'Fast Money' Recap: The Schizoid Dow
Stockpickr Staff
08/01/07 - 11:18 PM EDT
The Dow is bizarre and schizophrenic.
That was the word from the "Fast Money" gang Wednesday, after the stock market experienced wild volatility, with the
Dow dropping 79 points and then rallying back 150 at the close. Pete Najarian highlighted the put-to-call ratio on the
Financial Select Sector SPDR(XLF Quote), which tells him there are no bottom fishers in the financials.
Word on The Street
Najarian saw strength in names such as
United Technologies(UTX Quote),
Boeing (BA Quote) and
Johnson & Johnson (JNJ Quote). He also likes tech names
Juniper(JNPR Quote) and
Cisco Systems (CSCO Quote), which closed near their day's high.
Eric Bolling suggests that market players shouldn't make any big bets right now. Bolling gave us a pairs' trade, going long
Goldman Sachs (GS Quote) and short
Citigroup(C Quote). Najarian liked that Goldman closed up today.
Beazer Homes(BZH Quote), however, saw its stock fall 40% on bankruptcy rumors.
The company released the following statement today: "We have become aware of rumors circulating in the market about Beazer Homes' liquidity and a prospective bankruptcy filing. We do not know where these scurrilous and unfounded rumors started." Adami highlighted how the stock traded its float and then some. Bolling believes that BZH is going bankrupt, and Najarian would avoid the sector. Crude oil traded to a new all-time high today; Bolling says refinery utilization at 93% is the reason.
Najarian would look to the oil services sector and get out of the refineries.
General Motors(GM Quote) and
Ford (F Quote) reported a decline in sales Wednesday, while
Toyota (TM Quote) saw its first drop in sales in three years.
Guy Adami would put on a pairs' trade, going long F and short GM.
Walt Disney (DIS Quote) reported strong earnings and revenue postclose, while Time Warner
(TWX Quote) traded lower on problems with AOL ad numbers. Pete Najarian wouldn't get in TWX until the company is split up.
Jeff Macke says Disney did OK with theme park revenue up 6%, and is comfortable long.
Starbucks(SBUX Quote) missed analysts' estimates on revenue, but the stock is up after hours. Jeff Macke would get out of the stock, but Eric Bolling likes the java-maker from a technical standpoint.
Jobs and Blackstone
The ADP employment report could be signaling a bad jobs report for Friday. Eric Bolling believes that a lot is riding on Friday morning and that a bad number could bring out weakness. Jeff Macke says a weak number will give the market an excuse to sell off. Seven firms on Wednesday today and rated
Blackstone(BX Quote) a buy. Adami believes that only Wachovia has it right with a neutral on valuation. Najarian mentioned that the price-to-earnings was too high when it came public, and that's why you had to sell it.
Trading a Migraine Breakthrough
A new drug could help end migraine pain for 300 million sufferers The Food and Drug Administration could soon approve a new prescription drug for migraines.
CNBC's Mike Huckman joined the crew tonight to discuss the potential drug.
Huckman talked about a drug called Trexima, made jointly by
GlaxoSmithKline (GSK Quote) and
Pozen(POZN Quote). A biotech analyst is speculating that Pozen will trade to $22 if it's approved and drop to $13 if not. (Real Money Take: Roger Nusbaum wrote about GSK recently: "The allocation would be 6% to GlaxoSmithKline (GSK) and 5% to Pfizer (PFE)." For more, check out
this article.)
Pete Najarian feels that Trexima could be huge. Huckman says that HMO's are now only paying for 4 to 5 pills a month for migraine patients, which could hurt the blockbuster potential of this drug. Huckman added that
Allergan(AGN Quote) is in phase III clinical trials testing Botox for migraine suffers.
