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Two Ways: Pennies Get Pinched Still Tighter


Strengthen your portfolio in good times and bad.

US consumers continued to cut spending in April as unemployment concerns put further pressure on their pocketbooks. Incomes, however, increased overall, as did the savings rate, which rose to its highest level in 14 years.

According to Bloomberg, household purchases, which account for over two-thirds of the economy, fell in April by 0.1%. The loss was smaller than predicted, but still marked the second consecutive month of decline.

Incomes had their biggest increase of the year, growing at a rate of 0.5%, but analysts attribute those increases to a rise in unemployment benefits and Social Security payments. Economists were expecting incomes to drop by 0.2%.

Meanwhile, personal savings as a percentage of disposable income rose to the highest level since 1995, from 4.5% in March to 5.7% last month, as consumers continued to steadily construct safety nets to support them through the worst recession in a quarter-century.

For more on the economic data, see Professor Jack Lavery's Construction Spending: Don't Let the Headline Fool You.

From the Bull Pen: We mentioned Costco (COST) last week after the stock took a dip post-earnings. If $49 resistance is firmly in the rearview mirror, continue to play this stock, with a sell stop near $48.

From the Bear Cave: For a downside play, consider a potential head-and-shoulders pattern in Celgene (CELG). Also see gapfill near $44. bears can set a tight buy stop above that level.

Mondaaaays. Have a great night!
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