Rising tensions in the Middle East and South East rattled the stock market on Monday.
Dow Jones Industrial Average
fell 31.62, or 0.37%, to 8483.93, and the
lost 3.38, or 0.39%) to 869.42. The
skidded 19.92, or 1.3%, to 1510.32.
Melissa Lee, the moderator of
's "Mad Money" TV show, asked the trading panel if there were any trading opportunities in today's thinly traded market.
Joe Terranova said that there is so much uncertainty in the market that it's difficult to know whether to rely on fundamentals or technicals. He said a push to a durable rally technically has failed and there are no signs on the fundamental side to support either buying or selling.
Guy Adami liked the trading opportunities in
, which he would go long, and
Rohm & Haas
Pete Najarian said he doesn't really expect anything to happen until 2009 when investors with trillions of dollars on the sidelines make a move back into the market.
Lee asked the panel to comment on
's shaky deal with Rohm & Haas after the Kuwait government pulled out of a deal to buy half of Dow's plastics unit, which would have been used to finance the Rohm deal.
Terranova said the falling out is "all about declining oil revenue in Kuwait." Jeff Macke said he didn't liked getting "slapped around by Kuwait" and wondered "where's the gratitude."
Lee asked the panel to comment on mall stocks in the wake of a 20% decline in retail traffic over the holiday season. Adami said he would short
, a maker of lightning fixtures for commercial buildings.
Terranova said he would be a buyer of REITs because he senses a momentum shift into the stocks after a nice recovery from November until now.
Macke said the news is going to get worse in retail as the reality of bankruptcies creeps in. "When they mark down 70%, they're giving away a significant amount of their margins."
The trading panel turned their attention to one of the big stories of the day: the 6% increase in crude oil as a result of the escalation in violence brought on by the Israeli attacks against Hamas along the Gaza Strip.
Looking at the price of gold on a chart, Adami talked about a "pennant" formation in the price, adding there could be significant move up in gold if prices move past that formation.
Najarian said investors might consider buying options in
Lee brought in David Kelly, chief market strategist for JPMorgan Funds, to talk about his outlook for 2009. Kelly said an expansion may start in the spring to the middle of next year. "It's not going to feel like it," he said.
Using history as a guide, Kelly said the deeper recession goes, the stronger the bounce back. "If you are long-term investors, look at the valuations. Take a gut check," he said. "By every valuation, US stocks are cheap."
He said he would be a buyer of
at these low prices.
Lyle Gramley, former
governor, appeared on the show to talk about the Fed's balance sheet, which has grown from $950 billion to close to $2.25 trillion.
Gramley liked what the Fed is doing to grapple with the problem, saying it's going in the right direction, and, with the fiscal stimulus package, should succeed.
Gramely said the big worry next year will be deflation, with the drop in the oil and the global economy in decline. He said the Fed needs to be aggressive in managing the balance sheet down. "It can do that by refusing to renew many of the short-term loans it's made," he said.
Lee asked the panel to comment briefly on what she called the Dow Dogs of 2009, including stocks such as
Bank of America
, which are sporting high dividends.
Narjarian said it would be "dangerous" for investors to use high dividends as the sole yardstick to measure stocks. He said these companies are going to have to own up to the fact that they should not be paying such high dividends.
Terranova wondered whether
Johnson & Johnson
can continue their strong performances in 2007 and 2008 and go for a threepeat in 2009.
Looking past what appears to another troubled year in 2009, Lee asked the panel for their forecasts for 2010. Terranova ventured that energy and natural resources should move higher in the next three to five years as economies reflate and have more need for energy and natural resources.
He expects stocks like
and Freeport McMoRan to fare well.
Arch Crawford, an astrologist-technical analyst, noted that the stars are pointing to a rally in the first half of next year and a plunge in the second half.
Charter Worth, chief market technician for Oppenheimer Asset Management, said he expects the S&P to ride along current levels for the next few months as market apathy continues.
He also said he's a seller of gold stocks such as
because they have appreciated much faster than the price of the gold.
In the final trades, Macke said he liked
; Adami was high on Target; Terranova would play oil through
; and Najarian was up on
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