Two Ways To Play: Mind The Gap
Strengthen your portfolio in good times and bad.
Gap (GPS) surprised the Street with better-than-expected first-quarter profits. According to Bloomberg, the largest clothing retailer in the U.S. said net income increased 40% to $249 million, or 34 cents a share on revenues of $3.38 billion. Analysts expected 31 cents a share on $3.42 billion in revenues. The company improved its profitability by cutting costs, lowering payroll and advertising spending but was still able to sell more jeans and t-shirts in the process. However, same store sales fell 11% including an 18% drop at Old Navy, its largest division by revenue. Nonetheless, Gap issued inline guidance for FY2009 saying EPS would come in the range of $1.20-1.27 per share.
From the Bull Pen: Gap has been trading in a tight range for some time. Should Gap shares rise, bulls that already own the stock might decide to use a covered call strategy.
From the Bear Cave: Bears see a broken uptrend in Urban Outfitters (URBN); buy-stops can be set above $32.
Existing Home Sales
According to Bloomberg, sales of previously owned homes likely fell in April to a record low. At 10:00 AM EST, the National Association of Realtors is scheduled to report existing home sales data. Economists are looking for a drop of -1.6% to 4.85 million homes. It would be the lowest level since comparable records began in 1999. Meanwhile, yesterday the Office of Federal Housing Enterprise Oversight said home prices fell a record 1.7%, the biggest drop in the 17 years the housing regulator has tracked the data. For context, see Professor Kevin Depew's Five Things You Need To Know.
From the Bull Pen: Bulls can consider the $65 level in the iShares Real Estate ETF (IYR) for an upside trade.
From the Bear Cave: Housing bears can use Home Depot (HD) for a downside play; buy-stops can be set above $27.80.
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 -1.31%, Nikkei +0.24%, Sensex -1.52%, Taiwan -1.92% and Shanghai -0.36%.
A quick look towards Europe finds the CAC -0.97%, DAX -0.47%, FTSE -0.57%
As of 8:45 AM EST, S&P futures are lower -5.10 points to 1388, and Nasdaq futures are down -6.00 to 1960.
A Look At Commodities
Commodities are mixed. Crude oil is higher +1.38 to 132.19. Gold is higher +7.80 to 926.10. Silver is lower -0.023 to 17.975 as well as copper, down -0.85 to 371.40.
The dollar index is higher +0.154 to 72.053.
On the Radar
10:00 Existing Home Sales: 4.85 million cons.
10:00 Existing Home Sales (m/m): -1.6% cons
Happy Friday, Minyans! Three-day weekend! Woo!
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter