Crude oil was down for the week, and “we thought it was going to control the market” Dylan Ratigan said on CNBC's Fast Money. Joe Terranova said, “I'm buying gold because I'm concerned and worried.” Pete Najarian stated that “we put so much on oil, but we go right back to the financials; nothing has been solved overnight.” He said this market is going to take some time to play out. Quint Tatro added that “this market is trading on the data” and said this morning's data helped support the market. He said we are starting to “take our cues.” On the basis of financial news, he said, “We are consolidating,” and the S&P 500 stayed flat. “This is actually a positive,” he said.
Najarian commented there was an early move in the financials today, but I don’t believe the credit crisis is done. The financials at the end of the day didn't look all that strong, and Narjarian does not want to be in them.
In breaking news, Amgen provided a positive result in a trial for an osteoporosis drug and is up 10% in after-hours trading. Tatro said that “Pharma and biotech is where the action is and where you need to be buying.” Najarian added “This is biotech that's doing the right thing.” Moving forward Ratigan stated “gold posted its worst week since May and hasn't done much here this week.” Terranova said this weakness needs to be used as an opportunity and said to use this pullback to “play it as a defense and hedge.”
Shifting gears into tech stocks, Ratigan stated that Apple (AAPL) is down despite earnings. He said, “Is there anything to be had here?”
Najarian said the big news today was Juniper and Cisco, not Apple. These guys “knocked the cover off the ball.” He said they're seeing growth and said wireless is growing. He also likes AT&T because they “put out some great numbers earlier this week.”
Moving on to Research In Motion, Tatro said the stock is “going be met with some serious upside resistance, but look for it to go up in the long run.” He also added that IBM is in a stellar state as “they continue to perform day to day.”
Wamu, What Next? Washington Mutual (NYSE:WM)
Ratigan asked if Washington Mutual will survive “a raft of defaults as it has lost one-third of its value in a week.” Paul Miller of FBR Capital Markets joined the show and stated that “this week when they came out with earnings, we know they have enough capital at $19 billion of loses, but they are probably going to need another capital raise.” “Current shareholders are going to be diluted away,” he added. Miller says this is a risky bet at $3 because of capital structure. “I don't think they can make it, and I believe they will have to raise capital.”
Moving forward, Michael Darda joined the traders to talk about the GDP number coming out next week. Darda says the number will come in above expectations at 2.5%, but “the credit markets still don't look good though.” Also, he said he believes the jobs report will “be down 85,000,” as he is looking for a weaker-than-expected number. “Were in a sharp slowdown, and the second half of this year should be worse than the first half,” he added.
Darda stated that this is a recession for certain sectors of the economy as “credit indicators have deteriorated and until they turn we will have to wait on the economy and the financials.” Next week, GDP should actually look good, but "it may not be relevant because of the stimulus checks."
In the last month healthcare has emerged as the best performing sector in the S&P. Over the past two weeks Pfizer and Johnson & Johnson both reported strong profits. “I’d look at Intuitive Surgical” and Johnson & Johnson as they are “breaking out of a trend line, but put on a tight stop though” said Quint Tatro. “The key to this sector is to play on what’s working,” he explained. Then stick with it until it doesn’t work any more. “I think Novartis is the trade,” says Peter Najarian.
Najarian commented on Visa and MasterCard, reminding viewers that these are not credit names, they are transaction names. Both Visa and MasterCard report earnings next week. After disastrous numbers from American Express what should you expect? “American Express reported truly recessionary earnings,” wrote Craig Maurer, analyst at Calyon Securities in New York. The credit card company said credit losses were rising and even its wealthiest customers were slowing their spending. When Visa and Mastercard come out with their earnings next week, we will find out where everyone is spending. Najarian likes American Express at its current level for the long term and Visa and MasterCard in the short term. I think the most important thing you’ll learn is, how Americans are spending, says Pete Najarian. We have moved into a credit society. I wouldn’t touch American Express, counters Joe Terranova. I like Visa and Mastercard because they’re not involved in credit. They’re transaction processing companies, only. Unfortunately Visa and Mastercard look like they're broken technically, says Quint Tatro so I'd stay away.
The group then moved on to Arch Coal, as it was up 9% and over 80% in the past year. CEO Steve Leer joined the show and said his company is “seeing tremendous demand growth, with the deficit in world energy we are seeing a huge surge.” “Looking forward we see the energy deficit continuing over the next three to five years and actually growing over the next three to five years.” Demand growth is estimated to be a billion tons by 2012, and Arch stands to benefit.
Najarian said he really likes coal right now and has been telling you this for a while. He tells viewers “to wait for pullbacks and buy into this sector.” Leer tells the traders that he sees any dip in his company’s stock as a buying opportunity.
With earnings released on Thursday, investors could learn if Exxon has done more than stand still. Joe Terranova thinks Exxon could begin to turnaround.
Verizon reports on Monday and Comcast reports on Wednesday. Peter Najarian likes AT&T and thinks Verizon has a shot, too.
Starbucks earnings will be reported after hours on Wednesday. Tatro says he would stay away from the stock.
Final Trade – Your First Move on Monday
Joe Terranova prefers Schlumberger (NYSE:SLB).
Pete Najarian thinks Cisco (CSCO) is a buy.