Call for Help
In this turbulent market, wireless telecom continues to shine. The "Fast Money" crew discussed the way to play it. Guy Adami loves
Research In Motion (RIMM Quote) calling it an "animal." Pete Najarian, for the second day in a row, likes
Alvarion(ALVR Quote) as a trade on WiMax. (Real Money Take: Jim Cramer wrote about RIMM recently: "The next selloff will not hurt the Research In Motions (RIMM)." For more on what Cramer said, check out
this article.)
He also is bullish on
FiberTower(FTWR Quote), which had a monster day Wednesday. Eric Bolling likes the strength in
AT&T(T Quote), which goes up when the market goes down.
Preserve Your Reserves
Consumer-product companies could be the play to help investors protect returns. On Thursday
Clorox(CLX Quote) reports earnings, and
Procter & Gamble (PG Quote) reports Friday. (Real Money Take: Dick Arms wrote about CLX recently: "Clorox appears to have turned up again after a two-month decline. I like to see the heavy volume coming in on the upside. In the last two days, it has pulled back from the breakout on light volume." For more on what Dick said, check out
this article.)
Eric Bolling likes the
Consumer Staples Select Sector SPDR Fund (XLP Quote). Jeff Macke would be a buyer of PG here, along with Guy Adami. Najarian was bullish on Clorox, Procter & Gamble and
Colgate(CL Quote) because all three went up into the close Wednesday. (Real Money Take: Roger Nusbaum wrote about PG recently, "In applying this logic, you are saying that a stock such as Procter & Gamble (PG) has the same risk profile as, say, Baidu (BIDU) That's surely not the case." For more on what Roger said check out
this article.)
Sector Trade
Wednesday's focus was on the "Magellan trade." GPS maker
Garmin(GRMN Quote) was up 10% after reporting a 72% jump in revenue. Also,
Trimble(TRMB Quote) and
Navteq(NVT Quote) were up on solid earnings. Garmin CFO Kevin Rauckman joined the crew to discuss his company's prospects. Bolling asked the CFO to, "give us a window into your demand." Rauckman said that "in the first half of the year we've seen very strong growth in the U.S market, so strong, we've seen a 300% increase on units sold in Q2."
Jeff Macke asked how pervasive the consumer product will be, to which Rauckman responded, "In North America and Europe combined, we're looking at 25 million units of personal navigation devices just this year alone. The good thing about this market is there's very low penetration with many consumers not using it." Bolling asked if Garmin was able to keep up with demand. "We've recently spent $100 million in cap-ex this year to buy a third factory," he answered. Jeff Macke says he has a Garmin product that he loves. The entire crew wants to own all of the GPS stocks.
Pops and Drops
Pops and Drops is a new feature that follows the biggest stock movers of the day.
Pops:
Chipotle Mexican Grill (CMG Quote) was up 12% on an 85% jump in profit. Macke loves this stock.
OfficeMax (OMX Quote) was up 6% after beating estimates. Najarian likes the stock. Bruce Toll, CEO of
Toll Brothers (TOL Quote), sold 620,000 shares last month before the massive selloff in homebuilder stocks. Macke says "nice trade, Bruce."
Drops:
MasterCard (MA Quote) was down 11% after reporting earnings Wednesday. Adami is still bullish on the name.
Buffalo Wild Wings (BWLD Quote)was down 17% on poor sales. Bolling doesn't like the technicals on the chart.
Jones Apparel (JNY Quote) dropped 12% on news of price cuts. Najarian says it's a pig.
First Solar (FSLR Quote) was down 4% on higher costs. Bolling believes it goes to $75, and says get out now.
SPX(SPW Quote) was down 11% on worries of the company's exposure to the car sector. Adami likes this stock.
Ruth's Chris(RUTH Quote) was down 8% on rising beef prices. Macke prefers
Morton's (MRT Quote).
Final Trade
Jeff Macke would sell Starbucks. Pete Najarian says buy
St. Jude Medical (STJ Quote). Adami would buy
Short Dow30 ProShares (DOG Quote). Eric Bolling likes
El Paso (EP Quote) because natural gas recently caught a bid.
