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Two Ways To Play: Retail Madness


Strengthen your portfolio in good times and bad.

Bloomberg reports U.S. retail sales jumped twice as much as forecast in May. It was evidence that Americans blew their tax rebate checks on consumer goods rather than hoarding it to help stave off more weakness in the economy.

The Commerce Department said purchases jumped 1% last month. Economists were expecting sales to increase 0.5%. Furthermore, April's figure was revised upwards to a 0.4% gain, which was originally reported to decline 0.2%.

Breaking the numbers down, sales increased all around except for miscellaneous retailers. Auto sales and parts stores increased 0.3% after falling 2.1% in April. Excluding autos, sales jumped 1.2%, also above the median forecast of a 0.7% increase.

For more, See Professor Kevin Depew's Five Things You Need To Know.

From the Bull Pen: Bulls continue to like Wal-Mart (WMT), The stock definitely benefited from the tax rebate effect, but with its pricing power, bulls might still feel comfortable heading into the second half.

From the Bear Cave: The bears are skeptical of today's performance in other retailers. A downside play might exist in clothing retailers like J.C. Penney (JCP) and Limited (LTD) as inflationary pressures continue to weigh on consumers.
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