The stock market rebounded sharply Monday as investors continue to bet that the Federal Reserve will lower rates on Wednesday. The Dow closed up 176 points and the Nasdaq finished up 23 points.
On
CNBC's "Fast Money" Monday, Guy Adami says investors should look to buy dips in the financial stocks. According to Pete Najarian, traders should sell the
Financial Select Sector SPDR(XLF Quote) now that it has had a phenomenal run. Jeff Macke mentioned he is very concerned going into the Fed meeting. He advised investors to pay attention to the Fed language and look for statements about growth, inflation and guidance.
American Express(AXP Quote) reported a 10% drop in quarterly net income. The stock traded down 3% after hours on the news. Adami says if you want to be in this sector, the play is
MasterCard(MA Quote).
CME Group(CME Quote) held talks to buy
Nymex Holdings(NMX Quote) for $11 billion. Adami feels the CME trade is over. He likes the
NYSE Euronext(NYX Quote) better for its cheaper valuation. Najarian says if you want to play CME, put on a call spread to control your risk.
Commodity stocks surged Monday as gold hit a record high. Finerman mentioned refiner play
Holly(HOC Quote) was upgraded Monday. Adami says the play for the commodity sector is
Potash(POT Quote). Macke thinks gold will trade to $1,000 and he likes
streetTracks Gold Trust(GLD Quote). Najarian doesn't like the GLD; for a gold play he would rather play the miners and use put options for protection. He likes miner names like
Newmont Mining(NEM Quote),
Barrick Gold(ABX Quote) and
Goldcorp(GG Quote).
VMware(VMW Quote) reported sales that missed analysts estimates. The stock plunged 27% after hours on the news. Adami thinks at some point VMW will become interesting. He would also look to buy
EMC(EMC Quote) if it trades below $15.
According to a study by the University of Wisconsin, the Super Bowl advertisers tend to beat the
S&P 500 in late January and early February in 10 of the last 12 years. Macke would like to short this study; he thinks it makes little sense.
Chartology With Dan Fitzpatrick
Dan Fitzpatrick, contributor and technical analyst for
RealMoney.com, joined the "Fast Money" show to discuss the markets. Fitzpatrick explained that the chart of the S&P 500 looks broken, and dip-buyers are now losing money. He thinks that once the S&P 500 trades back to 1400-1425, it will come under heavy selling pressure from dip-buyers who will sell to get their money back. Fitzpatrick likes the look of the chart for Potash, which is still trading above its 50-day moving average. Finally, he looked at the chart for
Toll Brothers(TOL Quote). He called Toll Brothers' chart the "Slope of Hope" and recommended that investors sell the stock at $23, which he thinks is still the top.
Recession Trade
This week's cover of
Newsweek says we're in a recession. Finerman thinks the U.S. is in a recession, but the question is how deep is it. Adami agrees that we're probably in a recession, but he advised investors to take a look at
DuPont(DD Quote) and
Eastman Chemical(EMN Quote) for early recovery plays. He explained that investors should watch
Burlington Northern Santa Fe(BNI Quote) Tuesday when it reports earnings. He thinks BNI will be a great tell if we're in a recession.
Macke thinks it's too late to be putting on a recession trade now. He feels now is the time buy retail stocks for the long term. Finerman feels the homebuilders might have some tailwinds, and she wouldn't be short the sector. Najarian thinks it's a bit early to be getting into the homebuilders. He suggests looking at the cheaper agriculture names like
Archer Daniels Midland(ADM Quote).
McDonald's Trade
McDonald's(MCD Quote) put in its largest percentage decline in five years Monday. Macke explained that the weak consumer has finally caught up with the burger chain. He thinks MCD is a great American company but he questioned its coffee strategy. Macke says investors should take a look at
Starbucks(SBUX Quote), which he thinks will do well over the next six to 12 months. According to Adami, now is the time to look at McDonald's stock for its attractive valuation. Najarian also thinks now is a great opportunity to buy McDonald's. He recommended investors build a position in the name.
Yahoo! Earnings Trade
Yahoo!(YHOO Quote) is set to report earnings Tuesday. What is the trade? Macke mentioned he isn't enormously optimistic about Yahoo!. The only thing good he could see happening right now is a takeover by
Microsoft(MSFT Quote). Finerman says she wouldn't be shocked to see Microsoft buy Yahoo!. None of the "Fast Money" crew was willing to recommend buying Yahoo! ahead of earnings.
Trader Radar
Alberto-Culver(ACV Quote) traded four times its average daily volume Monday.
RSS
Stockpickr Staff
Get Cramer's portfolio stock picks at Action Alerts PLUS —