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Two Ways To Play: Retail in Retreat

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Strengthen your portfolio in good times and bad.

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December was another painful month for US retailers as rising unemployment and tighter credit conditions contributed to what may have been the worst holiday shopping season in 4 decades.

Even Wal-Mart (WMT) couldn't withstand the pressure. According to Bloomberg, shares of the world's largest retailer plunged after the company reported lower-than-expected same-store sales and announced that fourth-quarter net income would miss previous forecasts. Wal-Mart finished the day down 7.49% to $51.38.

Elsewhere, Macy's (M) same-stores sales were down less than analyst expectations (-4% versus -6%), but the company announced 11 store closings and now predicts fourth-quarter earnings would come in below consensus. Shares fell by 3.36% to $10.93.

Posting better-than-expected same-store sales were Target (TGT) and Sears (SHLD). Those shares rose 1.3% and 23% respectively.

For more on the December figures, see Professor Jeff Macke's Wal-Mart, Aeropostale Lead Lackluster Retail.

From the Bull Pen: Costco (COST) is still one of the favorites. Bulls can consider this stock with a sell stop near $48.

From the Bear Cave
: See Amazon (AMZN) approaching $60 resistance. For a trade, bears can test the downside if the stock reaches that level.

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No positions in stocks mentioned.

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