The Market Is Weak - Fast Money Recap (9/8/08)

by: Joan Wickham

Recap of CNBC's Fast Money, Monday September 8.

Fannie and Freddie Take the Plunge - Fannie Mae (FNM), Freddie Mae (FRE), Morgan Stanley (NYSE:MS), Lehman Brothers (LEH)

As host, Dylan Ratigan kicked off the show with a discussion about Fannie Mae and Freddie Mae, which saw their shares plunge after the U.S government took over the companies. Ratigan asked the traders if they are any more confident to buy stocks today. Pete Najarian said yes. He advised viewers to consider Morgan Stanley. He also disclosed that he added to his put position in Lehman Brothers.

Stocks Respond to Bailout - Wal-Mart (NYSE:WMT), Church & Dwight (NYSE:CHD), Johnson & Johnson (NYSE:JNJ), Home Depot (NYSE:HD), MDC (NYSE:MDC), Centex (CTX)

Jeff Macke said he likes Wal-Mart, which broke out technically today. Guy Adami mentioned that Church & Dwight and Johnson & Johnson continue to work. Ratigan switched the conversation to the housing market. Macke said that if he were long any homebuilding stocks right now, he would be taking profits. Adami pointed out that the 30-year mortgage rate went from 6.5% to 6% today. He said he likes Home Depot for a play on the housing recovery. Finerman said that if you want to play in the housing sector, buy something like MDC or Centex that isn't over-leveraged. Najarian explained that the homebuilding stocks have been moving higher because of the high short interest in the sector. Macke and Najarian both agreed that the homebuilders are trading vehicles only.

Looking At - Fannie Mae (FNM) preferred stock, General Electric (NYSE:GE) and Citigroup (NYSE:C), U.S. Bancorp (NYSE:USB), Wells Fargo (NYSE:WFC), JPMorgan (NYSE:JPM)

Ratigan brought up a report out of the Financial Times that said subprime king and hedge fund manager John Paulson told investors he's looking to get more involved with the financial sector. Finerman said she likes the idea, and she said she would take a look at Fannie Mae preferred stock, General Electric and Citigroup. Adami mentioned that U.S. Bancorp is close to an all-time high. Najarian said the cream of the crop in the financial stocks includes JPMorgan, U.S. Bancorp and Wells Fargo.

Turning To - Research In Motion (RIMM), Google (NASDAQ:GOOG)

Ratigan moved the talk to the technology sector. Adami pointed out that the chart of Research In Motion is broken. “If you're long RIMM, you should buy some puts and sell an upside call,” Najarian added. Finerman says Google is getting close to a value play when you look at the P/E level. Najarian pointed out that Google traded twice its average volume today, which could be a sign of a bottom for the stock.

Financial Sector – Wachovia (NASDAQ:WB)

Analyst Paul Miller joined the traders to discuss the financial sector. Miller says the bank stock rally is a step in the right direction, but he said he is worried about what will happen during the fourth quarter. “I think the financial rally has more room to go and will extend for a couple of more weeks,” he added. However, Miller said he is worried that any bank with a large amount of Level 3 assets, like Wachovia, could be the subject of an audit in the fourth quarter.

Socializing - Gap (NYSE:GPS), General Motors (NYSE:GM)

The traders discussed ways to trade the government's new move toward socializing companies. Adami explained that Gap has figured out a way to get their gross margins up 4%, and its operating margins up 10%. He said that when we come out of the credit crisis, the retailers will do well. Finerman thinks the government intervention in Fannie Mae and Freddie Mac is bearish for the equity of General Motors and the airline stocks.

Opec and $100 Oil - United States Natural Gas Fund (NYSEARCA:UNG), United States Oil Fund (NYSEARCA:USO)

Joe Terranova joined the crew to discuss the chances of OPEC allowing crude oil to trade down to $100 a barrel. He said that right now, OPEC is over-supplying the market. He said that if OPEC doesn't get what it wants, it may cut production at the December meeting. He said the refiners could be a trade here, but the market is so crazy, it's a tough call. The bottom line from Terranova is that the United States Natural Gas Fund and the United States Oil Fund isn't the way to trade crude oil right now.

Technically Speaking

Oppenheimer chief market strategist Carter Worth joined the traders to discuss his call to sell the bounce in a note to clients today. Worth explained that the volume wasn't near record levels, and semiconductors didn't even participate. He said he was surprised the Dow wasn't up 1000 points off the Freddie Mac and Fannie Mae takeover news, and the fact it wasn't shows the market is weak. Worth said the only stocks working today were the same “loser stuff” and not names like Google and the chip stocks.

Music Analyst - Apple (NASDAQ:AAPL)

Apple Music Piper Jaffrey tech analyst Gene Munster, joined the gang to discuss Apple. Shares fell as much as 5 percent on Monday ahead of a highly anticipated event on Tuesday when the maker of the Mac, iPod and iPhone is expected to roll out a new iPod Nano and may give an update on iPhone sales. I expect a new iPod touch and iPod Nano,” says Piper Jaffrey tech analyst Gene Munster on Fast Money. “It’s going to be all about iPod. Munster said the meeting doesn't mean much because the iPod is the least significant of the company's three business segments. He said he feels the meeting has more to do with Steve Jobs. “I am confident that Jobs will be at the meeting and looking healthy,” Munster said.

Trader Radar – Home Depot (HD)

Shares of Home Depot were among the most actively traded stocks on the NYSE today.

Final Trade – Your First Move for Tuesday September 9.

Jeff Macke said to buy Research In Motion (RIMM) “at $100 with a tight stop at $95.”

Guy Adami picked Urban Outfitters (NASDAQ:URBN).

Finerman recommended Flowserve (NYSE:FLS) which she says was down on Monday for “no good reason.”

Peter Najarian thinks Novo Nordisk (NYSE:NVO) is a buy.

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