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Two Ways To Play: Toyota's Flat Tire


Strengthen your portfolio in good times and bad.

Toyota's Tough Quarter

According to Bloomberg, Toyota's (TM) fiscal fourth quarter profit fell more than analysts estimated and said earnings would fall due to currency issues and economic woes in the U.S. The world's second largest automaker said earnings fell 28% to 316.8 billion yen while sales rose 3.8% to 6.57 trillion yen. Toyota forecasts net income for the fiscal year to drop 27% to 1.25 trillion yen due to the stronger yen in addition to higher material costs and slowing demand in the U.S. The company gets about 50% of its operating profit from North America. Revisit Professors Kathy Lien and Boris Schlossberg's column, Has the Dollar Hit Bottom?

From the Bull Pen: Bulls can play the Japanese Yen ETF (FXY); sell-stops can be set near the 200-DMA ($91).

From the Bear Cave: Bears can consider the downside in TM, buy-stops above 109, as well as Honda (HMC); buy-stops above $34.

Pending Home Sales

According to Bloomberg, fewer Americans signed contracts to purchase previously-owned homes in March for the second month in a row. The National Association of Realtors said its index of pending home sales fell 1% to 83. On a year-over-year basis, pending sales fell 20%. In addition, February's 1.9% drop was revised downwards to 2.8% quieting those calling for a bottom in housing. For context, see Professor Andrew Jeffery's Foreclosure Relief Falls Short.

From the Bull Pen: Sometimes biotech stocks trade in a world of their own. Bulls looking for upside exposure can look outside of the real estate sector and consider Schering Plough (SGP). Sell-stops can be set around $17.

From the Bear Cave: The consensus is that the biggest risk to the U.S. economy is the downturn in housing. Until this reverses, bears can press the downside in the homies, one option being Meritage (MTH); buy-stops near $19.50.

For more ideas, check out Minyanville's Spotlight Stocks.

Quick Check Around the World

Asian trading closed with the Hang Seng -0.63%, Nikkei -1.13%, Sensex -1.49%, Taiwan -0.67% and Shanghai +2.17%.

Looking at Europe, we spy the CAC -0.41%, DAX -0.26%, FTSE -0.04%.

As of 8:35 AM EST, S&P futures are up +4.5 points to 1399, and Nasdaq futures are higher +6.25 points to 1966.

A Look At Commodities

Commodities are mixed. Crude oil is lower -0.22 to 123.31. Gold is higher +1.3 to 872.60. Silver is lower -0.62 to 16.555, and copper is down -7.30 to 379.00.

The dollar index is up +0.148 to 73.663.

On the Radar


Initial Jobless Claims: 365 k vs. 370 k cons.
Continuing Claims: 3020 k inline.

10:00 Wholesale Inventories: 0.5% cons.
1:30 ICSC Chain Store Sales:

Click here for the full trading radar.

Good luck!
No positions in stocks mentioned.

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