Fast Money Recap, 3/11/08: Rally Round Financials

Recap of Fast Money, Tuesday March 11. Click on a stock ticker for more analysis.

Market Overview:

The Fed’s move to put $200 billion in liquidity into the markets sparked a rally on Tuesday, and Tim Seymour said the collaboration from Central banks in Canada and England gave new hope amid the current crisis. Spreads and Treasuries came down and the dollar found its way up. Pete Najarian gives CNBC's Steve Liesman credit for the rally in financials when he announced the Fed would give more help as necessary. Finerman was less enthusiastic and said the market rallied only to where it was last week. Adami said believed confidence was returning and short-squeezes were not the cause of the rally. However, Seymour countered by saying there was a large amount of covering by hedge funds and short squeezes were having an impact.

Healthcare: WellPoint (WPT), Humana (HUM), Aetna (AET), Cepheid (CPHD)

Najarian said the healthcare selloff on WPT’s negative news was excessive and doesn’t think HUM and AET are facing the same problems as WPT. CEPH shares were also down, and while Najarian thinks this selloff was also overdone, one failed trial might seriously hurt the company. Adami says HUM is cheap and would buy.

Financials: Financial Select Sector SPDR (XLF), Bear Stearns (BSC), Goldman Sachs (GS)

XLF was up along with other financials, but more negative news came out about BSC as it dropped from its open at $68 and Dick Bove, analyst at Punk Ziegel, cut the price target to $45 from $90. Adami said GS is a trade off of BSC and he would stop out any close in GS below $155, but Seymour is bearish on financials now.

Oil: Schlumberger (SLB), Exxon Mobil (XOM), U.S Oil Fund (USO), Baker Hughes (BHI)

Oil continued its journey upward to $110 and Seymour said its ramp depends on how weak the dollar is. Najarian sees a squeeze and then a pullback. Adami would buy SLB on Exxon’s capital expenditures on notes SLB is cheap. He thinks USO is worth selling at this price. Finerman sees potential weakness for oil if Fed action raises the dollar. Najarian would sell SLB and BHI as they rise.

Tech: Apple (AAPL), Google (GOOG), Microsoft (MSFT), Take Two (TTWO), Electronic Arts (ERTS)

Both Apple and Google rose on Tuesday, but Najarian thinks AAPL is the real value stock, while GOOG’s upside was due to Europe’s approval of its Doubleclick acquisition. Adami said MSFT is cheap coming out of two “ridiculous” quarters and would buy. TTWO jumped after the close on a takeover bid from ERTS. Finerman thinks the company will get a higher bid, but Najarian noted selling from Fidelity and Oppenheimer as a reason to think TTWO may have to settle for a lower bid.

Rally Sells and Insider Buying: UltraShort Oil & Gas ProShares (DUG), Washington Mutual (WM), Sallie Mae (SLM), Cheseapeake Energy (CHK), XTO Energy (XTO), GE (GE), American Eagle (AEO), Target (TGT)

John Najarian named some stocks worth selling in the current rally. While he likes USO, it has jumped from $68 to $86 and is due for a pullback. While it might be idea to find a short for the USO, he would not buy DUG because he prefers options as a strategy to manage risk. On increased put action, Najarian would get rid of WM and FNM. SLM has less default risk than mortgage insurers, and Najarian noted increased call activity in Sallie. The group discussed companies with substantial insider buying, and Najarian picked CHK’s whose CEO recently purchased another 400,000 shares. Adami’s choice is XTO, whose management holds 6% of the total shares. Seymour mentioned GE and Finerman likes AEO. Najarian concluded he would be long TGT when he sees insider buying.

Trader Radar: Lululemon (LULU) Traded at twice its average daily volume on Tuesday.

Zach Karabell, of Fred Alger Management and the Spectra Funds: Caterpillar (CAT), Chicago Bridge & Iron (CBI), Fluor (FLR), Bucyrus (BUCY) and Joy Global (JOYG)

On a falling dollar, Zach Karabell would take a look at global infrastructure stocks such as CAT, CBI and FLR. Najarian added BUCY and JOYG to those names. Karabell would pay attention to Chinese demand.

Fast Messages: Research in Motion (RIMM), Altria (MO)

Najarian told a viewer RIMM was alright to hold into earnings, but prefers Apple. On the MO spinoff, Finerman said holders of record on March 18 will benefit from the MO spinoff even if they sell on March 19, however, she would hold MO.

Final Trades: Adami likes Taiwan Semiconductor (TSM),Adami, while the rest of the group is bullish on Goldman Sachs (GS)

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Comments

[Gajonka]

Spitzer is down. His good friend, Cramer, also a corrupt dog, is next.