'Fast Money' Recap: Driven by Energy
The U.S. stock market turned back toward the baseline from an early rally Monday. The Dow finished largely unchanged, while the S&P 500 added 0.2% and the Nasdaq lost 0.3%.
On
CNBC's
"Fast Money" TV show, the traders discussed an earnings warning from
Arch Coal
(ACI) - Get Report
. Pete Najarian said that the entire market has been driven by the global energy trade in areas such as coal, oil and natural gas. He said that
Chesapeake Energy
(CHK) - Get Report
and
Apache
(APA) - Get Report
have been running, as have coal stocks.
Guy Adami said that he's concerned about the immediate prospects for the energy stocks. He noted that
DuPont
(DD) - Get Report
pulled back after trading higher and that many energy names are showing signs of topping out.
Jeff Macke said that, as the traders have discussed, crude had been trading between $100 and $110, and today it reached up toward $110. He said that investors should buy dips and sell rallies but lean toward the bullish side in the market.
3 Stocks I Saw on TV |
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Najarian said that an upcoming Howard Weil Energy Conference will be very important for investors in the energy space.
More broadly, Macke noted that
Apple
(AAPL) - Get Report
pulled up after an upgrade then gave back its gain. He said that he had expected the market to open bullish and then cool down later in the day.
Washington Mutual
(WM) - Get Report
shares soared almost 30% on news that a private-equity firm may provide the troubled bank with $5 billion in financing.
Finerman said the news was unequivocally positive. She was surprised, however, that a private-equity firm was involved in the deal. The move is a sign that there's enough capital out there for firms to shore up their balance sheets, she said.
Najarian said that the rally in financials today was on low volume, which made it easier to sell. He said investors hadn't bought into the move upward. He maintained that the positive action in the market was about commodities.
Macke said of the financing deal for Washington Mutual that it is a bullish sign for smart money to be investing in the bank.
After hours,
Advanced Micro Devices
(AMD) - Get Report
warned about its upcoming earnings. Alcoa also fell on a disappointing earnings report.
Adami said that Alcoa missed their numbers, and he was disappointed by the explanation, which he didn't think was valid. Still, he said, the company saw favorable trends in Asia. He thinks investors can buy Alcoa at these levels, he said. Finerman said that there is still a possibility for a takeover of the company.
Jeff Macke said that Alcoa misses its numbers "every quarter" and that today's news didn't surprise him.
Najarian observed that Goldman Sachs raided 2008 and 2009 numbers for Alcoa ahead of earnings.
On AMD, Najarian said that competition in the chips sector is "brutal." He said that there had been a nice bump in the space thanks to
Micron
(MU) - Get Report
and
SanDisk
(SNDK)
, but any company can fall if competitors come into their space. He said he likes
Intel
(INTC) - Get Report
, because the company is not just a chipmaker.
On new developments in the
Yahoo!
(YHOO)
-
Microsoft
(MSFT) - Get Report
merger, Finerman said that she doesn't think anything's changed. She called Yahoo! defenseless.
Macke called Yahoo! "whiney." Microsoft is in the right, he said. Najarian reminded viewers that if Microsoft stock goes lower, then the takeout price for Yahoo! will likely go lower.
Gasoline prices hit record levels today. Adami said the news is great for
MasterCard
(MA) - Get Report
because most people use credit cards at the pump.
Najarian recommended keeping an eye on
BJ Services
(BJS)
and
Baker Hughes
(BHI)
. He also noted that the CEO of Chesapeake Energy bought more shares of his company lately.
Carl Icahn and
Motorola
(MOT)
reached a truce of sorts today. Icahn will have access to Motorola's board. Finerman said she's not sure what has changed but it will be good for everyone that they are no longer engaged in a proxy fight.
Activist investor Bill Ackman gave
Borders
(BGP)
money to keep the bookseller alive as it pursues alternatives, Macke said. He says Borders stock is getting interesting now.
