Recap of CNBC's Fast Money, Wednesday September 3.
Erin Burnett hosted and started the show by saying the story of the day was oil falling below $110 a barrel. Jeff Macke explained that oil isn't going to launch the market higher or provide a catalyst. Karen Finerman said the story of the day was the continuation of the selling for commodities from yesterday. She thinks other commodity funds like Ospraie Management could fail due to redemptions.
S&P Chart of the Day
The Chart of the Day was the S&P 500 trading channel. Burnett said if the chart breaks below 1265 it could fall back to the July lows. Guy Adami didn't agree, but he also doesn't think the market is going higher. Pete Najarian thinks the two catalysts in the market are oil and the credit crunch. He said bank stocks looked strong today and energy stocks are weak. Macke said commodities are breaking and it's time for investors to shorten up their grips.
The traders moved the discussion to crude oil. Adami said he wouldn't bet that crude goes much lower from here. He feels the next move is a run back to $115. Macke mentioned crude oil is way too hard right here.
Burnett brought up Alcoa, which was a big drag on the Dow today. Adami pointed out that Alcoa had a nice run in the first-half of the year. Macke said he likes Potash because the stock is getting support around the $150 area. He thinks you can get long around that level with a stop at $145. Adami agreed on Potash and said the stock could be bottoming here. Najarian pointed out that the refiners like Valero Energy and Tesoro were hot today. He also noticed unusual options activity in refinery company Frontier Oil. He said the September $20 calls were very active with over 10,000 contracts trading hands.
The retail sector is due out with some big August same-stores sales figures on Thursday. Macke said the results will be ugly and disappointing. He said he's trading it by staying long Wal-Mart. Adami said now is the time to take profits in Home Depot and expect to buy it back cheaper. Finerman mentioned she took some profits in J. Crew Group and J.C. Penny because the stocks have made big moves in the last two weeks.
Najarian pointed out that the technology sector is getting weak. He feels hedge fund manager Bill Fleckenstein is going to be right that tech is the next sector to take a big hit. Najarian mentioned that Corning, Research In Motion and Apple are all getting weaker even when the tape is strong. Adami disagreed on Corning. He said now is the time to take a look at Corning on valuation.
Burnett pointed out that auto stocks traded up today. Macke said General Motors is trading well, but the stock is just a call option on “the dead.” Najarian said he likes Honda because it has moved into solar and the hybrid market. He feels the General Motors and Ford fluctuations is all about oil. Macke said he continues to short Toyota Motor which he feels is the most over-rated company on the planet.”
The financial sector came under discussion today. Finerman said Lehman Brothers traded up today after reports surfaced that the company is in talks with HSBC. She told viewers to stay away from the stock here. Adami went with US Bancorp in the financial sector.
Oil Inventory Report Thursday
Joe Terranova joined the crew to discuss the best way to trade crude oil with the weekly inventory report due out Thursday. Terranova said the important thing to look for in this week's inventory numbers, is if you continue to see declines in reformulated gasoline. He said the refiners are moving higher because supplies and inventory are moving lower. Terranova feels that OPEC is most likely going to defend oil at $100. He thinks the better play is remaining on the sidelines, remain a buyer and don't short crude at current levels.
Jon Najarian joined the traders to discuss the global growth trade. He said at this level he likes Nokia since the stock down 30% on the year. He favors the stock on a value basis and as a play on wireless in India and China. He explained that Nokia has a large market share in India of 55%. He also thinks the new Nokia products on the high end are competing with products from Research In Motion and Apple. Pete Najarian added that Nokia is aggressively getting into the smartphone handset market in North America. He said the stock will be up big in three to six months. Jon Najarian also recommended Yum! Brands for a play on China.
The traders moved the discussion to companies that are making big transformations with their business models. Macke said Whole Foods Market and Starbucks are making big mistakes with the changes to their business models. He said avoid both stocks. Finerman talked about three companies that have come up with successful transformations. She said Intel did a good job in the early '80s from switching from a memory to a chip firm. Another company is Bank of New York Mellon, which shifted from being a bank to a fee and transaction company. The last one was IBM. She explained IBM changed from a mainframe company to a consulting and service firm. Adami said he likes the transformation going on at Johnson & Johnson. A few years ago Johnson & Johnson was a drug company, but now it gets 25% of its revenue from consumer products. Najarian mentioned he likes the changes going on at Dell. He mentioned the company is now getting into the retail space and doing a good job of making its products cooler.
Among the Most Actively Traded - Trader Radar Shares of Ethan Allen Interiors (NYSE:ETH).
Brokerage Outlook - Merrill Lynch (MER), Morgan Stanley (NYSE:MS) and Lehman Brothers (LEH), Ameritrade (NASDAQ:AMTD), Charles Schwab (NYSE:SCHW), Raymond James (NYSE:RJF), Goldman Sachs Group (NYSE:GS)
Oppenheimer chief market strategist, Carter Worth, joined the crew to discuss the technical outlook for some brokerage stocks. He said the shares for online trading companies look very good here. Worth told viewers to avoid Merrill Lynch, Morgan Stanley and Lehman Brothers. He explained that all of these charts are in established downtrends. Instead, Worth prefers the charts of Ameritrade, Charles Schwab and Raymond James. The bottom line from Worth is that you can be long the online names and not own the traditional brokerages. Najaran agreed with Worth on Ameritrade and Charles Schwab due to impressive transaction volumes. However, he said he likes Morgan Stanley more than Goldman Sachs Group here. Najarian explained that Morgan Stanley is expanding its retail arm.