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Two Ways To Play: Stimulus Stimulates Wal-Mart's Earnings


Strengthen your portfolio in good times and bad.

Wal-Mart's Beat n' Raise

Bloomberg reports Wal-Mart (WMT) reported a 17% rise in second-quarter profits and increased its earnings forecast for the full year. The world's largest retailer said net income rose 17% to $3.45 billion, or 87 cents a share while revenues increased 10% to $102 billion. Excluding some items, profit beat analysts' expectations by 2 cents. The company benefited from its strategy of cashing tax-rebate checks for free and reduced prices on items like cereals and shampoo.

Wal-Mart also captured sales from consumers trading down from stores like Macy's (M) and other retailers by dressing up displays of flat-panel televisions, apparel, and home fashions. For the full year, the company expects to earn $3.43 to $3.50 per share above its previous forecast of $3.30 to 3.43 a share.

From the Bull Pen: Those that remain bullish on WMT can set sell-stops below the $55 support level.

From the Bear Cave: Bears can look to Target (TGT) for a downside play. A rally to the 200 DMA ($52) could provide them with an opportunity.

U.S. Foreclosures Jump 55%

Bloomberg reports banks repossessed almost three times as many homes in the U.S in July than a year earlier while the number of homes entering foreclosure status jumped 55%. According to data provided by California-based RealtyTrac, bank seizures rose 184% to 77,295, the largest increase since the company began keeping records in January 1995 while total foreclosure filing rose 8% from the previous month to 272,171, about 1,000 shy of the record set in May. RealtyTrac Vice President Rick Sharga said the problem is getting worse with the number of properties that have been foreclosed on by the banks and still haven't sold is the highest he's ever seen. For more on housing, see Professor Depew's Five Things You Need To Know.

From the Bull Pen: For those that believe rally will continue, Home Depot (HD) may be an option. Sell-stops can be set below $26.

From the Bear Cave: Those that remain bearish on housing can fade the rally in the Real Estate Index Fund (IYR) into the $65-$66 range.

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 +0.47%, Nikkei -0.51%, Sensex -2.44%, Taiwan +0.46% and Shanghai -0.38%.

Glancing towards Europe, we see the CAC +0.92%, DAX +0.49%, FTSE +1.22%,

As of 8:36 AM EST, S&P Futures are lower -6 points to 1278, and Nasdaq futures are down -5 point to 1935.

A Look At Commodities

Commodities are higher. Crude oil is up +0.17 to 116.17. Gold is up +6.80 to 831.80. Silver is up +0.010 to 14.855 and copper is up +3.40 to 340.10.

The dollar index is higher +0.038 to 76.246.

On the Radar.

CPI (m/m): 0.8% vs. 0.4% cons.
Core CPI (m/m): 0.3% vs. 0.2% cons.
CPI (y/y): 5.6% vs. 5.1% cons.
Core CPI (y/y): 2.5% vs. 2.4% cons.
Initial Jobless Claims: 450 k. Prior revised to 460 k from 455 k.
Continuing Claims: 3417 k. Prior revised to 3303 k vs. 3311 k.

Good luck today!
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No positions in stocks mentioned.

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