An update: a decision to hold one short and close another short position - due to the probability of higher-than-expected U.S. GDP growth in Q3/Q4, and the impact that better economic recovery would have on consumer spending.Exxon-Mobil (NYSE: XOM), recommended on June 3, 2009 at a price of $72.88. As expected, Exxon-Mobil's stock remains under pressure, due to the possibility of moderating oil prices and continued, sluggish U.S. gasoline sales, stemming from 7 million lay-offs in the U.S., increased vehicle efficiency, and a frugal consumer. Hold Short, but Cover Short on a bounce off $60, $56.50, $55, $50, $45, or $40. Revised Buy/Stop Loss if you sold shares in this company: $78.
Wal-Mart (NYSE: WMT), recommended on June 3, 2009 at a price of $50.88. Cover Short immediately, taking the modest $1 or so profit, while it lasts. The 'frugal consumer' trend has weighed on sales even at discounter WMT, but the stock re-tested and held support in the $47-48 range this summer, and that fact, combined with an approaching U.S. economic recovery, tips the risk/return scale against the position, hence the Cover Short recommendation.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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