STOCKS DROP INTO OFFICIAL BEAR MARKET
The S&P closed 20 percent below its all-time high set in October, making it the last of the three major U.S. stock indexes to fall into a bear market.
With bear market runs of the S&P 500 averaging a decline of about 29 percent -- from peak to trough -- since 1929, market technicians see the index scrambling for support at around the 1,220 level, based on Wednesday's close.
Stocks have been roiled for months by the credit crisis and a severe U.S. economic slowdown.
This is a traders market, says Pete Najarian. I think it’s okay to play but if you get a 10% up-side move in this market, make sure to take profits.
The 52-week low list is not a menu for buying, counters Jeff Macke, because they’re going to make another 52-week low tomorrow. You’re fighting a trend. Stop trying because chances are you won’t win.
BEARISHNESS AT 9-YEAR HIGH
A widely watched market poll shows bearishness has reached its highest level since 1998.
Bullish sentiment is also low, adds Guy Adami. It sort of points to capitulation but I wouldn’t run out and buy stocks tomorrow. However, I also think you could easily see an 800 point uninterrupted move higher.
Bottoms are a function of time, price and sentiment. We’ve got the sentiment but not the price, counters Jeff Macke.
If the VIX gets a 30-handle then I’d get long, says Karen Finerman. Or at least longer.
I agree that we’re very, very close to a buying opportunity, adds Pete Najarian. But we’re not there yet.
BANK BLOODBATH WORST IN 6 YRS
Fannie Mae and Freddie Mac dropped sharply Wednesday as some investors worried that the two pillars of the U.S. housing market will need to raise billions of dollars in additional capital through stock sales, diluting the holdings of current investors.
An article posted on the Fortune website just before 2 PM ET may also be a contributor to the weakness according to CNBC's Bob Pisani. In it, the author basically goes over the recent Lehman Brothers analyst report, and is titled: "The Fannie and Freddie doomsday scenario: It's time to wonder what would happen if Fannie Mae and Freddie Mac failed."
Meanwhile, Merrill Lynch shares fell more than 9 percent, after Fitch Ratings said it may cut the U.S. investment bank's debt rating, given expected ongoing write-downs and diminished prospects for earnings.
You can make your year in one of these trades, says Guy Adami. Yes you have to be fast but the biggest bull runs are in bear markets.
If you’re a long term investor there’s no need to be bottom picker, counsels Pete Najarian. Be smart and miss the first 10% of the financial turnaround.
I know that I’m not going to be able to pick the bottom, counters Karen Finerman. But some of these stocks look like a value.
You might be interested to hear that Dennis Gartman is calling a turn.
We’ve reached levels that are just absurd, says strategic investor Dennis Garman on Fast Money. I started buying the banks today and shorting the general market. People are throwing up all over their shoes. I’d play it by being long the Financial Select Sector SPDR and hedge the bet by being long the UltraShort S&P 500 Proshares which gets you short the S&P 500.
Stay home, counters Jeff Macke. It’s a brutal market and I don’t know anyone who was quick enough to catch the great airline rally of 2008, which was yesterday.
CISCO PUSHES TECH INTO BEAR MARKET
Cisco led the tech sector lower on Wednesday after CEO John Chambers told Reuters many of his customers see the economy picking up early next year rather than this year.
Also brokerages cut their price targets on Cisco shares. RBC cut its price target on Cisco to $27 from $29, and UBS cut its target to $25.50 from $27. JP Morgan analyst Ehud Gelblum found Chambers' remarks to be "punctuating our dour outlook and indicating no improvement in the near term."
I think Cisco on this dip is an opportunity, says Pete Najarian. That which is building will continue to build. Wireless is working and Cisco provides the infrastructure.
Cisco is on my radar too, says Karen Finerman. The valuation is very attractive.
It was a senseless beating, exclaims Jeff Macke. But I’d wait for capitulation.
TOPPING THE TAPE: STEEL
Analysts at UBS raised their rating on Nucor to "buy" from "neutral" on Wednesday. In a note to investors, UBS said the recent selloff in North America steel stocks was overdone and that Nucor was less susceptible to a dip in steel prices later this year than its competitors.
UBS also raised its rating on Steel Dynamics Inc to "buy" from "neutral" and said both companies were likely to beat market forecasts for second-quarter earnings.
I like United States Steel, says Guy Adami, but it’s become a momentum name which kind of scares me. However, the current level in this stock could be the place to start building a position.
TOPPING THE TAPE: DRUG STOCKS
We said it yesterday and we’ll say it again today. Drug stocks are beating the bear. Schering , Merck and Amgen all closed in positive territory with foreign Pharma companies such as Novartis and AstraZeneca making gains faster than their U.S. counterparts.
I have a Merck position as well as Pfizer and J&J, says Karen Finerman. I think it’s an attractive place to hide.
Gildead , says Guy Adami, One word. Nothing more.
EVEN OIL'S NOT WORKING
Commodities staged a modest rebound on Wednesday, with crude oil and gold ending off their session highs, as investors reevaluated their strategy for these commodities after recent record highs.
Analysts said the sharp losses seen on most commodity fronts on Monday and Tuesday could recur if investors anticipate less upside potential for the sector in the second half of 2008 versus the first.
I believe in Chesapeake . I’d buy it on the secondary with a tight stop, says Guy Adami.
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Trader disclosure: On July 9, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (MSFT), (WMT); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (AAPL), (CHK), (MAR), (TSO), (ANR); Najarian Owns (SLB) Calls, (YHOO) Calls; Najarian Owns (XLF) And (XLF) Puts; Najarian Owns (FNM) And (FNM) Puts; Finerman Owns (GS); Finerman's Firm Owns (MSFT), (SUN), (TSO), (VLO),(PPH), (MRK), (PFE), (JNJ); Finerman's Firm Owns (TGT) Calls; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Finerman's Firm Is Long SPX Index Puts; Finerman's Firm And Finemran Own (C) And (C) Leaps; Finerman's Firm And Finerman Own (PDE) And (PDE) Calls; Finerman's Firm And Finerman Own (FLS)
Gartman Owns (PLL), (AFFY), (SJT), (JJG), (EWZ), (PH), (GOOG),(ATW); Gartman Owns (SU), And Is Short (SU) Calls; Gartman Owns (UYG) And Owns (SDS) Against It; Gartman Is Short (WFMI), (BA), (DE); Gartman Owns (BPT) And Is Short (BP); Gartman Owns (TOWN) And Is Short (ING); Gartman Is Short (X); CIBC Gartman Index Owns Natural Gas And Is Short Crude Oil; CIBC Gartman Index Owns Aluminum