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Two Ways To Play: Dell of a Quarter


Strengthen your portfolio in good times and bad.

Consumer Spending Slows

The Commerce Department reported today consumer spending rose 0.2% in April inline with expectations. According to Bloomberg, it is a sign that the largest part of our economy may be faltering as higher energy costs and slumping home values continue to eat into the confidence of the American Consumer. Personal income grew 0.2% above expectations of a 0.1% increase, but that was bolstered by the recent government tax rebates which some believe may only provide temporary relief in the coming months. Last quarter, consumer spending rose at a 1% annual pace which was the smallest gain since the 2001 recession. See Professor Kevin Depew's Five Things You Need To Know: Wants Vs. Needs.

From the Bull Pen: The bulls will continue to look to the best-in-breed plays. One option is Wal-Mart (WMT); sell-stops can be set near the 50 DMA ($55.80) or support at $55.

From the Bear Cave: Bears might consider a downside play in GameStop (GME); buy-stops can be set near the 100 DMA ($51).

Dell Making Real Progress?

Shares of Dell (DELL) surged nearly 10% yesterday in after-hours trading. According to Bloomberg, the world's second largest personal-computer maker behind Hewlett-Packard (HPQ) beat expectations on earnings per share and revenue, signaling that the company's turnaround strategy is making real progress. Consumer laptop shipments rose 78% with sales advancing in all groups except for desktop PCs. And for the first time overseas revenues exceeded those in the U.S. with a 19% gain in Asia. Last year, CEO Michael Dell abandoned the strategy of selling PCs only through the phone and online and added 13,000 retail outlets in the world's 20 largest economies.

From the Bull Pen: For the bulls that believe in the emerging markets story, an entry into Dell might be more appealing should the stock be able to hold its 200 DMA ($23.40). Sell-stops can be set below that level on an upside attempt.

From the Bear Cave: Bears are watching the behavior in Dell near $24.40 as it represents a 50% retracement from the November peak. Sell-stops can be set above this level on a downside attempt.

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 +1.52%, Sensex +0.61%, Taiwan -0.76% and Shanghai +0.94%.

A quick look towards Europe finds the CAC +0.39%, DAX +0.51%, FTSE +0.22%

A Look At Commodities

Commodities are higher. Crude oil is up +1.31 to 127.92. Gold is higher +7.40 to 884.60. Silver is higher +0.335 to 16.850, and copper is up +4.10 to 361.00.

The dollar index is higher +0.034 to 73.057.

On the Radar

Personal Income: 0.2% vs. 0.1% cons.
Personal Spending: 0.2% vs. 0.2% cons.
PCE Deflator (y/y): 3.2% vs. 3.1% cons.
PCE Core (m/m): 0.1% vs. 0.1% cons.
PCE Core (y/y): 2.1% vs. 2.1% cons.

9:45 Chicago PMI: 49.5 cons
10:00 Mich Sentiment-Rev: 60.0 cons

End this week on a great note! Good luck!
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No positions in stocks mentioned.

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