Oil Rises, Dow Falls - Fast Money Recap (6/26/08)

Recap of Fast Money, Thursday June 26.

Wall Street Storm: Citigroup (C), Morgan Stanley (MS), GM (GM), Merrill Lynch (MER), Goldman Sachs (GS)

The Dow plunged while oil rallied to $140 and financials swooned on a negative Goldman Sach’s note. Analyst William Tanona brought Citi down to its lowest level in 10 years and predicted more write downs for Merrill Lynch. He suggested shorting Citi and being long Morgan Stanley. Meanwhile Goldman was downgraded by Wachovia. Karen Finerman thought it amusing that the banks were busy downgrading each other, and said if oil weren’t so high, she would buy in the sector.

Oil Rises Again: Halliburton (HAL)

On Libya’s threat to cut output and OPEC’s prediction that oil will rise to $170, the commodity jumped 4% to $140. Guy Adami discussed Halliburton’s strong performance, and said if the stock could do well on such tape, it will keep going higher.

Tech Gets Shot: Apple (AAPL), Research in Motion (RIMM), Oracle (ORCL), Ultrashort QQQ ProShares (QID)

Wall Street darlings RIM and Apple were shot on Thursday, and Oracle was savaged on statements indicating slower growth. Najarian would short tech and suggested QID.

GM (GM) Stalled

Goldman Sachs slashed GM to a sell rating and the stock dropped to its lowest level in 55 years. Guy Adami thinks GM is interesting because it doesn’t have a problem with cash, and thinks it may be a buy in a few days.

Gold Glows: Freeport McMoran (FCX), PowerShares DB US Dollar Index Bullish (UUP), Alpha Natural Resources (ANR), United States Oil Fund (USO)

Gold rose 4% as investors fled other stocks to the yellow metal and commodities. After a modest rise earlier this month, the dollar tumbled to a three week low. Joe Terranova doesn’t like gold, because he thinks the dollar would recover, but in the sector he thinks the best choice is FCX and would buy UUP. Guy Adami thinks gold will head lower, and Najarian prefers coal and oil to gold, and likes ANR and USO.

Nike (NKE) Runs Away

Nike fell in spite of a profit gain because it admitted domestic sales will be slow. Finerman and Najarian like Nike and Adami says he sees capitulation in the stock.

Don’t Buy Yet

"The market is by all counts nowhere near to be finished,” said Carter Worth, chief market strategist for Oppenheimer. He thinks coal and railroads are going to fall apart, and the market will not be oversold until stocks at their 52-week low fall apart. Joe Terranova disagrees, "it is a fragile market technically, fundamentally there is something that could take this higher."

Safety in Pairs? JP Morgan (JPM), Capital One Financial (COF)

The group discussed the strategy suggested by Goldman Sach’s analyst William Tanona to short Citi and be long Morgan Stanley. Joe Terranova would undertake a strategy based on themes. For instance he was long JPM and short COF if he thought consumer finance would be hit harder than capital markets. Karen Finerman says she doesn’t think trading in pairs really reduces risks and may intensify a downside.

Unjustly Punished: ConcoPhillips (COP), Merck (MRK), L-3 Communication (LLL), Nucor (NUE)

The group discussed stocks they felt were unjustly punished by Thursday’s bearish action. Najarian: ConcoPhillips, Finerman: Merck, Adami: L-3 Communication, Terranova: Nucor

Fed Dilemma

While the rate-cutting season seems to be over, raising interest rates may cause a slow down. The Fed seems to be faced with a choice between inflation and recession. Steve Cortes, founder of Veracruz Research suggests the government buy up U.S. dollars to prevent further decline in the currency.

In the House

The House of Representatives requested that the Commodity Futures Trading Commission place limits on speculation in energy and futures. Joe Terranova wondered how long the speculators actually are. Karen Finerman said she believes in the free market and the best strategy is to let oil trade where it is going to trade. The group agreed.

Bill Fleckstein’s Bearish Calls: Cisco (CSCO), IBM (IBM), Texas Instruments (TXN), Juniper (JNPR)

Fleckstein doesn’t see a recovery any time soon; "I expect real estate to get worse, stocks to get worse and the economy to get worse; and the three will probably feed on one another." Meanwhile cell phone sales have been dropping around the world, and Fleckstein would short not only cellcom and networking stocks, but tech in general; CSCO, IBM, TXN and JNPR.

Final Trade: Terranova: Suncor Energy (SU), Adami: Allstate (ALL), Najarian: Semiconductor Holders (SMH),

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Comments

[chris_b:]

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2008 Jun 28 02:10 PM