STOCKS SHAKE OFF BAD NEWS
The Dow rose on Friday on hopes that a lifeline for struggling U.S. automakers could still materialize.
The White House said it may be willing to provide emergency funding to the struggling auto industry, the day after Congress failed to approve a deal.
GM , Ford and Chrysler employ nearly 250,000 people directly and 100,000 more jobs at parts suppliers could depend on their survival. The industry fears the failure of one Detroit manufacturer could drag down the other two.
Meanwhile investors bet the large stockpiles in cash at technology companies will help them weather the economic downturn. Gains by the Nasdaq outpaced the other two major indexes with investors scooping up big-cap technology shares.
"The expectation is that tech will be one of the first, not the last of the sectors to rebound," says Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
Investor confidence took a hit early in the day with the arrest of former Nasdaq Chairman Bernard Madoff, who was charged with running a $50 billion "Ponzi scheme" in what would be one of the largest fraud cases ever.
For the week, the Dow was down 0.1 percent, its second straight week of declines. But the S&P was up 0.4 percent for the week and the Nasdaq rose 2.1 percent.
Strategy Session with the Fast Money Traders
The VIX is heading back down, explains Pete Najarian. Fear is going out of the market despite some terrible news including fraud. That’s impressive.
I think the comments from the White House put a floor under the market, muses Karen Finerman.
I have renewed confidence in the market, adds Guy Adami. I thought we’d be down big on the Madoff news but we weren’t. Personally, I think there’s a shot we go significantly higher next week.
In technology keep your eye on Hewlett Packard, IBM and Apple , counsels Najarian. The action in these stocks is interesting. However RIMM is having a tough time breaking over $40. And stay away from semiconductor stocks all together
The tailwinds for tech last year were the weaker dollar, adds Adami. And the dollar moved lower this week for the first time in a while. I think currency could be driving technology shares right now.
Tech generally has good balance sheets, add Finerman. Seems like a good place to be.
And keep an eye on Cree Inc adds Adami. There’s a huge short interest in the stock.
MAD'OFF' THE BOOKS
Investors scrambled on Friday to assess potential losses from the $50 billion fraud allegedly perpetrated by Bernard Madoff, a day after the arrest of the prominent Wall Street trader.
Prosecutors and regulators accused the 70-year-old former chairman of the Nasdaq Stock Market of masterminding a Ponzi scheme of epic proportions through a hedge fund he ran
I think the market understands that there was some terrible damage to the victims, but that it’s contained, says Tim Seymour. And keep in mind he was able to perform the fraud because he controlled every aspect of the business. That's quite unusual.
COMMODITIES WILD BUT GOOD WEEK
Oil prices settled nearly $2 lower on Friday after the collapse of a $14 billion rescue plan for U.S. automakers kept Wall Street and oil markets volatile.
Meanwhile, Goldman Sachs slashed its commodity price forecasts on Friday, citing a collapse in global economic growth and demand because of the credit crisis.
The U.S. bank which earlier this year predicted an oil price spike to $200 a barrel now expects to see crude average $45 a barrel next year.
We’ve had a wild ride in oil, adds Tim Seymour. And I think it will continue next week.
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Trader disclosure: On Dec. 12th, 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); Najarian Owns (FCX); Najarian Owns (DRYS) And Is Short (DRYS) Calls; Najarian Owns (NUE) And Is Short (NUE) Calls; Najarian Owns (UYG) Calls; Najarian Owns (XHB) Calls; Finerman's Firm Owns (DSX), (MSFT), (UNH), (IBB); Finerman's Firm Is Short (USO), (BBT), (COF), (IYR), (IJR), (MDY), (SPY), (IWM); Seymour Owns (AAPL), (BAC), (F), (INTC), (MER); Seygem Asset Management Owns (EEM)
CNBC.com with wires