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Before the Bell: Bad Santa For Retailers, HP Beat, Futures Point Higher


It may be a bad holiday season for retailers. HP beats estimates and guides higher. Lookin' like Turnaround Tuesday again.

Morning Perspective: Bad Santa For Retailers

Bloomberg reports analysts are predicting a tough holiday season for U.S retailers as rising energy costs, high consumer debt levels, and a severe housing crisis continue to take their toll on consumer spending. A national survey found that 35% of Americans polled stated they intend to reign in on holiday spending. The combined factors have the National Retail Federation forecasting just a 4% increase in retail sales to $475.5 bln for the critical months of November and December, marking the smallest increase since 2002. For more context, read retail specialist Professor Macke's October A Month to Forget For Retail.

From the Bull Pen: Costco (COST) is considered by many a best-in-breed company. For those who believe Costco may weather this holiday storm, sell-stops may be placed below $64.50, marking a supporting trendline from the September low.

From the Bear Cave: Retail bears may see a downside play in Wal-Mart (WMT) with buy-stops above $47, which represents a break in the downtrend from the June highs.

A Hewlett Beat!

Hewlett-Packard (HPQ) reported 4Q earnings of $0.86 EPS, $0.04 better than consensus estimates. Revenues rose 15% on an annualized basis to $28.3 billion versus analyst estimates of $27.44 billion. The company issued upside guidance for 1Q with EPS at $0.80 vs. $0.77 consensus. HPQ also announced an $8 bln buyback. For another perspective into the New Year, read Minyan Andrea's Minyan Mailbag: Where We Are Relative To History.

From the Bull Pen: Those pleased with HPQ's numbers and its buyback can try the buy-side with sell-stops below $47, trendline from the July lows.

From the Bear Cave: Bears looking for a play in the tech sector may see a potential head and shoulders formation on Dell (DELL), should the stock rally to $28.20. Buy-stops may be placed above.

Click on Minyanville's Stocks To Watch more company-specific ideas.

Quick Check Around the World

Asian trading closed with the Hang Seng +1.13%, Nikkei +1.12%, Sensex -1.80%, Shanghai +0.45% and Taiwan was flat with a modest gain.

A quick check across the pond is skewed to the upside with the CAC +0.63%, DAX +1.18%, FTSE +0.74%, ATX +0.33%, Swiss Mkt. +0.43% and Stockholm +0.81%.

A Look At Commodities

Crude oil is up +0.97 to 95.61. Gold is higher +11.20 to 789.20. Silver is up +0.30 to 14.46. Copper is lower -0.7 to 301.80.

As of 8:30 AM EST, S&P futures are up +4.60 points and Nasdaq Futures are higher by +14.0 points.

On the Radar

Housing Starts: 1229K vs. 1170K consensus
Building Permits: 1178K vs. 1200K consensus

At 2:00 PM, FOMC Minutes will be released.

Click here for Minyanville's full Trading Radar.

Looks like it's going to be another Turnaround Tuesday! Good luck and have a great day!
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No positions in stocks mentioned.

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