OIL DROPS, LIFTS STOCKS
The Dow fought its way higher on Wednesday as oil prices fell and positive sentiment swelled on hopes that lawmakers will soon approve a rescue plan for Fannie and Freddie.
OIL DROPS BELOW $125
Oil prices fell $4 to a six-week low on Wednesday after a U.S. government report confirmed that high prices and economic turmoil are eating into the nation's energy demand.
Oil and the financials seem to be trading inversely, explains Joe Terranova. I’m staying in the Financial Select Sector SPDR because oil looks weak, right now.
That’s right! The financials work when oil comes down and vice versa, adds Pete Najarian.
WHERE'S THE BOTTOM OF THE BARREL?
How low can oil go now that its broken the uptrend?
The crude oil chart suggest a Fibonacci Retracement, explains Addison Armstrong, Tradition Energy Director Of Market Research, on Fast Money. Right now we’ve hit some very important support levels.
“If we break below the first support level at $123.91 then we're headed lower to $122.25, the 100-Day moving average. And if we break below the 100-Day moving average, then $115 is the next stop.
The bottom line: "We’re probably closer to $105 than $140," says Armstrong. "We’re beginning to see big demand destruction out of Asia. However I expect oil to turn higher short term before it ultimately goes down."
To see the chart used on Addison Armstrong's technical analysis please watch the video.
FANNIE, FREDDIE SURGE ON RESCUE PLAN
Shares of Fannie Mae and Freddie Mac surged Wednesday after President Bush dropped opposition to a housing rescue bill, clearing the way for measures meant to shore up the worst U.S. home market since the Great Depression.
I don’t really understand the plan, reveals Karen Finerman, but apparently the market likes that its vague.
In the space I’d keep an eye on Washington Mutual . I don’t know how they’re going to make money in the future, says Pete Najarian.
There’s been a vicious snap away from things like coal and ag names that worked earlier in the month and it seems all that money is going into the financial services sector. I sold Goldman Sachs today, reveals Jeff Macke. But that’s just because it made gains and I don’t want to tempt fate.
AT&T FUELS TECH COMEBACK
Despite weak second-quarter earnings and an accelerating loss of landline subscribers, investors sent shares of AT&T higher on Wednesday. Like we've seen so many times this earning season Wall Street was apparently expecting worse.
Also, AT&T said sales of Apple’s 3G iPhone, for which it is the exclusive U.S. carrier, were nearly double those of the first iPhone.
The one year chart looks like the stock is broken to me, exclaims Jeff Macke.
In the space RIM is now trading at the level where it broke down a few weeks back, says Joe Terranova. I’m not sure if you should hold onto it at this level.
AFTER HOURS ACTION: AMAZON
People are still shopping their just doing on the internet. Online retailer Amazon.com said on Wednesday its second quarter net profit doubled, helped by higher revenues and a gain related to the sale of European DVD rental assets.
Shares of Amazon rose more than 8 percent after hours.
Goldman Sachs has a $98 price target on this stock, reminds Joe Terranova.
SELLING IN BULK... COSTCO PLUNGES 12%
Costco warned on Wednesday that its quarterly profit would miss current Wall Street targets because of soaring energy costs and other inflationary pressures, sending shares of the No. 1 U.S. warehouse club operator tumbling by the close.
I bought this stock because I think it’s a best of breed play, says Jeff Macke. I think consumers will continue to shop Costco for low prices.
On the technical side the stock broke right below it’s 200-day moving average, counters Joe Terranova. That isn’t good.
HAPPY WITH SECOND PLACE
General Motors took it on the chin again Wednesday. New data reveals the largest US automaker is trailing rival Toyota in global vehicle sales.
In the first six months of 2008, GM sales totaled 4.54 million while Toyota’s tally reached 4.8 million.
I can’t get on board the GM wagon, says Karen Finerman. Too many miles per gallon.
I think Toyota is the short, says Jeff Macke, because investors think they will stay ahead of the product cycle. I’ve got news. The Prius isn’t the answer to our long term energy problems.
TOPPING THE TAPE: BIG PHARMA
It looks like investing and drugs mix, afterall. The world's two biggest drugmakers, Pfizer and GlaxoSmithKline , both beat expectations for quarterly earnings on Wednesday.
Although both companies face major threats from generic competition, the latest results show demand for medicines is holding up relatively well at a time of economic downturn.
Lipitor is carrying Pfizer, exclaims Pete Najarian. They need to make acquisitions. I’d look at Roche, instead. They’re not sitting on their hands.
I’m long the Pharmaceuticals HLDRS , reveals Karen Finerman.
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Trader disclosure: On July 23, 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 (WMT), (COST), (MSFT), (EMC); Najarian Owns (AAPL), (COST), (TSO); Najarian Owns (YHOO) Calls, (CSCO) Calls, (SKF) Calls; Finerman Owns (GS); Finerman's Firm Owns (MSFT), (PPH), (SUN), (TSO), (VLO); Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY); Terranova Owns (BNI), (CME), (RIMM), (VLO), (SA), (FCX), (GOOG), (INTC), (IYT), (XLF), (SU), (YHOO); Terranova Is Long September Crude Oil $154 Call; Terranova Is Short September Crude Oil $130 Put; Terranova Is Short September Crude Oil $130 Call
Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; 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); Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
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