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Will Deal Making Drive The Market Higher?

Published: Tuesday, 9 Mar 2010 | 5:23 PM ET

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By: Lee Brodie
Producer

While everyone else is looking back at the last 12 months, we've got your plays for the twelve months ahead.

What must you know to trade this market? According to the Fast Money traders it's that deal making will likely be the big driver going forward.

Strategy Session with the Fast Money traders

I’m keeping an ear open for M&A chatter, says Pete Najarian. Options activity suggests M&A will continue to drive the market.

It seems to me the S&P 500 [.SPX Loading... () ] wants to go above 1150, muses Joe Terranova. I think it’s just a matter of finding the catalyst. And I agree it will probably be M&A. There's speculation that British bank Barclays [BCS Loading... () ] is on the prowl for another major acquisition and if it's true it could take us higher.

If you’re bullish on M&A I’d play it with Greenhill [GHL Loading... () ], counsels Guy Adami. Or you can look at Jefferies [JEF Loading... () ] and Lazard [LAZ Loading... () ].

I'm watching GGP [LAZ Loading... () ], says Karen Finerman. With Fairholme entering the fray I'm expecting more bidding. And broadly, there's a psychological angle to all this M&A. If one CEO makes an acquisition it makes his peers envious. That, too, could keep the market going.

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BREAKING NEWS: PHARMA M&A

In breaking news CNBC’s Mike Huckman explains that M&A is driving the market in the after hours with Abbott Labs [ABT Loading... () ] inking a deal to acquire Facet Biotech [FACT Loading... () ] .

And in other Pharma news – Huckman also says InterMune [ITMN Loading... () ] received approval for its drug to treat lung disease; and the FDA approved Allergan’s [AGN Loading... () ] Botox for a new multiple sclerosis treatment.

If you want to play biotech, I’d do it with Celgene [CELG Loading... () ], says Guy Adami.

And elsewhere in the market, if you’re long RIG [RIG Loading... () ] I’d take profits, adds Adami.

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CITI TO LEAD THE NEXT 12 MONTHS?

If you added up the share price of Citigroup [C Loading... () ] and AIG [AIG Loading... () ] a year ago, , you'd have a grand total of a $1.35.

Fast forward a year, and the twin faces of government bailout are surging and leading the market higher.

What’s the trade?

I’m bullish on Citi for the long-term, says Joe Terranova. I expect to see the government exit Citi very gently.

I'm seeing a lot of activity in the March 4 and April 4 Citigroup calls, adds Pete Najarian. My interpretation is that the options market is expecting Citi shares to go much higher.

If you’re looking at AIG you should know there’s huge short interest in the name, says Guy Adami. If I were long, I’d take profits.

Elsewhere in the space, I’d keep an eye on Goldman [GS Loading... () ] especially if you’re long, adds Terranova. The action in this name is concerning.

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INNOVATION TO DRIVE TECH?

Tech led us from the bottom and continues to lead now. Shares of Apple [AAPL Loading... () ] hit another all-time-high on Tuesday.

But, the question is, will tech defy gravity going forward?

Some tech will, says Guy Adami. I'd keep an eye on Akamai [AKAM Loading... () ]. Yes valuations are rich but I think it's got room to the upside.

I'd put EMC [EMC Loading... () ] on the radar, says Pete Najarian, as well as QLogic [QLGC Loading... () ].

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CALL OF THE DAY: GOOGLE

Apple may have touched fresh all-time highs, but America’s other favorite growth stock, Google [GOOG Loading... () ], shed a half percent after analyst Colin Gillis said the stock was basically "dead money."

Gillis pinpointed 4 reasons for this thesis:
- Google's revenues won't be as strong this quarter
- Google’s ad click pricing is on decline
- There appears to be little hope for Google in China
- Microsoft has become a true competitor with Bing.

What’s the trade?

It's dead money until at least summer, Gillis tells the desk.

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SCHIFF: WHAT COULD GO WRONG?

Some say the key to the next 12 months of this baby bull market is housing. And in bond land, there may be glimmers of hope.

Prices for Fannie and Freddie debt have nearly reached record levels relative to Treasuries. That suggests more investors find Fannie and Freddie bonds attractive – which in turn, suggests a floor in the space.

Well that’s one interpretation anyway.

Perma-bear Peter Schiff of Euro-Pacific Capital sees the situation rather differently.

What his beef? Watch the video and find out now!

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Trader disclosure: On March 9th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), BTU); Pete Najarian Owns (BAC) Call Spread; Pete Najarian Owns (CMC) Calls; Pete Najarian Owns (ENER) Bonds; Pete Najarian Owns (INTC) Calls; Pete Najarian Owns (MCD) Call Spread; Pete Najarian Owns (QLGC) Calls; Pete Najarian Owns (C) Calls; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (USO); Finerman's Firm Owns (WMT), (YUM); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (GGP); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm And Finerman Own (WFC) Prefered; Terranova Owns (GLD) March Puts; Terranova Is Short (XLY); Terranova Owns (AAPL), (EMC), (DELL), (MSFT), (GOOG); Kelly Owns (ELX) Calls; Kelly Owns (AMZN) Calls; Kelly Owns (QLGC) Calls; Edwards Owns (GLD) For Clients; Edwards Owns (GS) For Clients; Edwards Owns (INTC) For Clients; Edwards Owns (MCD) For Clients; Edwards Owns (WFC) For Clients; Edwards Owns (SPY) For Clients; Edwards Owns (QQQQ) For Clients; Jon Najarian Owns (CSCO), Is Short (CSCO) Calls; Jon Najarian Owns (AAPL), Is Short (AAPL) Calls; Jon Najarian Owns (GOOG), Is Short (GOOG) Calls; Najarian Owns (BAC) Call Spread; Najarian Owns (C) Calls; Najarian Owns (F) Calls; Najarian Owns (INTC) Calls; Najarian Owns (MCD) Call Spread

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (GOK)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLI)

For Brian Kelly
Kanundrum Capital Owns (C)
Kanundrum Capital Owns (JPM)
Kanundrum Capital Owns (GE)
Kanundrum Capital Owns (ELX)
Kanundrum Capital Owns (QLGC)
Kanundrum Capital Owns (QCOM)
Kanundrum Capital Owns (TOL)
Kanundrum Capital Owns (PHM)
Kanundrum Capital Owns (RYN)
Kanundrum Capital Owns (EWA)
Kanundrum Capital Owns (EWC)
Kanundrum Capital Owns (EWJ)
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Is Short Copper
Kanundrum Capital Is Short (FCX)
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Swiss Franc
Kanundrum Capital Is Short Treasury Notes
Kanundrum Capital Is Short (GRMN)

For Dennis Gartman
Funds Managed By Dennis Gartman Own (GLD)
Funds Managed By Dennis Gartman Are Long Gold
Funds Managed By Dennis Gartman Are Short European Currencies

For Whitney Tilson
Funds Managed By Whitney Tilson Own (WMT)
Funds Managed By Whitney Tilson Own (PFE)
Funds Managed By Whitney Tilson Own (YHOO)
Funds Managed By Whitney Tilson Own (GGP)
Funds Managed By Whitney Tilson Own (BRK.A)
Funds Managed By Whitney Tilson Own (BRK.B)
Tilson Owns (BRK.B)
Tilson Owns (GGWPQ)

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