The markets ended mixed Monday as crude hit a six-week low. The Dow Jones Industrial Average added 44.13, or 0.53%, to 8,324.87, while the S&P 500 rose 2.30, or 0.26%, to 898.72. The Nasdaq lost 9.12, or 0.51%, to 1,787.40.
With crude down 4% today to the lowest level in six weeks, Joe Terranova said on CNBC's "Fast Money" TV show that it's been a "wild four or five days" in the oil markets. "It's been the liquidation of the reflation trade," he said. He said he would go long on low-beta integrated trades like Petrobras ( PBR) and avoid oil futures and the high-beta names Jon Najarian said crude's decline is good for the consumer and doesn't believe it will go much lower. Despite the drop in oil, Tim Seymour said the market can rally without the commodity, as he emphasized today's encouraging numbers from the Institute for Supply Management. He said he sees real strength in the economy with oil at $65 a barrel. Karen Finerman said oil is a proxy for economic health. Falling oil prices would mean less economic growth, higher unemployment and less consumer spending, she explained. Guy Adami was pessimistic about a rebound in oil, saying the trend is lower. Shifting the topic to the late turnaround in the market today, Melissa Lee, the moderator of the show, pointed out several defensive stocks helped turned things around, including General Mills ( GIS).
Adami said the stock has performed well but has met resistance at the $60 level. He said he's bullish about the stock if it goes above that price level but he thinks that's not going to happen. Najarian said he would wait another two weeks into the earnings season before he makes a judgment on the quarter. Adami said he wasn't optimistic about the earnings of Alcoa ( AA). He said he predicted it would trade lower, and he said it has. He said he would stay away from the stock at this juncture. Lee shifted to tech, which saw all the major players -- Microsoft ( MSFT), Apple ( AAPL) and Intel ( INTC) -- trading lower. Adami sees Intel trading lower after its recent runup. Meanwhile Seymour sees an opportunity to buy Microsoft on weakeness, adding the company has a good product line. Finerman said she would be a buyer of Cisco ( CSCO), saying the risk-reward is worth it, although the stock hasn't shown much movement in recent weeks. Adami also said investors could start building a position at these levels in IBM ( IBM), which he called a $120 stock. Shifting to the credit card space, Adami said he would rather be in Mastercard ( MA) than in American Express ( AXP), which he said is much more expensive and trending the wrong way. Shifting to consumer staples, which also worked well today, Seymour said he liked stocks like Pepsi ( PEP) in overseas markets although he worried about the distribution networks. Adami was high on one of his favorities, Yum! Brands ( YUM), which he sees heading to $40.
Commenting on commodities which were hit today, Dennis Gartman said he wasn't using today as a buying opportunity. Instead, he said he was reducing his positions in crude last week. He said he's been surprised by the vicious correction in the commodities markets. He said the gold market is heating up as inflation worries intensify. However, he said would rather leave gold alone, saying it looks like the commodity wants to go lower. He said he wouldn't be surprised if crude drops to $59 a barrel before things turn around. As for Alcoa, he expects the company to report awful earnings. He said he's reducing his stake dramatically by selling calls. Lee turned to Mike Gurka, global asset strategist for Empower Funds, for trading ideas overseas. He likes Taiwan, where demand is strong and technology is "king." The trading vehicle for Taiwan is Ishares MSCI-Taiwan ( EWT) He said he's seeing huge allocations to that part of the globe, where wages are low and profits are high. He said Taiwan benefits from a back-draft from China and its stimulus package. However, Seymour wondered whether Taiwan could be vulnerable if China's economy turns sour. Gurka, though, maintained that Taiwan stands alone. In the Rising Star segment, Finerman liked Children's Place ( PLCE) for its target customer, mothers who are looking for good deals. At 10 times earnings, the stock is attractive, and the company has $6 a share in net cash on its balance sheet, she said. Also there's a catalyst that might move the stock that involves the efforts of the former CEO to gain enough seats on the board to change management, she said.
Greg Trocolli, director of technical research with Opalesque, expressed fears that the U.S. equities markets are heading from a cloudy condition to an outright rain storm, if the S&P closes below 874. And he sees cloudy conditions for crude and more "backing and filling" for the Nikki index. For the stock of the day, Adami chose Schlumberger ( SLB). He said the valuations made no sense at $63 but they get better at $49.50. In a segment on the growing recession-proof porn trade business, Adami said he liked Cablevision ( CVC) above $19. Otherwise, he advised buying it at $16.50. In the final trades, Seymour liked Mobile Telesystems ( MBT); Adami liked Yum! Brands; Finerman went with Children's Place; and Najarian suggested Petrohawk Energy ( HK) on the basis of high options activity. "Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday.