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Fast Money HomeFast Money Rapid RecapAbout Fast MoneyFast Money BiosFast Money Web ExtraFast Money Disclaimer
Text Size
Aug.11
9:05 PM ET
Monday, 11 Aug 2008
Stocks Cling To Gains
Posted By:Lee Brodie

STOCKS CLING TO GAINS

The news: Once again, oil was the story of the day. With oil prices closing lower for a 6th day, the Dow [.DJIA  Loading...      ()   ]and broader stock market closed higher on Monday. Investors believe the trend in oil improves prospects for consumer and business spending.

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VOLATILE OIL TRADE DICTATES DAY

The news: Oil prices fell on Monday as a drop in crude imports by No. 2 consumer China outweighed concerns over supply disruptions stemming from the conflict between Russia and Georgia.

The plays: The oil trade is probably being driven by the strong dollar, explains Joe Terranova. But it's natural gas that's got my attention. I think gas is probably finding a bottom. Look at Apache [APA  Loading...      ()   ]and Chesapeake [CHK  Loading...      ()   ], he says. And if oil moderates and stops going down the integrated names should trade higher.

I'd look at ExxonMobil [XOM  Loading...      ()   ] on a valuation basis, Guy Adami suggests.

The fall in oil comes from weakness in the economy, says Karen Finerman. I’m short the British pound [FXB  Loading...      ()   ]because I think the economic slowdown will creep across the globe.

I bought the PowerShares DB US Dollar Index Bullish   [UUP  Loading...      ()   ] on Monday, says Jeff Macke, as a dollar trade. In ag I’d wait for panic selling before getting long.


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RETAILERS RIPPING

The news: The Retail HOLDRs ETF [RTH  Loading...      ()   ] jumped significantly on Monday with Wal-Mart [WMT  Loading...      ()   ], Kohl’s [KSS  Loading...      ()   ] and the Gap [GPS  Loading...      ()   ] all leading the way. As we said above, investors are betting that the recent  decline in oil prices lows will help boost consumer spending.

The plays: I think the play is to sell into this strength, says Karen Finerman. Also, keep in mind Kohl’s is up something like 40% over the last few weeks. That’s too much too fast.

I’m a seller too, says Jeff Macke. The RTH rallying 10% in 2 trading days is nothing more than an opportunity to sell.

If you don’t mind a little more volatility look at the Consumer Discretionary SPDR [XLY  Loading...      ()   ] , counsels Pete Najarian. It should trade inversely to oil.

And if you're in Home Depot [HD  Loading...      ()   ] I'd take profits, adds Guy Adami.

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AIRLINES TAKE OFF ON OIL DROP

The news: Nothing helps the airlines [XAL  Loading...      ()   ] take flight like the plunging price of oil. In fact both the alirlines and the automakers traded higher as oil retreated.

The play: A Morgan Stanley analyst is forecasting profits for the airlines in 2009, explains Pete Najarian. The analyst thinks all the recent cost cutting measures should bode well provided oil averages about $115 next year.

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BANKS JUMP 2%

The news: Bank shares also rose, with the KBW index for the sector rising nearly 4 percent, as the drop in oil prices reversed the popular trade of going long energy stocks, short the financial sector.

The play: On a forward basis I’d dump the financials, says Jeff Macke. The only buy in this group is Goldman Sachs [GS  Loading...      ()   ] as a best of breed trade.

I also think Goldman is going higher, Guy Adami says.

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