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Two Ways: Consumer Credit Contracts Again


Strengthen your portfolio in good times and bad.

Consumer Credit Contracts Again in August

Consumer credit fell by $12 billion in August -- an annual rate of -5.8% and marking a seventh consecutive decline, according to a report released yesterday by the Federal Reserve.

In a story by Bloomberg, July's contraction, however, was revised upward to 9.1%, but the series of declines marks the longest streak since 1991.

Revolving debt, such as credit cards, fell 13.1% in August -- a decline of $9.9 billion. Non-revolving debt, which includes auto loans and mobile home loans, fell 1.6% -- a decline of $2.1 billion.

From the Bull Pen: Although the consumer-credit contraction is significant, what investors must realize is the much larger role of government in all of this mess, a reason for higher equity prices. Bulls can consider health-care company Johnson & Johnson (JNJ); there appears to be a floor near 59.50. One can set a sell stop below that level.

From the Bear Cave: If you're looking for a downside play, a failure for subprime consumer lender Capital One (COF) near $39 could signal a double-top. If and when.

A Quick Check Around the World

Asian trading closed with the Nikkei 0.34%, India 0.22%, Hang Seng 1.18%, Shanghai (Closed), and Taiwan -1.38%.

Across the pond, we see the FTSE 0.63%, CAC 1.23%, DAX 1.20%

As of 8:15 a.m. EST, S&P Futures are trading +8.00 to 1061.75 and Nasdaq futures are +11.75 to 1719.75.

A Look at Commodities

Over in commodities, crude oil is +0.70 to 70.27 while gold is +11.3 to 1056.00 this morning. Silver is +0.34 to 17.85 and copper +7.900 to 285.85.

The dollar index is -0.4550 to 76.2100.

On the Radar


08:30 Initial Claims
08:30 Continuing Claims
10:00 Wholesale Inventories (-1.0% cons.)

Also be on the lookout for today's 30-year Bond auction results at 1:00 PM EST. Click here for the full trading radar.

Remember, Minyans. It's okay to be wrong. The real sin is in staying wrong. Good luck and have a great day.

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No positions in stocks mentioned.

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