Dow Jumps Over 3% On The Week
CRUDE SETTLES BELOW $129
The Dow closed with fresh gains on Friday due to a smaller-than-expected loss from Citigroup and the biggest weekly dollar drop ever in oil prices.
The turn in Fannie and Freddie was the catalyst for financials earlier in the week, explains Pete Najarian. It’s a story of rotation (Investors getting out of energy stocks).
If Fannie and Freddie can get the public markets to bail them out instead of the government, says Karen Finerman, I think it will be great for the market.
It’s about confidence because banks are always a leap of faith, says Jeff Macke. This is a bottom, he exclaims, but is it the bottom? Probably not!
WORST WEEK FOR OIL IN 3 YEARS
Oil fell to below $129 a barrel on Friday, due to easing tension with Iran and growing concern about demand. Oil's losses this week are the steepest in dollar terms since futures began trading in New York in 1983 and the steepest in percentage terms since December 2004.
We broke some important support in crude and other energy names, says Jeff Macke. Since the technical up-trends are broken I’d get out while the getting is good.
I expected some sort of correction, adds Joe Terranova. But I wouldn’t look for more. I think oil trades sideways for a while.
GM and airlines popped on the news, explains Pete Najarian. They’re moving inversely to oil. Everytime oil drops these names go up. But remember if you go into the automakers or airlines it’s a trade.
CITIGROUP KEEPS WALL STREET PARTY GOING
Citigroup shares bounced Friday after the nation’s largest bank posted a loss that was smaller-than-expected. Despite $11.7 billion in write-downs and credit losses tied to deteriorating capital markets, investors took this stock higher.
I own Citigroup, says Karen Finerman. It’s hard to say what’s coming but so far so good.
There are still plenty of earnings on tap in the financials, says Pete Najarian. I’m cautiously optimistic.
I’d trim some gains, counters Jeff Macke. And on a related note E*Trade and Ameritrade have interesting balance sheets when everyone else is panicking. I think that’s an interesting trade, right here right now.
ANALYZE THIS: DON'T BUY THIS BANK BREAKOUT
Many investors are hopeful that the turnaround in banks could signal the sector has finally found its bottom. However Morgan Keegan Analyst Robert Patten issued a report on Friday questioning the rally.
Bank stocks also had a relief rally amid first quarter reports in April, he tells Fast Money, and just like back in April, this rally should soon fail, too.
“The drivers of this are less bad earnings and huge short interest. This is the biggest government induced rally we’ve ever seen,” says Patten on Fast Money.
In other words he thinks the rally was induced the government’s new regulation on short selling.
“You still don’t know what you’re buying with some of these larger banks and some of the smaller banks have the same issues.”
He thinks you shouldn’t get into banks until asset pricing is re-valued or until the housing market stabilizes.
And that leads to the Charles Schwab Question of the Day!
BIGGEST GOOGLE DROP EVER... MICROSOFT FALLS 6%
Technology stocks fell on Friday and drove the Nasdaq down 1 percent on disappointing earnings from Google and Microsoft.The two tech giants cast doubts on whether they are, in fact, immune to the economic downturn.
"Now we’re seeing a broadening of the advertising slowdown and a lot of fears that it will be prolonged," said Clayton Moran, a media and communications analyst from Stanford "And if Google’s going to be impacted, then that impact will last as long as the slowdown lasts."
Microsoft has flat-lined since 2001, says Pete Najarian. They’re just sitting there in mud. I’d keep an eye on IBM instead. They seem to be doing things rights.
Amen on Microsoft, says Jeff Macke.
I bought more Microsoft on Friday, counters Karen Finerman. At this valuation I think it’s very attractive.
> Find out what options actions suggests about tech earnings next week.
IS BILL MILLER A YAHOO?
Yahoo’s second largest institutional shareholder, Legg Mason Capital Management, said on Friday it will back Yahoo's board, dealing a blow to a billionaire investor Carl Icahn's efforts to get a rival board slate elected.
It’s a ship of fools, exclaims Jeff Macke. If Karen really loved Carl she’d talk him out of this.
I think an investor could play Yahoo! with options, says Pete Najarian. If you think there’s a chance Microsoft will increase their bid, then put-on a call spread.
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Trader disclosure: On July 18, 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 (ATVID), (MSFT), (GS), (WMT), (HAS); Pete Najarian Owns (AAPL), (CHK), (TSO), (XLF); Pete Najarian Owns (CSCO) Calls, (MRK) Calls, ; Pete Najarian Owns A (YHOO) Call Spread; Finerman Owns (GS); Finerman's Firm And Finerman Own (PDE); Finerman's Firm Owns (MCC), (MSFT), (SUN), (TSO), (VLO), (MCC); Finerman's Firm And Finerman Own (C), (C) Leap; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Terranova Owns (VLO), (RIMM), (INTC), (YHOO), (GOOG), (CME), (FCX), (BNI), (XLF), (IYT), (SU), (SA); Terranova Is Short September Crude Oil $130 Puts; Terranova Is Short September Crude Oil $130 Calls; Terranova Is Long September Crude Oil $154 Calls
Terranova Is Phoenix Investment Partners' Chief Alternatives Strategist And Co-Manages The Phoneix Diversifier Fund; Phoenix Investment Partners Owns More Than 1% Of (DBV), (RWX), (LNET), (EXR), (SKT), (DLR), (IGE), (ARE), (DBC), (ABD), (OFC), (CLB), (BLV), (CNTY), (FL), (HPC), (PSPT), (ESS), (OIIM), (BIG), (ENG), (PFD), (DRH); Phoenix Diversifier Fund Owns (IGE), (DBC), (DBV), (GOOG)
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An Affiliate Of Morgan Keegan & Co. Has Received Non-Investment Banking Compensation From (CBSS), (SBIB), (SNV), (WB), (CNB), (CBH), (TSFG), (FHN) In Past 12 Month; Morgan Keegan & Co. Expects To Receive/Seek Investment Banking Compensation From (CNB) In Next 3 Months; Morgan Keegan & Co. Has Managed Or Co-Managed A Public Offering Of Equity Securities For (CNB) In Past 12 Months; Morgan Keegan & Co. Has Received Investment Banking Compensation From (CNB), (FHN) In Past 12 Months