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Two Ways To Play: Ford, Toyota Spin Their Wheels

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Strengthen your portfolio in good times and bad.

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More gloomy news from the automotive sector. According to Bloomberg, Ford (F), Toyota (TM), Honda (HMC) and General Motors (GM) all reported declining sales in September because tighter credit conditions turned off buyers.

Ford said sales of cars and light trucks dropped 35% year-over-year. Toyota reported a 32% drop and Honda reported a 24% drop. GM's figures were down 16%.

Industrywide, sales likely fell for an 11th consecutive month marking the longest decline in 17 years.

Buyers were turned away as consumers were faced with tighter credit conditions. Last week CNW Marketing Research said loan rejections rose for all categories of auto buyers in the US - even for those with the best credit. The firm also said that through September 20, just 81% of applications for prime loans were approved, down from 91% a year earlier.

From the Bull Pen: It might be too easy to say that consumers weren't going to be buying cars and trucks, just soup and crackers. Nonetheless, note today's performance in Campbell Soup (CPB). Those that remain bullish on this stock can set sell stops below $38 or 37.

From the Bear Cave: All of the automakers are facing challenging times. But a rally in Honda to $32 could present bears with the best downside opportunity. If and when.
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No positions in stocks mentioned.

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