'Fast Money' Recap: The Intel Effect
After a hesitant day, the New York stock market closed slightly to the upside Tuesday. The Dow, S&P 500 and Nasdaq each added 0.5%. Intel (INTC) - Get Intel Corporation Report delivered an earnings beat after the close.
On
CNBC's
"Fast Money" TV show, Pete Najarian said the options gave traders a road map into earnings, because the activity had predicted a 7% move, which is how the stock reacted.
Jeff Macke said that guidance was in line, but that the Street wasn't expecting a tremendous amount. He said expectations were tempered by a bearish report from
AMD
(AMD) - Get Advanced Micro Devices Inc. Report
. Intel said that margins and revenues were looking good for the year, which means that demand for the company's wares hasn't "fallen off a cliff," he said.
Najarian said that positive earnings from Intel may work in
IBM's
(IBM) - Get International Business Machines Corporation Report
favor. He said that Intel's strength is a buyback program.
3 Stocks I Saw on TV |
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Guy Adami said that $23 was the support price level when Intel stock broke down. He said he believes that same level will offer resistance. He said he wouldn't buy Intel right here, because he and the traders have liked tech for a while. Investors who have been long Intel should take profits, he said.
Najarians pointed out that Intel said its flash-memory business has been a negative. The competition is too high, he said. This means you should stay away from
Micron
TheStreet Recommends
(MU) - Get Micron Technology Inc. Report
and
Sandisk
(SNDK)
, he said.
CSX
(CSX) - Get CSX Corporation Report
earnings also came in better than expected. Adami said the earnings per share of 85 cents were ahead of expectations of 72 cents. He said the beat bodes well for other railroad stocks.
Najarian said to keep an eye on
Norfolk
(NSC) - Get Norfolk Southern Corporation Report
, which is very cheap at these levels. He also recommended
Burlington Northern Santa Fe
(BNI)
Macke said he would stick with the railroad trade as long as the fundamentals continue to back it up. He said the railroads are managing their stocks very well.
Najarian said that viewers should also look at
Mosaic
(MOS) - Get Mosaic Company (The) Report
,
Potash
(POT)
and
Monsanto
(MON)
. He said these agriculture names have pricing power.
Joy Global
(JOYG)
and
Bucyrus
(BUCY)
are also worth a look because their story is still intact, Adami said.
Airline stocks continued to decline despite news of a merger between
Delta
(DAL) - Get Delta Air Lines Inc. Report
and
Northwest
(NWA)
. Najarian said it's too early for the efficiencies and pricing power to come into play. Macke expressed skepticism that the airlines would ever be a worthwhile investment.
Adami said that
Johnson & Johnson
(JNJ) - Get Johnson & Johnson Report
shares did nothing today on earnings. He said the company has moved toward a
Procter & Gamble
(PG) - Get Procter & Gamble Company (The) Report
model. He said he liked what Johnson & Johnson had to say today.
Real estate investment trusts, including
Ventas
(VTR) - Get Ventas Inc. Report
and
HCP
(HCP) - Get HashiCorp Inc. Report
, are on a bull run. Finerman said she believes the companies are overvalued. The money that's going into these names hopes that they're defensive, but she doesn't think so, she said. Macke agreed, saying that the stocks are ahead of themselves.
Crude oil prices continued to surge. The crew welcomed
CNBC
contributor Addison Armstrong to the show to discuss the event.
Armstrong said he's not sure that oil will reach $120 a barrel. He noted that oil is acting like a currency proxy. On the other hand, he said, there are supply worries in the market today, including a decrease in Russian oil supply and output. He said that it's hard to be short here, and that investors should be positioned for a move to $115. If it breaks through $115, he said, it's going to $120.
Macke agreed, saying that the $110 to $120 trading range he'd been talking about earlier is now gone. Oil is going higher, he said.
On natural gas, Armstrong said the commodity still has the fundamentals behind it. He said that there was resistance at $10.30. Of gasoline, he said that the national average price at the pump will creep toward $4.
Shares of
Crocs
(CROX) - Get Crocs Inc. Report
plummeted after hours Monday and stayed down all day Tuesday. Najarian said there may be investors tempted to pick for a bottom in the name. He said to wait a while.
Macke said he had wanted to buy the dip but said the CFO has lost his credibility after delivering such poor numbers. Finerman agreed, saying that when management doesn't have a handle on its business she can't buy the stock.
IBM reports earnings tomorrow after the close. Shares have risen 8% since January. Najarian said that options are predicting a 7% move in the stock. He also noted that the stock is up today after earnings from Intel. He said he likes IBM.
Adami said that the company has a lot of revenue overseas and that 75% of its revenue from banks comes from overseas, so it may be immune to some of the problems in the domestic markets. He recommended taking profits ahead of earnings and then getting back in on a dip.
Macke agreed, pointing out that Intel popped today after being down "horribly" all year. Coming in line was good enough to cause a spike in Intel shares, he said. With IBM up year to date, he said that the stock may fall on earnings.
The consumer price index will be reported tomorrow. The crew welcomed Zach Karabell, president of River Twice Research, to the show to discuss inflation. He said that today's producer price index didn't reveal any new information, and he expects that tomorrow's CPI will be similar. He said that although inflation can produce fear in consumers, it won't necessarily become a huge negative on the corporate side.
Macke agreed, saying he's more concerned about recession than inflation. Karabell said that for the most part, people will continue to spend as long as they have jobs and income, regardless of inflation.
Merrill Lynch's
(MER)
earnings this week are hotly anticipated, and some on the Street speculate that the company's report will determine market activity. Najarian noted heavy put activity ahead of earnings. He said that there has been a 3-to-1 put-to-call ratio and that volatility has reached 125%.
Macke said that the put-buying in Merrill may be late, because the market already knows that there is a lot of trouble in the financials. He predicted that the stock would not move substantially on its report.
Trader Radar
Pfizer
(PFE) - Get Pfizer Inc. Report
was one of the most actively traded stocks on the
New York Stock Exchange
today.
The traders moved on to look at some stocks that hedge fund managers like to buy. They covered
Altria
(MO) - Get Altria Group Inc. Report
, whose cigarettes are a defensive play.
Finerman warned investors that it's not always wise to own favorite stocks of hedge funds, because the funds can sell their substantial stakes in companies because of liquidity concerns. She said that Altria and its spinoff
Philip Morris
(PM) - Get Philip Morris International Inc Report
combine for a market cap of $150 billion, so they're safe from a liquidity squeeze. She said she liked Philip Morris for its powerful cash flow and growth potential, particularly if the company can penetrate the Chinese market.
Claymore Securities is debuting a solar ETF that will trade under the ticker TAN. The traders talked with Claymore president Christian Magoon about his ETF. Magoon said that an ETF will offer a more diversified play on the booming solar industry. Finerman asked if there would be puts available on the ETF.
Fast Messages
One viewer asked why refiners were not doing well. Adami said that the crack spread has collapsed. Macke said that this happened because it's hard to raise gas prices as fast as crude prices can increase. Finerman pointed out that to the extent that oil is a currency trade, the market is dislocated.
Final Trade
Macke said to sell IBM ahead of earnings. Adami said to buy
Apple
(AAPL) - Get Apple Inc. Report
. Finerman selected
Domtar
(UFS) - Get Domtar Corporation Report
. Najarian chose
Noble
(NE) - Get Noble Corporation plc Report
.
