Tuesday marked another drab day for U.S. stocks as investors again turned their attention forward to the outcome of a rendezvous by Federal Reserve officals. The Dow finished down 0.3%, the S&P 500 lost 0.4%, and the Nasdaq added 0.1%.
"Fast Money" TV show, the traders talked about the action in commodities and the U.S. dollar. Jeff Macke noted a large move in agriculture names. He said that a 2% move downward in oil is not a top. He said gold is a better short than oil.
Karen Finerman said that she doesn't believe the market has seen a bottom for the dollar. She said that she hopes the
does nothing to the fed funds rate, because another rate cut won't accomplish anything for the financial markets.
Pete Najarian said that investors are rotating out of oil, metals and agriculture, which he said have had an unbelievable run. He pointed to action in
, saying the companies have continued to produce outstanding numbers. He said that investors should prepare for a pullback and be willing to sell some of their gains, but oil at $110 is still evidence of a bull market in commodities.
3 Stocks I Saw on TV
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Finerman said that if there is a groundswell against U.S. ethanol policy, that could be bearish for agriculture companies.
Najarian disagreed, saying that ethanol policy is not a driving force in the agriculture boom, pointing to a global surge in demand for food. He said a pullback in Potash stemmed from an RBC analyst predicting a pullback, but Najarian said the analyst still has $300 in a target range for the stock.
Macke noted strong action in retail today. He said that the stimulus package may help the consumer. He said that ethanol may not be driving the ag boom, but every bubble gets pricked eventually, and he says ethanol policy may serve that purpose. He said
is trading on "decade-long" highs, thanks to the consumer.
Back to the Oil Patch
Najarian noted options activity in the
U.S. Oil Fund
may indicate a pullback in the ETF.
Guy Adami recommended
after a 50% correction. He said the stock may be offering an entry point. He also recommended
CFO previously said the bank would not need to raise capital, the company raised $3 billion in a stock offering. Shares dropped after hours.
Finerman said that the problem is that shareholders are left with the impression that the company was done raising capital, only to be surprised. That's troubling, she said.
Adami said that similar news has occurred in other financial names, notably
Macke said $3 billion isn't enough for Citigroup. He recommended raising more capital if the company needs it. He predicted the financials would ease after a good run on the Fed news.
Najarian noted that $27 has served as resistance in the
Financial Select Sector SPDR
. He said the fund has reached that level seven times, and Citi's selloff has kept it in that range.
shares plummeted 9% today on news that the FDA would reject its experimental cholesterol drug.
Najarian said that bad news has kept this stock down for a while, and investors had thought this drug would be a "layup for approval. He said it might be time to buy the stock, although the pipeline has been hurt.
Macke advised viewers to stay away from Merck. After repeated bad news, it's time to move on, he said.
On predictions that
Grand Theft Auto 4
will be the best video game ever, Michael Pachter, gaming analyst at Wedbush Morgan, joined the show to discuss video games.
Pachter said that although the game will be great, he doesn't believe it will substantially affect
unsolicited bid for Take-Two. He said that the game's sales are already priced into the stock and that arbitrageurs may raise Electronic Arts' bid slightly, but the original price is a fair value.
In advance of the Fed's notes on its meeting and GDP figures,
correspondent Steve Liesman joined the show to talk about the economy.
Liesman said that GDP growth is expected to be flat to slightly positive. He advised viewers to be cautious if the growth appears to come from rising inventory numbers, as this is actually not a positive sign. He said, however, that if the consumer appears to be waking up, that will be better for the market. He predicted a pop in consumer spending from the economic stimulus package.
Liesman also predicted that Fed Chairman Ben Bernanke would temper his statements to attempt to avoid dissenting statements from other Fed board members. He said that in the future the Fed is likely to rely more on creative measures to help the credit markets, rather than simple rate cuts.
Adami said that the weak-dollar trade is likely to unwind in the second half of the year.
Noting solid earnings reports from
, the traders debated whether the economy may be all right, and how to trade that thesis.
Macke said that good companies are not whining about the economy, and that's why Corning and
are performing well. Adami recommended taking profits in Corning, saying the stock will likely pull back before making a run to $30. Finerman recommended
. Najarian said he likes
traded on unusual volume today.
The traders looked at actions by billionaire investor Warren Buffett, who has done very well even in a slumping economy. Macke said to keep things simple and buy
, Buffett's company. Adami recommended figuring out why Buffett likes what he holds. He said he thinks Buffett likes
because of its good management,
Burlington Northern Santa Fe
because of pricing power, and
Johnson & Johnson
because of its consumer products exposure.
Finerman said she would buy Berkshire shares. Najarian said he agrees with Adami, and pointed viewers to
, which he said has some credit risk but might have more upside than Burlington Northern or Johnson & Johnson.
Commodities trader Dennis Gartman wrote in to the show to say that the commodities bubble has popped and that he's short
as a play on weakness in the space.
One viewer asked what would be a good trade on aggressive Fed action against inflation. Finerman said that if the Fed raises rates the market will go down, as will oil. She predicted the dollar would rise substantially.
Another viewer asked for a good play on potential bullish action in natural gas. Najarian recommended
. Macke recommended leaving the commodities trade alone. Adami recommended
on a pullback.
Macke recommended selling Citigroup. Adami chose the
Short Dow30 ProShares
. Finerman selected
. Najarian picked