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Two Ways To Play: Count on Discount


Strengthen your portfolio in good times and bad.

Retail in May

Monthly sales figures from the nations retailers helped kick-start a broad-based rally yesterday. But according to the Wall Street Journal, the figures were boosted in part by government rebate checks, leading many to believe that the gains will be short-lived.

Discounters led the sector with Wal-Mart (WMT), Costco (COST), and BJ's (BJ) all reporting solid results. Wal-Mart alone said it cashed in $350 million in rebate checks. Department stores and clothing chains mostly reported declining sales or weak forecasts. In all, U.S. retailers posted a 2.8% gain in same-store sales. For more, see Professor Jeff Macke's Retail Roundup.

From the Bull Pen: The picture looks increasingly bright for Wal-Mart. Bulls can continue to play the upside, and near-term sell-stops can be set near the 50 DMA ($56).

From the Bear Cave: Although the retail ETF (RTH) broke a short downtrend, bears remain skeptical of the sector and might choose to fade the stock as it approaches $100 resistance.

Monthly Jobs Report

All eyes are on the jobs report today due out at 8:30 AM EST. According to Bloomberg, economists are predicting nonfarm payrolls to fall 60,000 in May. It would be the fifth consecutive decline in the monthly report signaling the U.S. economy is stalling. Economists are also expecting the unemployment rate to increase to 5.1%. This is another blow to the American consumer as it faces soaring food and energy costs amid plummeting home values. For more context on the economy, see Professor Kevin Depew's Five Things You Need To Know.

From the Bull Pen: Stocks might see a bounce should the numbers come out better-than-expected. But major challenges still exist, and bulls might find safer plays in stocks like Kraft (KFT); near-term sell-stops can be set below $31.

From the Bear Cave: Bears see a downside play in Harley-Davidson (HOG); buy-stops can be set above $42.

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 +0.61%, Nikkei +1.03%, Sensex -1.25%, Taiwan +0.08% and Shanghai -0.66%.

Over in Europe we find the CAC +0.10%, DAX +0.04%, FTSE +0.07%

As of 7:00 AM EST, S&P Futures are trading -0.40 points to 1404, and Nasdaq futures are flat as well, -0.25 points to 2056.

A Look At Commodities

Commodities are mostly higher. Crude oil is up +1.96 to 129.74. Gold is higher +13 points to 884.80. Silver is up +0.125 to 17.295, and copper is unchanged at 355.30.

The dollar index is higher +0.071 to 73.104.

On the Radar


8:30 Average Workweek 33.7 cons
8:30 Hourly Earnings 0.2% cons
8:30 Nonfarm Payrolls –60 k cons
8:30 Unemployment Rate 5.1% cons
10:00 Wholesale Inventories 0.5% cons
15:00 Consumer Credit 7.7B cons

Happy Friday! Good luck and have a great weekend!
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No positions in stocks mentioned.

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