STOCKS SOAR ON FED, LEHMAN EARNINGS
The headline: Fed Rate Cut, Better-Than-Expected Earnings from Goldman , Lehman Spark Monster Rally
When Jeff Macke reads a Fed decision, he looks for three things: Growth, Inflation and Guidance. Today’s decision shows that the Fed thinks growth is getting worse, inflation is accelerating but will moderate and guidance is all about liquidity. The bottom line? Credit markets will not fail on Bernanke’s watch. The meeting is almost an afterthought. The Fed’s actions this past weekend changed everything, Macke said.
Guy Adami thinks the Fed put a floor in for the financials. The easy money to be made shorting these stocks is over, he said. Now it’s time to buy the dips.
BANK STOCKS SOAR
The headline:Financials ETF Jumps 8.4%, Second-Biggest Move of All Time
Take your gains in Lehman, Jeff Macke said. But otherwise, he would be a buyer of financials on dips going forward because, again, the Fed “changed everything.”
Tim Seymour is reluctant to group together the whole sector with one trading strategy, although Guy Adami echoed Macke’s “buy the dips” approach.
Whatever you do with these stocks, buy protection. Pete Najarian can’t stress this enough. These stocks are still toxic and could still hurt, so buy the appropriate puts, he stressed.