Bad News Bulls

Thursday, 30 Oct 2008 | 6:26 PM ET

These are strange days indeed. Despite horrible headlines some stocks are trading higher. Much higher.

Take MGM Mirage for example. The casino reported third quarter profits that were 67% lower than the same quarter this year. And they’ve halted development of a promising Atlantic City project, as well as a joint venture on the Las Vegas Strip. The stock, however, closed higher.

Wall of Worry
The Fast Money traders take a look at why some stocks are going up on bad news.

Or check out Aflac. Net income fell by 76% in the third quarter and it expects to take a fourth-quarter charge of about $110 million on securities it owned in Icelandic banks. This stock traded higher too.

Then there’s Lowe’s . Home prices fell a record 16% and construction spending is down a whopping 19%. But where’s the stock. Higher!

And in general consumer confidence out this past Tuesday was a record low. Yet Macy’s , Kohl’s and even the Retail HLDRs all closed in the green.

What’s going on?

When stocks like these with so much horrible news trade higher, I can only assume that the bad news is baked in, says Jon Najarian. And that could suggest the bottom is in for these names.

How is Najarian trading it?

He’s long (MGM) Calls, (LOW) Calls, (AFL) Calls. In other words he's betting these three stocks are going to go higher.

Guess that makes Jon Najarian, a bad news bull!

Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send your e-mail to fastmoney@cnbc.com.

Trader disclosure: On Oct.30, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Pete Najarian Owns (MS) Calls; Pete Najarian Owns (MSFT) And Is Short (MSFT) Calls; Pete Najarian Owns (PBR); Pete Najarian Owns (TSO) Call Spread; Pete Najarian Owns (YHOO) And Is Short (YHOO) Calls; Pete Najarian Owns (BNI) Put Spread; Finerman's Firm Owns (RIG), (MSFT), (SUN), (TSO), (VLO); Finerman's Firm Is Short (IYR); Finerman's Firm Owns (OIH) Puts; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (COF), (BBT); Seymour Owns (AAPL), (BAC), (BX), (F), (MER), (TSO), (CHL); Seygem Asset Management Owns (PBR), (EEM)

Jon Najarian Owns (MGM) Calls, (LOW) Calls, (AFL) Calls

  Price   Change %Change


Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET
  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

  • Scott Wapner is host of the "Fast Money Halftime Report," which airs weekdays from 12 p.m. to 1 p.m. ET.

  • Guy Adami is a contributor on CNBC's "Fast Money." He also is managing director of stockMONSTER.com.

  • Najarian, the "Pit Boss," is cofounder of optionMONSTER.com, a news site for options traders.

  • Finerman is president of Metropolitan Capital Advisors, Inc., a company she co-founded.

  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

Halftime Report