Momentum stocks most vulnerable: Pro
The stock market's fundamentals and technicals are signaling weakness, Joe Terranova of Virtus Investment Partners said Tuesday.
"I am more troubled by the price action that we are seeing right now. I'm more troubled by the technical formation: A lot of positive news yesterday, poor market response," he said.
"I think the momentum stocks are in the most vulnerable right now because they're absent a fundamental catalyst, and the technicals to me don't look so hot."
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On CNBC's "Fast Money," Terranova said that the recent stock market rally could be reignited when earnings season starts up again in the second week of October.
The play, he added, was clear.
"I am going after momentum stocks," Terranova said, adding that he was shorting shares of Priceline.com.
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OptionMonster's Jon Najarian seconded the play on momentum stocks.
"Few have better momentum right now than Facebook, for instance," he said. "Facebook has just had upside buying of calls for the last two weeks. The stock has just been chugging along.
"I would anticipate that would continue."
Rosecliff Capital's Mike Murphy said that the market was still in an uptrend.
"I would argue that the rally hasn't really stalled," he said. "We've had a normal pull-back in the market off a huge rally up, and if you look at the short- or long-term trends in the S&P, we're still going higher. So, we've talked about it for a long time. Don't fight that trend.
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"Yes, we know that there's going to be some volatility around Washington. We've come to expect that now the last two times we've had this event where we're debating over the debt ceiling. Right now, you need to stick with quality names."
Murphy noted that financials hadn't participated in the most recent rally, but he said that the sector was poised to resume its leadership roles, and "we're at new highs shortly."
Stephen Weiss of Short Hills Capital remained positive on the market.
"There's some trepidation in front of earnings season," he said. "Let's just have a slight correction. We'll see what we've always seen, which is buying on the dips. So, I remain bullish. I know it's going to be volatile the next couple of weeks. I'm not concerned."