from truck leases and labor disputes as well as plunging sales in the U.S. The loss breaks down to a deficit of $27.33 a share for the largest U.S. automaker and marks the company's fourth straight quarterly loss.

CEO Rick Wagner said on television that hopefully the worst is over for the company. It is looking to sell Hummer as soon as possible but feels it may take a while. The cost of protecting GM debt rose after the release by 3% to 43.5%. Todd mentioned GM earlier this week in his Answers I Really Wanna Know.

From the Bull Pen: Bulls can look to Celgene (CELG) for an upside play. Note the double top breakout at $75. Near-term sell-stops can be set below that level.

From the Bear Cave: We've talked about GM and the bearded financials. A better downside play could be in Target (TGT); buy-stops in the near-term can be set above $48.


Greenspan Drama

Bloomberg reports stocks took a dip late afternoon yesterday when Former Fed Chairman Alan Greenspan said that falling home prices in the U.S. are "nowhere near the bottom" and market turmoil is showing no signs of abating. In a television interview, Greenspan said the odds of a recession are 50-50 and achieving stability in the marketplace would take some time. He also said Fannie Mae (FNM) and Freddie Mac (FRE), the largest sources of money for U.S. home loans, are a "major accident waiting to happen" and that nationalization is the likely solution. For more context on the economy, see Professor Kevin Depew's Five Things You Need To Know.

From the Bull Pen: Is the gold ETF (GLD) a good risk/reward play? Professor Lewis pointed out the bullish island reversal pattern yesterday as well. Sell-stops can be set below $87.

From the Bear Cave: Bears can choose to play the downside in Centex Corporation (CTX). Buy-stops can be set above $15.


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 +0.58%, Nikkei -2.11%, Sensex +2.10%, Taiwan -0.31% and Shanghai +0.94%.

Quickly checking Europe, we see the CAC -0.91%, DAX -0.86%, FTSE -0.48%


A Look At Commodities

Commodities are lower. Crude oil is down -0.90 to 123.16. Gold is lower -9.20 to 914.00. Silver is off -0.205 to 17.585, and copper is off -8.45 to 363.20.

The dollar index is higher +0.039 to 73.266.


On the Radar

Economics

Change in Nonfarm Payrolls: -51k vs. -75 k cons.
Unemployment rate: 5.7% vs. 5.6% cons.
Change in Mfg. Payrolls: -35 k vs. -40k cons.
Avg Hourly Earnings (m/m): 0.3% vs. 0.3% cons.
Avg. Hourly Earnings (y/y): 3.4% inline.
Avg. Weekly Hours: 33.6 vs. 33.7 cons.

9:00 RPX Composite 28 Day Index
9:00 RPX Composite 28 Day YoY
10:00 ISM Manufacturing
10:00 ISM Prices Paid
10:00 Construction Spending MoM


TGIF! Good luck today and have a great weekend!
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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