S&P 500 UP FOR A THIRD DAY
Stocks rose for a third day on Thursday, marking the biggest three-day gain since November. Markets were up across the board, led by Banks, with Bank of America jumping 19%. General Electric also shocked the street today, gaining 13% despite a ratings cut from Standard & Poors, alongside retail data that helped sustain today's rally.
Biggest Three Day Gain for Markets Since November
Does this rally have legs? Guy Adami is looking at the internals, and with a close above the S&P 500 “Magic Number” of 741, he sees the S&P moving above 900. Tim Seymour sees a chance for the CBOE Volatility Index, as it has a chance to break through.
Pete Najarian recommends caution with the .VIX, and says it’s all relative. He looks at the 50 level on the .VIX as a high number, although many traders don’t see it as such. With the financials taking a beating as of late, Najarian suggests taking a look at Morgan Stanley , Goldman Sachs and Northern Trust . He sees potential 30-40% moves to the upside in these companies. People like what they’re hearing about the possible changes in mark to market and uptick rules and the buzz may push these stocks much higher. He says the financials have been oversold as a result of the status-quo rules.
Karen Finerman sees expected changes in mark to market accounting to be integral in the rally we’ve seen in the banking sector. She points out that the banks have been so down and oversold, and sees this three-day rally to be the most impressive she’s seen, although she’s skeptical of the rally, worried that there is potential for a pull-back.
The cream is rising to the top, says Najarian, John Mack is leading one of the best on the street - Morgan Stanley is hitting 6 month highs, seeing September levels.
Seymour points to the second derivative numbers, like the recently released retail figures, which seem to be stabilizing. Although they’re bad, they’re not getting worse each month. Although numbers like unemployment is still bad, the market response to these numbers is still positive.
GE Surges 13%
After S&P cut the rating of General Electric , the parent company of NBC Universal and CNBC, still saw as surge of 13% after the stock price had been falling for multiple trading sessions. Pete Najarian points to the charts, which shows a large push to the downside under $6 per share, and says we’ve seen a complete reversal as to how people are approaching the stock. The trend has gone from pushes to calls, and the stock is climbing higher as a result.
Guy Adami sees positives on the margins, and sees people starting to get more comfortable with the workings of GE Capital, but notes that the important thing to look at is the industrial arms of these companies, and by his estimation, General Electric’s infrastructure business alone valued in the $12-$13 per share range.
Pete Najarian points out the Industrial SPDR , with potentially profitable up-side call activity. He’s looking at some interesting options action surrounding the industrial sector. The index, which includes names like 3M and United Technologies , but GE’s big percentage move is pushing the index higher.
Topping The Tape: Bio-Pharma
With Roche finally closing the deal on Genentech for $95 per share, there was big news in the Bio-Pharma sector.
Pete Najarian looks at how the stocks have been priced in, and has seen selling of the $95 calls in the options market. He's seen pressure for quite some time on $95 calls, and that's what we saw more of today.
Guy Adami thinks there's no more juice in Genentech. Although people may not be getting out of it, he sees little reason to trade on it. With so many designated Biotech hedge funds out there, he thinks the place to look is in Amgen and Celgene , which may be getting more traction, with some money coming out of Genentech.
Karen Finerman is a buyer of Biotech, looking at trades in the IBB or the XBI , as ways of getting more exposure in the sector. She also expects to see more consolidation in the pharmaceuticals industry.
Retail Ex-Auto Sales Up
With new retail data released from the government, shares from major retailers like Wal-Mart and Macy's were given some upward momentum.
However, Tim Seymour points out that the names outside Wal-Mart , which cater to the relatively higher-end consumer were not as fortunate, such as Nordstroms , whic suggests that the consumers are still not able to spend as much as they should.
Guy Adami is looking at Home Depot as an attractive stock, which has a healthy balance sheet and may be undervalued at this point in the game.
In the options arena, Pete Najarian is looking at the SPDR S&P Homebuilders ETF which has seen a dramatic upswing of late, and sees these moves as just the beginning. He also points out that there are other "feeders" into the homebuilders, like Bed Bath & Beyond , Mohawk Carpeting and Rent-a-Center .
Big Oil Names Rebound
After an 11% surge in the price of oil today, closing above $47 per barrel, energy stocks like Chevron and Exxon Mobil got a healthy boost. Guy Adami points out that the stats were incredibly bearish in the oil trade, but the short sellers are getting a little squeezed. With a surprising reversal, Adami expects to see gasoline prices rally, with the price of crude reaching $50 per barrel, if not higher.
With the OPEC meeting coming up this week, Tim Seymour doesn't think the oil producers will be cutting production. He sees opportunities in drillers and refiners, Transocean Inc , Tenaris , Halliburton and Schlumberger .
Gold Higher for a Second Day
Despite the three day market rally, gold was up again today. Guy Adami sees money being put to work at gold, but sees the possibility for the gold trade going lower, especially if equitites continue their upward moves. He sees the gold trade as a bit of a coin flip.
Tim Seymour sees the inflation side of the gold argument. He says that the monetary supply growth is very inflationary and many analysts think that this effect could be felt faster than expected.
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Trader disclosure: On Mar. 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 (COF) Call Spread, (FCX) Call Spread, (GDX), (GS) Call Spread, (GLD) Put Spread, (GE) Calls, (JPM) & (JPM) Calls, (MS) & (MS) Calls, (MSFT), (X) Call Spread, (XHB) Call Spread; Seymour Owns (AAPL), (T), (BAC), (EEM), (FXI); Finerman's Firm Is Short (IJR), Short (IWM), Short (MDY), Short (SPY), Short (USO), Owns (MSFT), (DNA) Calls, (BAC) Preferred, (WFC) Preferred, (WFC) Preferred, Short (BBT), Owns (RIG), Owns (PBR); J. Najarian Owns (MS), (WFC), (COF), (FAS), Is Short (SKF)
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