Wall Street started off the week on the bright side Monday. The Dow and the NASDAQ put in the best single one-day gains for the year. The Dow finished up 171 points and the NASDAQ closed up 38 points. The crew at CNBC's "Fast Money" wasn't convinced by the strong showing. They focused on the upcoming MacWorld and brought in Carter Worth to talk about charts.Karen Finerman was surprised at how well the stock market did across the board Monday. Jeff Macke explained that today was nice, but investors shouldn't get carried away. Pete Najarian mentioned that IBM's strong numbers were a validation for the strength in the global growth story.
Macworld PreviewMacworld is set to kick off this week and Apple ( AAPL) shares are already beginning to trade higher. Dylan Ratigan explained that rumors are floating around Wall Street that Apple could introduce an ultra-thin laptop and iTune movie rentals at the 2008 Macworld. Jon Najarian disclosed he is long Apple, but he doesn't think this Macworld will be as great as 2007 was when Steve Jobs brought out the iPhone. Najarian feels a better way to play Macworld is to buy into the Apple ecosystem plays like Adobe ( ADBE), EMC ( EMC) and Google ( GOOG). In Macke's opinion, Macworld could produce negative news for Netflix ( NFLX). He thinks a good hedge against Macworld is to short NFLX. (Here's how the pro's look at tech on Stockpickr.com with Wasatch Global Science and Technology.)
Rumor Has It....Tom Krazit, a top Apple blogger who writes "One More Thing" for CNET Networks joined the "Fast Money" crew to discuss the rumors surrounding Apple going into Macworld. According to Krazit, Apple is getting ready to introduce a very sleek ultra-thin laptop that could weigh less then 3 pounds and cost around $2000. He also mentioned that Apple has possibly made some deals with several major movie studios for iTunes rentals. He expects Apple will price iTunes movie rentals at $3.99 each. Lastly, Krazit explained it would be big news if Apple announced it will be adapting WiMax technology for its new computers.
Chartology with Carter WorthCarter Worth, the Chief Market Technician for Oppenheimer joined the "Fast Money" crew to discuss his take on the markets. Worth took a look at a 5-year chart for Yahoo ( YHOO) and he feels it is showing the stock is making a top. He demonstrated how YHOO is trading at a premium to tech darlings like Apple, Research In Motion ( RIMM) and Google even though it's growing at a slower rate. Macke thinks YHOO is a long term turnaround play. Najarian wouldn't short YHOO because he thinks it's a takeover target. Worth next mentioned he loves the coal stocks. He especially likes the charts on Peabody ( BTU) and Arch Coal ( ACI) and he would look to buy both on pullbacks. Adami agrees with Carter on BTU.
Tech TalkIBM ( IBM) reported a 24% rise in profit for the fourth quarter helped by strong demand from global sales. Adami thinks the trade off of IBM is to buy Western Digital ( WDC) which he thinks will report a great quarter. Najarian likes EMC ( EMC) and Juniper Networks ( JNPR) for a trade off of IBM. Intel ( INTC) is set to report earnings on Tuesday after the bell. Macke disclosed that he still has half of his Intel position in place going into earnings. He explained that he will be watching for the following three things from Intel on Tuesday: EPS at $0.40 for this quarter and $0.35 for the next quarter, margins above 55% and guidance of 60% for 2008 and economic outlook from Intel's CEO. Adami and Najarian like Intel as a buy here for a trade into earnings.
Rate Cut TradeThe Federal Reserve is set to meet on January 30th to decide on interest rates. What is the trade if the Fed cuts rates on the 30th or before? Najarian says if we get a rate cut keep an eye on Fannie Mae ( FNM) and Freddie Mac ( FRE). He thinks both stocks could make a huge move if the Fed cuts.
Word on the StreetCitigroup ( C) and Merrill Lynch ( MER) traded higher ahead of the earnings reports set for this week. Adami thinks Merrill looks like a better buy than Citigroup. Gold closes above $900 an ounce for the first time in history as the dollar trades to a 7-week low. Macke thinks Gold is going to $1000 and the way to play it is with streetTRACKS Gold ( GLD). Adami suggests that if you want to play commodities look at Deere & Co ( DE). Finerman mentioned that Apache ( APA) and Devon ( DVN) are good ways to get long natural gas. She also disclosed that she is long some Canadian income trusts like Paramount Energy Trust, Daylight Resources Trust and Canetic Resources Trust. Genentech ( DNA) reported fourth-quarter profits that rose 6%. The stock traded down 1.4% after hours. Najarian tells viewers to keep an eye on Genentch to see if it trades any lower. He explained the stock is near a 52-week low and it's getting interesting at these levels. Najarian also disclosed that he holds a position in Biogen Idec ( BIIB) and he thinks BIIB has greater upside then DNA. Eddie Lampert's Sears Holdings ( SHLD) issued a fourth quarter profit warning and the stock fell 5%. Macke predicts SHLD is going lower. Finerman disclosed that she is short the iShares Dow Jones US Real Estate ( IYR). Goldman Sachs Group downgraded high-end retailers Coach ( COH) and Polo Ralph Lauren ( RL) on Monday. Macke thinks these downgrades are the beginning of the end and he would avoid the group. Adami suggests Saks ( SKS) could be ready to rebound and he would buy the stock for a trade. Finerman disclosed she owns SKS. Najarian noticed unusual options activity in Sovereign Bancorp ( SOV). He explained that the April $10 calls for SOV saw heavy action on Monday. He speculated that it's possible SOV could be a takeover target.
Pops & DropsPops - Boeing ( BA) traded up 1% after the company signed a $6 billion deal with Gulf Air. Adami is bullish on Boeing for its cheap valuation. Home Depot ( HD) traded up 3% after Credit Suisse raised its rating for the home improvement giant. Macke cautions it's a long road back for HD. American Eagle Outfitters ( AEO) traded up 8%. Finerman mentioned a very good hedge fund disclosed a position in AEO after the bell. FTD Group ( FTD) traded up 18% after the flower delivery firm reported quarterly profits that beat Wall Street estimates. According to Macke, nobody believes in the flower story trading at 9 times earnings. Biogen Idec ( BIIB) traded up 2% after Tysabri received FDA approval. Adami feels the stock is cheap and should be bought. Sanmina-SCI ( SANM) traded up 8% after the electronic manufacture said EPS could met or exceed Wall Street estimates. Najarian tells investors to forget about this one. YRC Worldwide ( YRCW) traded up 7% after Bear Stearns upgraded the entire trucking sector. Finerman points out that the chart looks horrible. Mosaic ( MOS) traded up 10% after Standard and Poors raised its rating on Mosaic's debt to BB+ from BB. Najarian is positive about MOS. Deere & Co ( DE) traded up 6%. Adami likes the valuation on DE. Drops - Schering Plough ( SGP) fell 8% and Merck ( MRK) fell 1% after Vytorin, which is made jointly by both firms, showed results that weren't better then a cheaper drug that has been on the market longer. Najarian explained news like this will produce a drop for a drug stock. Washington Mutual ( WM) fell 2%. Finerman wryly commented that this is a pop for WM. Compuware ( CPWR) fell 13% after earnings missed Wall Street estimates. Macke explained CPWR is in the wrong business at the wrong time.
Final TradeThe team wrapped up the show with the trades they think will be the most profitable.
- Macke advises selling Netflix (NFLX).
- Adami likes EMC (EMC).
- Finerman recommends Corning (GLW).
- Najarian prefers Bunge (BG).