WWE
(WWE) - Get Report
CEO Linda McMahon called in to the show to wish Macke a happy birthday.
With the earnings season beginning, the market expects consumer staples to get hurt for the upcoming quarter. Jon Najarian joined the show to discuss the matter. He said that investors don't expect that a company that sells razor blades, such as
Procter & Gamble
(PG) - Get Report
, will see its stock rise in the upcoming quarter.
Jon Najarian said that instead, the energy market is seeing increased expectations. He said that a look at the New York Mercantile Exchange explains the story, as commodity prices continue to rise. He said that energy and agriculture stories continue to hold strong. However, he advocated selling the rips and buying the dips. He's looking for a pullback in both sectors before getting long.
Being long the
S&P 500
during earnings season has not been profitable in the past six years, he said. He said that earnings season creates a stock-picker's market. Finerman disagreed, saying that the data set wasn't worth respecting.
Jeff Macke said that it may nonetheless be wise to take gains on companies that have posted gains ahead of earnings. He suggested selling some
Wal-Mart
(WMT) - Get Report
.
Jon Najarian said he was looking at
Jos. A. Bank
(JOSB)
. The stock may be a buy heading into this quarter, he said. He was also bullish on
Progressive
(PGR) - Get Report
.
The traders moved on to discuss the possibility that
Morgan Stanley
(MS) - Get Report
is the best trade to be had of all the financials. Najarian said the name will perform well going forward. He said that as Morgan Stanley breaks into the Chinese market it stands to reap the benefits of Chinese growth.
Finerman said she still prefers
Goldman Sachs
(GS) - Get Report
, thanks to its impressive return on capital. It has consistently outperformed Morgan Stanley in this category, she said.
Adami said he thinks Morgan Stanley could have a huge second half of the year, particularly. Macke said that Morgan Stanley heads a list of companies that can be bought at a substantial discount but that don't pose a huge risk.
Najarian said that if the company's assets, which it had written down substantially, ever turn out to have positive value, the company will have a "huge quarter."
Wyeth
(WYE)
and
Elan
(ELN)
surged on news about an upcoming Alzheimer's drug the companies are sponsoring.
Kris Jenner, who manages the T. Rowe Price Health Sciences Fund, joined the show to talk about the news. He said that the drug is the most advanced product of its kind and that the data will probably indicate that it will be successful in phase III trials. He said that 7 million people are diagnosed with Alzheimer's, and that thanks to the large addressable market, the drug could be worth $10 billion.
Jenner said the odds of success for the drug were "greater than 50-50." He said that a play on this drug is risky, but he likes the upside. Elan is riskier but holds a greater possible reward, he said, whereas Wyeth has multiple products and carries less risk.
Najarian said that the marketplace for Alzheimer's is very large. He said to also take a look at
Myriad
(MYGN) - Get Report
and
Eli Lilly
(LLY) - Get Report
. Lilly is in phase III testing of its own Alzheimer's drug, he said.
Trader Radar
Columbia Sportswear
(COLM) - Get Report
posted a decline on unusual volume today.
Carter Worth conducted a "Chartology" segment about investing in defensive stocks for bear market. He recommended making a different bet, saying to stay away from
Coca-Cola
(KO) - Get Report
,
Pepsi
(PEP) - Get Report
and Procter & Gamble. He recommended coal stocks, including
International Coal Group
(ICO)
. The stock has lagged the sector, he said, and is ready for a breakout.
Finerman said the coal sector is too rich for her. Adami said that laggards carry some risk, because if the sector pulls back, the stock might get hammered. Macke said he's terrified of laggards because they are generally the worst of breed.
Fast Money Madness
In the championship match of the "Fast Money Madness" NCAA-style tournament, Goldman Sachs routed Microsoft in a four-nothing vote among the traders.
Final Trade
Macke chose Microsoft. Adami said to take profits in
U.S. Steel
(X) - Get Report
. Finerman selected Goldman Sachs. Najarian picked Chesapeake Energy.