'Fast Money' Recap: Bear Party
The stock market continued to slide on Monday as the dollar reversed higher to take down the commodity stocks. The Dow closed down 55 points and the Nasdaq 43 points. The crew at CNBC's "Fast Money" guide investors through these tricky market waters.
Pete Najarian's one concern all day long was the strength in the volatility index, which closed on the highs. Because the market traded so poorly at the end of the day, he is very bearish right now. Jeff Macke joins the bears because the market couldn't bounce on Monday. Karen Finerman didn't think it was so bad on Monday, since the financials found a bid. Guy Adami predicts we see 12,700 on the Dow.
Dennis Gartman
Dennis Gartman, author of The Gartman Letter, joined the 'Fast Money" crew to discuss his take on the dollar, which he predicted last Friday was due for a bounce. The dollar had its biggest one day reversal in a year on Monday. Gartman expects that the dollar has a lot more upside to go and he would also keep an eye on the Canadian dollar. He noted that in the last 4 days the U.S. dollar had the biggest rally versus the Canadian dollar that he has seen in his life.
He also wouldn't be surprised to see gold fall another $40, because the general public is too long. Gartman is looking for oil to fall $10-$15 before Thanksgiving. Gartman recommended investors watch what is going on with the carry trade and the new strength in the Japanese Yen. Gartman disclosed that he is minimally long gold and short crude oil and no longer short large American oil companies.
Where are the Shoppers?
Merrill Lynch economist David Rosenberg came out with an interesting note for clients on Monday. Rosenberg commented that the last time he's seen a drop in consumer confidence to this degree during the Holiday season; the economy was in a recession. Macke thinks the Tuesday earnings reports from
Home Depot
(HD) - Get Report
and
Wal-Mart
(WMT) - Get Report
will be horrific. The only retailer he expects a good earnings report from is
Kohl's
(KSS) - Get Report
and he thinks the wild card is
Macy's
(M) - Get Report
. He would get long
Costco
(COST) - Get Report
and
Target
(TGT) - Get Report
on deep discounts.
Finerman agrees with Macke. She disclosed she is currently long Home Depot for a longer term value play. Adami thinks a trade is setting up for
Coldwater Creek
(CWTR)
, which he mentions has a very high short interest. Adami will give viewers the trade when it's ready.
E*Trade Strategy
E*Trade
(ETFC) - Get Report
lost 60% of its value Monday on concerns over the companies loan portfolio. In Finerman's opinion, the most clear trade is to be long
TD Ameritrade Holding
(AMTD) - Get Report
, which she accomplished on Monday. Finerman sees opportunity for TD Ameritrade to steal E*Trade clients with all the problems they're having. She also likes
Charles Schwab
(SCHW) - Get Report
.
Najarian thinks Ken Griffith, manager of Citadel Investment Group, might be looking at E*Trade for a takeover on valuation. Finerman agrees that E*Trade could possibly be a takeover target in the next few days. However, Macke doesn't see E*Trade as a takeover target at all.
Make a Deal
Deals continue to get done on Wall Street Monday with
IBM
(IBM) - Get Report
buying
Cognos
( COGN) for $5 billion and
Fortune Brands
( FO) selling its wine business to
Constellation Brands
(STZ) - Get Report
for $885 million. Adami declares
United States Steel
(X) - Get Report
will be the next company to be taken over.
(Some portfolios use merger information to make decisions, try looking at this manager's picks on Stockpickr.com
.)
Word on the Street
Technology stocks continued to slide Monday with leaders like
(GOOG) - Get Report
dropping 5%,
Apple
(AAPL) - Get Report
dropping 7% and
Research In Motion
( RIMM) dropping 9%. Adami likes
Hewlett Packard
(HPQ) - Get Report
ahead of next Monday's earnings report. Najarian noted unusual options action in technology stocks
EMC Corp
(EMC)
and
Vmware
(VMW) - Get Report
. He noticed that institutional players were buying December $20 calls and selling December $22.50 calls on EMC. This signals to him that EMC is going higher.
Rio Tinto
( RTP) hits a record high after
BHP Billiton
(BHP) - Get Report
laid out the details for its $140 billion all-share offer. Finerman thinks the deal could have some anti-trust issues, and if those issues can't be worked out the downside could be big. Najarian says the Chinese could have a problem with the combined companies controlling 77% of the world's iron ore production.
Big pharmaceutical stocks continue to outperform in a weak tape. Adami says the big pharma story is not fiction and
Merck
(MRK) - Get Report
is for real. He also loves defense play
Johnson & Johnson
(JNJ) - Get Report
. Macke agrees with Adami and that right now is a good time to be long Merck,
Procter & Gamble
(PG) - Get Report
,
Pfizer
(PFE) - Get Report
and
Church & Dwight
(CHD) - Get Report
for a defensive portfolio. Najarian wants to keep an eye on
Eli Lilly
(LLY) - Get Report
Pops & Drops
Pops -
Cisco Systems
(CSCO) - Get Report
traded up 2% on Monday as the market declined. Adami suggests buying it here, but stopping out below $29.
Mattel
(MAT) - Get Report
traded up 4% off a JPMorgan upgrade. Macke tells investors to move along; a recession isn't priced into this stock.
Starwood
(HOT)
traded up 2% after announcing plans to buyback $1 billion in stock and increase its dividend by 7%. Najarian sees signs that says investors might be starting to think that HOT is in play for a takeover.
Washington Mutual
(WM) - Get Report
traded up 1% as the financial stocks mounted a rally on Monday. 1% for WM is a huge victory in Finerman's eyes.
American Airlines
(AMR)
,
US Airways
(LCC)
and
Delta
(DAL) - Get Report
all traded up more than 5% as oil prices declined. Adami would sell the airlines into the rallies.
Starbucks
(SBUX) - Get Report
traded up 3%. Finerman believes SBUX was oversold and under owned.
Drops -
Freeport McMoRan
(FCX) - Get Report
fell 10% as commodity stocks were hit off the dollar rally. Adami predicts FCX has another 10% to go on the downside.
Tyson Foods
(TSN) - Get Report
fell 3% after cutting its 2008 forecast. Macke thinks investors can buy this stock.
Sotheby's
(BID) - Get Report
fell 2%. Finerman isn't that optimistic about BID.
Mosaic
(MOS) - Get Report
fell 14% off the dollar rally. This isn't much of a drop yet, according to Najarian
Final Trade
The team shares its best ideas in a difficult market.
- Macke likes defensive play Procter & Gamble (PG) - Get Report.
- Adami recommends Cisco Systems (CSCO) - Get Report.
- Finerman and Najarian both picked TD Ameritrade Holding (AMTD) - Get Report.
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