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Two Ways To Play: Starbucks Grinds 600 Locations

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Strengthen your portfolio in good times and bad.

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Starbucks Cuts Back

The Financial Times reports Starbucks (SBUX) announced that it will close about 600 stores in the U.S. Chief Financial Officer Peter Bocian said yesterday that while the economy had been "awful," the decision to cut back was more due to overly-aggressive expansion plans. The move will result in pretax charges of about $300 million and about 12,000 job cuts. That figure amounts to 7% of its global workforce.

Starbucks now says it will open less than 200 new stores in 2009, down from an original plan of about 500. See Starbucks' New Coffee: Bold or Bland?

From the Bull Pen: SBUX shares are higher in the pre-market. Those that believe this is a positive move for the company can play the upside; sell-stops can be set below $15.30.

From the Bear Cave: Bears looking for a downside play can look elsewhere such as Papa Johns (PZZA). The stock broke its uptrend from January. Buy-stops can be set above $27.


Bernstein Upgrades Exxon

Exxon-Mobil (XOM) caught an upgrade this morning. Research firm Sanford Bernstein raised its rating of the world's largest oil company from "market perform" to "outperform." According to Bloomberg, analyst Neil McMahon in London wrote in a note to investors that the company consistently generates the best returns in the industry. This combined with a solid credit rating "better than most governments," and in addition to its ability to weather market downturns," McMahon views Exxon Mobil as "a safe and steady pair of hands." Read Professor Matt Ford's A Free Market Misunderstanding.

From the Bull Pen: Exxon's uptrend since 2002 appears to be in tact. But sell-stops in the near term can be set below $85.

From the Bear Cave: Bears looking for a related downside play might find one in Frontier Oil (FTO). Previous support is now resistance. Buy-stops can be set above $25 on downside tries.


For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.


Quick Check Around the World

Asian trading closed mostly lower with the Hang Seng -1.80%, Nikkei -1.31%, Sensex +5.42%, Taiwan -0.73% and Shanghai unchanged.

Glancing towards Europe, we see some green with the CAC +0.61%, DAX +0.97%, FTSE +1.49%


A Look At Commodities

Crude oil is up +0.13 to 141.10. Gold is lower -6.60 to 937.70. Silver is down -0.230 to 17.970, and copper is lower -2.50 to 389.75.

The dollar index is higher +0.030 to 72.404.


On the Radar

Economics

MBA Mortgage Applications: 3.6% vs. -9.3% prior.
ADP Employment change: -79 k vs. -20 k cons.

A day and a half left! Good luck!

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No positions in stocks mentioned.

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