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The headline: Stocks Shrug Off Inflation Fears, Plummeting Consumer Confidence
Jeff Macke admitted that he didn’t see this rally coming. And it was spearheaded by some of the most beaten down sectors, too – homebuilders and retail. The price action in both those areas is looking better, he said.
BIG BLUE TO THE RESCUE
The headline: Stocks Rally After IBM [IBM
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] Boosts 2008 Buyback Program, Authorizing Additional $15 Billion
IBM was the saving grace as those early economic numbers threatened to drag everything down. But Big Blue’s announcement of a buyback increase and an improved forecast makes Pete Najarian think it’s a buy on a pullback.
Guy Adami would own IBM as well as Western Digital [WDC
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], which is a tandem play on increase hard drive usage worldwide. IBM bodes well for the entire tech sector, he said.
Jeff Macke called IBM a “show me stock,” pointing to the fact that the company has bought back almost $100 million in stock over the last decade yet the stock has barely budged in that period. He would rather own Intel [INTC
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].
OIL HITS NEWS RECORD
The headline: Oil Closes Up 1.7% to $100.88, New Record Close
Oil wasn’t the only commodity to surge Tuesday. Wheat jumped 8%, gold finished higher and U.S. Steel popped as well.
Agriculture play Potash (POT) should be bought on any pullback as far as Guy Adami is concerned. His oil plays are Baker Hughers (BHI) and Schlumberger (SLB), both of which are cheap although BHI looks better fitted for a turnaround, he said.
The best thing to do is just buy the oil ETF [USO
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] and the gold ETF [GLD
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], according to Jeff Macke. Don’t bother with the individual stocks here.
Pete Najarian disagreed. The individual stocks get a better return off high commodity prices than the funds, he said. Buy XTO Energy (XTO).
On a similar note, Karen Finerman said she trimmed her position on water pump and valve maker Flowserve (FLS) ahead of its earnings Wednesday. The expectations are too high for the near term, she said, although the stock is still a value play on a long-term basis.
CELLAR DWELLERS NO MORE?
The headline: Homebuilders Rally Even as Home Prices Plummet, Foreclosures Soar
The S&P Homebuilders Index (XHB) is up over 10% in the last three days, leading Guy Adami to think a bottom could be forming in the beleaguered housing market. But don’t buy homebuilders indiscriminately, he warned. He thinks Home Depot [HD
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] on a pullback is now a worthy buy.
SEARCH AND DESTROY
The headline: Google (GOOG) Falls 5% After comScore Report Shows Decline in Search-Ad Clicks
There needs to be institutional money flowing into GOOG before it can rebound, according to Pete Najarian. Guy Adami thinks that – believe it or not – with 18 times forward earnings, Google has actually become a value stock.
FINANCIAL OPTIONS
The headline: Financials ETF [XLF
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] Mounts Solid Comeback After Monday’s Slide
There was aggressive call buying in the XLF on Monday, Pete Najarian noted.
Fannie Mae (FNM) and Freddie Mac (FRE) are looking toward a bottom, Karen Finerman said. The negative sentiment in those stocks is finally diminishing. While they aren’t necessarily buys to Karen, she would no longer short them either.
Pete Najarian likes to play the financials with individual brokers like Knight [NITE
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], Schwab [SCHW
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] and TD Ameritrade [AMTD
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].
And Goldman Sachs [GS
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] is setting up to go higher as Guy Adami sees it. Jeff Macke concurred: “Buy Goldman likes crazy at $160.”
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Trader disclosure: On Feb.26, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Najarian Owns (BIIB), (NOK), (C), (CSCO), (MCD), (MS), (MSFT), (XLF), (XTO) Calls, (YHOO) and (YHOO) Calls; Macke Owns (INTC), (KSS), (MSFT), (ODP), (TSO), (WMT), (DIS), (YHOO); Finerman’s Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), Finerman’s Firm Owns (DVA),(AAPL), Finerman’s Firm and Finerman Own (FLS), (HD), Finerman’s Firm Is Short (LEH) and Owns (LEH) Puts
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