Thursday saw carnage in the market as worries over credit brought down the Dow by 1.8%, the S&P 500 by 2.2%, and the Nasdaq by 2.3% . Guy Adami said the bear market is upon us and rallies have to be sold, but is bullish on rails, especially BNI and also likes DD on a valuation basis. Jeff Macke thinks the panic is not as dire as it was last summer and GS’ current price of $158 is a good bargain. Peter Najarian conceded the market was ugly, with Citi trading at book value, airlines and vacation stocks like CCL getting hammered and oil prices rising to $105 and foreclosures increasing. He doesn’t see a bottom until the commercial real estate loan data goes public. Karen Finerman doesn’t mind the volatility and said she may go long again when the VIX hits 30. Jeff Macke hopes to see a terrible open on Monday followed by a rally. Najarian would hold of on buying GS until then.
The entire financial sector got hit on Thursday and dropped to a five-year low. The biggest victims included WM, FNM, FRE and NLY. Macke would approach USB, which is looking up because of Buffett’s investment, with caution. He would consider buying XLF on the selloff. Guy Adami likes AMP as an asset management for baby boomers play and Finerman noted her hedge fund is almost out of its short position on LEH. Najarian warned that the financials have not bottomed yet.
On oil’s rise to $105, Macke says he prefers USO to GLD. Adami thinks XOM’s 2.5% drop on bullish news is not a good sign, and prefers BHI, SLB and HAL to XOM. Najarian would stay away from oil refiners and predicts XOM and COP will bounce back on Friday. He added JOYG jumped 4% after a bad quarter and is bullish both on JOYG and BUCY. Adami said APA is cheap on a valuation basis.
One Wal-Mart’s stellar quarter, Finerman praised the company for delivering quality at a good price. Adami would caution against shorting luxury retailers like SKS on Wal-Mart’s success, and says SKS looks good. Finerman likes PLCE.
Although Apple is gearing its iPhone up for business networks, Adami doesn’t think investors should abandon RIMM. He says Apple is a value stock and citing bullish remarks from INTC as a reason to take a bite of Apple. Najarian would look into IDCC. If ORCL were on the way down, it would have prophesied an earnings miss on its recent report. He agrees with Goldman that ORCL is a buy. Najarian said Goldman has generally been on the mark with its analysis and Macke noted Oracle’s rivals get weaker and its pipeline gets stronger. Finerman says the tech trade is now a value trade and is holding MSFT.
John Roque, Technical Analyst at Natexis Bleichroeder
Noting stocks have fallen below their January lows, the group invited John Roque on the show who says a bottom is not even close. He recommended selling financials and buying commodities and blamed the lack of a bottom on investors insisting on buying financials incrementally as they dip. He believes the S&P 500 will fall to 1236.
Joe LaVorgna of Deutsche Bank
Concerning the February Jobs report, Joe La Vorgna said, "It's more doom. The numbers are going to be terrible." The bond insurer woes are to blame in addition to deleveraging in the financial sector, the rise of commodities prices and its affect on inflation and wages. He predicted a mild recession.
With the death of the yellow pages, the group found ways to play the demise of phone book publishers RHD and IAR. Finerman said GOOG and YHOO were obvious choices and also likes VCLK. Najarian chose MNSTR and FMCN.
Adami told a viewer to wait for a 100 million share volume day when AIG will be washed out. He added the stock is merely a trading vehicle. When asked how MSFT could thrive if the Yahoo acquisition fails, Finerman said MSFT has already been punished. Macke told another viewer that Costco has a good story-long term and the only other retailers he likes are WMT and Gap. Najarian would short commodities only in the short-term.
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