Fast Money Recap - The Real Stress Test (5/26/09)

Fast Money Recap, Tuesday May 26.

The Real Stress Test: TIP (TIP), IPE (IPE), TBT (TBT)

More stressful than the bank stress test, but probably an event that will attract less publicity, is the government's sale of Treasuries scheduled for this week; two-year notes were sold on Tuesday, five-year on Wednesday and seven-year on Thursday. If these Treasuries are not bought, the government will have more difficulties in funding its ambitious stimulus plan. Recent Treasury sales have not been so successful. Karen Finerman admits it is an "enormous problem" and TBT as a bet on higher inflation and a glut of Treasuries flooding the bond market. Tim Seymour also suggests TIP or TBT.

Consumer Confidence Saves the Day: Gap (GPS), Mastercard (MA), Wal-Mart (WMT), SPDR S&P Retail Index (XRT)

Consumer confidence and an Apple upgrade drove the market higher on Tuesday. Karen Finerman is skeptical because the surge seems to be driven by subjective factors rather than fundamentals. Tim Seymour and Guy Adami were also not excited by the rally, but Joe Terranova said he didn't see any reason to fight the momentum. The consumer confidence number rose to its highest level in 8 months. Guy Adami notes that Gap is pushing against resistance and thinks it is a buy on a decline. He also predicts Mastercard will trade down to $150, a level at which he would buy. Karen Finerman would be long Wal-Mart and short XRT.

Slowing Homebuilders

Prices of homes declined 18.7% from last year, but the pace of the drop slowed for the second consecutive month. Tim Seymour thinks a slowing of homebuilders is actually good for the market and is bearish on the sector. Guy Adami says anyone who is buying housing stocks is buying a lottery ticket.

Apple (AAPL), Research in Motion (RIMM), IBM (IBM), Red Hat (RHT), Intel (INTC), Nokia (NOK), Google (GOOG), Nokia (NOK)

Apple was upgraded on expected success for its iPhone, and analysts raised the price target from $108 to $150. Joe Terranova would be long Apple, Research in Motion, IBM and Google. Guy Adami noted Intel is hitting support at $15 and he would take a look at Red Hat, which might be a takeover target for IBM. Karen Finerman likes Nokia.

What's Moving Oil?

Oil Futures closed a point higher after hitting a new intraday high. Joe Terranova says that since inventory is not moving and demand is not strong, fundamentals do not support oil at $62. However momentum and not fundamentals are driving oil right now, and Terranova predicts it is moving higher.

Strong as Steel: Nucor (NUE) and U.S. Steel (X)

Steel moved up on Tuesday, but Tim Seymour says he can't quite figure out why, since the fundamentals are not strong. Guy Adami says U.S. Steel might be a possibility as long-term buy, but it isn't moving for at least a year, and he doesn't recommend it.

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Comments

[ain't no fo...:]

Joe Terranova is bullish on everything.

Joe Terranova wants Dylan Ratigan's old (and Melissa Lee's present) job shilling Fast Money... so its nothing but green shoots and pixie dust.

May 27 09:20 AM

[RiskReturnO...:]

Time to Increase Long Position in TBT.

10-year yield refused to go back to 3.50%. Too much money coming out of long dated treasuries into short duration ones.

Next stop for 10-year yield is 4.00%.

Not my preferred way of trading, but this time it will be hard to catch a pullback, as yields are increasing by 10 basis points per day.

May 27 02:16 PM