'Fast Money' Recap: Financials Come Off the Mat
Stocks in the U.S. finished the week with an up day Friday as a bullish round of earnings reports propelled the markets higher. The Dow and the S&P 500 each gained 1.8%, and the Nasdaq jumped up 2.6%.
On
CNBC's
"Fast Money" TV Show, the traders discussed bullish action in the financials. Karen Finerman said that eventually stocks in that space will put up good numbers, but lately they're still losing money. She said that investors believe the worst is over for the credit problems at the major banks.
Pete Najarian observed that the
Financial Services Select SPDR
(XLF) - Get Report
is close to the $24 level and continues to post higher lows. He said that for a bottom to truly come in, all of the bad news has to come out.
Jeff Macke urged viewers not to confuse stocks with news. He said
Merrill's
(MER)
performance earlier was a tell for the sector, because the quarter was a "nightmare," but the stock absorbed the news. The short thesis on the financials is dead, he said, because there are no more catalysts to bring stocks lower.
Adami said that he had advised viewers to get long
Wachovia
(WB) - Get Report
, and now it's up 7%. He said investors can raise their stops, because Wachovia will go up.
Najarian predicted that massive writedowns in the space will eventually have more value. He said he was impressed by the financial service sector.
TD Ameritrade
(AMTD) - Get Report
,
Charles Schwab
(SCWH)
and even
E*Trade
(ETFC) - Get Report
are looking all right, he said.
He said
Goldman Sachs
(GS) - Get Report
,
Lehman Brothers
(LEH)
and
Morgan Stanley
(MS) - Get Report
are all looking strong here too, because they're overbeaten.
Sweet on Honeywell
Honeywell
(HON) - Get Report
and
Caterpillar
(CAT) - Get Report
produced solid numbers when they reported earnings this week. Adami said that Caterpillar's run was all about mining. He said investors should take profits if they had been long the name. He said the Honeywell earnings report was fine, and the company is a long-term buy.
Macke said that
General Electric
(GE) - Get Report
laid an egg with its earnings but Honeywell,
United Technologies
undefined
and Caterpillar have an international kicker that helps performance. He said the U.S. economy is coupled to the rest of the world.
Najarian agreed, saying that Asia was a big driver for
Deere
(DE) - Get Report
. He said Deere's results were driven by the agriculture boom. He said
Potash
(POT)
Agrium
(AGU)
and
Terra
(TRA)
are all worth a look.
Retail Rallies
Macy's
(M) - Get Report
and
Nordstrom
(JWN) - Get Report
rallied. Macke said this is an opportunity to sell. He said he likes
Wal-Mart
(WMT) - Get Report
and
Costco
(COST) - Get Report
. Otherwise, trim gains, he said.
Adami noted that
MasterCard
(MA) - Get Report
reached a 52-week high today. He said the name is still a monster buy.
Energy Works
With oil up 6% this week, the traders welcomed
CNBC
contributor Dennis Gartman to the show. He said oil's not done climbing. He cited problems in Nigeria, a big oil producer. He said all energy works right now and recommended
San Juan Basin
(SJT) - Get Report
.
Macke asked Gartman about gold. Gartman said gold is a play on the weak dollar. He said he's bullish on gold but said it's got to move back up to $950 an ounce to look strong.
Najarian said oil services stocks are ripping higher. Gartman said investors can't get short the sector, and said new technology offers new opportunities to find oil. He said
Petrobras
(PBR) - Get Report
is the name to play.
(GOOG) - Get Report
had its best day ever. Shares jumped $90, or 20%.
Najarian said to lighten up positions a little.
Apple
(AAPL) - Get Report
and Google had been value plays into earnings. He said Google owns search with 55% of the market. He said on a valuation Google still isn't overpriced.
Macke said that the stock made a fantastic move. He said
Amazon's
(AMZN) - Get Report
big move today will be harder to justify when it reports earnings. Finerman said that Google is now worth $20 billion more, and so it's harder to get involved in the name here.
Najarian said to wait for a pullback in Google. If it gets into the low $400s, it's too cheap, he said. He predicted that its earnings will continue to impress.
The Train Set
CSX
(CSX) - Get Report
also posted solid earnings. Adami said it looks great, and that viewers should note
Burlington Northern Santa Fe
(BNI)
reports soon. He also said to look at
Wabtec
(WAB) - Get Report
.
Quicker Than the Ticker
The traders looked at their recent good calls. Adami picked
Intel
(INTC) - Get Report
ahead of earnings. The stock is up 6% after beating the Street's expectations. Finerman said to look at
BJ Services
(BJS)
, which was up 13% since her call. Najarian chose
Walter
(WLT)
, which subsequently rallied 6%. Macke chose
Citigroup
(C) - Get Report
, which climbed 11% since his call.
Microsoft
(MSFT) - Get Report
, Apple,
Yahoo!
(YHOO)
and Amazon are due to report in the coming week.
Finerman observed that the whole desk has liked Microsoft. She said it is possible that the company lower its bid for Yahoo!. She said she doesn't anticipate any news before Yahoo!'s earnings. Her fund is long both names, she said.
Macke said Yahoo! is going to try to prove that Microsoft shouldn't lower its bid. He said he doesn't expect Amazon's numbers to be bad, but the stock is more of a "crap shoot."
Apple of Your eye
Adami predicted that
Apple
(AAPL) - Get Report
will "crush" when it reports earnings. He said to keep an eye on
Western Digital
(WDC) - Get Report
.
Najarian said to keep an eye on
EMC
(EMC)
.
Pfizer
(PFE) - Get Report
reported weak earnings this week. The traders looked at how that news bodes for the rest of the biotech sector. Najarian said Pfizer needs to make acquisitions. He said
Johnson & Johnson
(JNJ) - Get Report
posted pretty strong numbers. He said investors should look at
Amylin
(AMLN)
.
Macke said that Pfizer has been too conservative. He said he'd rather be in tech. Najarian said that Pfizer is a good stock, and at some point the company will turn itself around. He recommended a look at
Biogen Idec
(BIIB) - Get Report
as well.
The traders welcomed technical analyst Dan Fitzpatrick to the show to talk about the transports. He said he thinks that the Dow needs to test a breakout point to spark a rally. He said the financials need to make new highs. He said he's wary of the financials because he doesn't understand what's going on in that sector. The stocks are still in downtrends, and he doesn't know if they're due for a rally or another move lower.
Adami said
FedEx
(FDX) - Get Report
and
UPS
(UPS) - Get Report
have absorbed their bad news and he likes the names for the second half of the year.
Trader Radar
Wells Fargo
(WFC) - Get Report
shares were among the most actively traded on the
New York Stock Exchange
today.
Fast Fire
The traders took a look at some of their bad calls. Macke had said to stay away from
IBM
(IBM) - Get Report
ahead of earnings. Shares surged 5%. He still recommended taking profits. Adami recommended a buy in
Crocs
(CROX) - Get Report
, which then fell 44%. Adami said he was going to try recommending the stock again, with a stop out below $10. Najarian recommended
Nokia
(NOK) - Get Report
, shares of which fell after the company missed estimates. He said he thinks the stock is trading in a range.
For their surprise guest, the crew welcomed
Mosaic
(MOS) - Get Report
CEO Jim Prokopanko to the show. He said his company has not been seeing demand for fertilizer decrease. He said phosphate and potash is still performing. He said if the price of food commodities decreases, demand for fertilizer will decrease. Macke said he likes Mosaic. Najarian said the company is actually cheap on the basis of its forward price-to-earnings ratio.
Final Trade
Macke chose Microsoft, as did Finerman and Najarian. Adami picked Wachovia.