Two Ways To Play: Retail's Sad September
Strengthen your portfolio in good times and bad.
According to Bloomberg, candidates for running the mortgage-backed assets portion of the Treasury's $700 billion bailout program include BlackRock (BLK) and Pimco. This is the program just signed into law last week, which is designed to remove mortgages and other illiquid distressed assets from the balance sheets of many financial companies. State Street (STT) and Bank of NY Mellon (BK) are bidding to handle the record-keeping and custody services. Treasury Secretary Hank Paulson said yesterday that the department could begin hiring firms by the end of this week.
From the Bull Pen: A relief rally may be underway and BLK could eventually see a recovery back to near the $200 level. Sell stops in the near term can be set below $160.
From the Bear Cave: It's a free market again with the short ban lifted as of last night. But upside risk currently outweigh the downside. Capital One (COF) may be an option for bears if it can rally back to $45. If and when.
Retail's Sad September
From Bloomberg, J.C. Penney (JCP), Kohl's (KSS) and Nordstrom (JWN) all said 3Q profits would come in lower than analysts' estimates because of dismal September sales.
Full priced department stores are suffering as consumers worry that the Wall Street meltdown will affect their jobs and savings. On the other hand Wal-Mart (WMT) showed a 2.4% gain, and Costco (COST) recorded a 7% gain as shoppers focused on food and discount items. See Professor Jeff Macke's retail comments in his column yesterday.
From the Bull Pen: Wal-Mart back near the $55 level may offer bulls a solid long term play. Near term sell stops can be set in the $53-54 range.
From the Bear Cave: Bears can look elsewhere, like consumer electronics play RadioShack (RSH). Fading (read:sell) into the $17 level can be an option. Buy stops above that level.
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 3.31%, Nikkei, -.50%, Sensex -3.14%, Taiwan -1.45%, Shanghai -.4%.
Across the pond we see the CAC +2.13%, DAX +1.14%, FTSE +1.10%
As of 8:20 a.m. EST, S&P Futures are trading +16 to 997, and Nasdaq futures are +24 to 1334.
A Look At Commodities
Commodities are mixed. Crude oil is -0.02 to 88.93, Gold is -17.8 to 888.70. Silver is -0.102 to 11.660, and copper is -17.8 to 236.65.
The dollar index is down -0.044 to 80.872.
On the Radar
8:30 Initial Claims: (10/4)
10:00 Wholesale Inventories (Aug).
Click here for the full trading radar.
Happy Thursday! Good luck!
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