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Stocks Snap 4-Day Winning Streak

Monday, 16 Mar 2009 | 6:00 PM ET

STOCKS SNAP 4-DAY WINNING STREAK

On Monday, for the first time in four days, the Dow declined though modestly. The slide was largely due to comments from American Express which said the number of people struggling to make credit card payments grew, erasing earlier optimism that banks could be returning to health.

"American Express took the legs out from under us," says Joe Saluzzi, co-manager of trading at Themis Trading. "When they came out that the default rates were higher in the last quarter, that accelerated the selling."

Banks stocks went from first -- to worst -- ending the day as the S&P's biggest drag after driving the market higher earlier in the session.

However, investors remained at least somewhat cheered by comments from Federal Reserve Chairman Ben Bernanke who said during an interview on the CBS program "60 Minutes" that the recession could probably come to an end this year and "we'll see recovery beginning next year."

Word on the Street
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Strategy Session With The Fast Money Traders

I think some investors decided to take money off the table Monday, counsels Guy Adami and ultimately we closed lower. But I also think some people got out of their shorts on Bernanke’s comments.

A couple days of consolidation won’t hurt the market, says Joe Terranova. The level to watch on the S&P is 740.

It looks to me like Bernanke is going to rain money on our problems, bristles Jeff Macke. And it seems the Fed is much more afraid of deflation than anything else.

I think there’s considerable upside from where we are now, counsels Zach Karabell.

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AFTER HOURS ACTION: ALCOA DOWN 11% AFTER DIVIDEND CUT

Alcoa said on Monday it will slash its dividend, issue stock and convertible notes worth about $1.1 billion and trim its 2010 spending in a bid to weather the steep downturn in demand for aluminum.

The stock traded 10% lower after hours, explains Guy Adami. That puts it at the same place it was on Friday.

This is another sign that just because industrial metals are working in general, it doesn’t mean aluminum is working in particular, says Zach Karabell.

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TOPPING THE TAPE: ENERGY STOCKS STAY POSITIVE

Both Chevron and BP ended the session higher with the spot price of crude making new gains.

It seems to me that crude wants to trade north of 50, says Guy Adami.

Meanwhile, the alternative oil space is getting slaughtered, adds Jeff Macke. Dirty fuels are back in vogue.

Alternative oil fuel producers rely on credit and credit is hard to get right now, adds Joe Terranova. If you’re looking for a play I’d look at Hess .

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TOPPING THE TAPE: TRANSPORTS

It seems that transports are continuing to chug along with Burlington Northern and Union Pacific both surging Monday.

Union Pacific just received an upgrade by Bank of America, reminds Guy Adami. If you want to play in the space this stock is a good place to go.

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WHAT'S WRONG WITH TECH?

The Nasdaq fell nearly 2 percent as investors booked profits in semiconductor stocks following a strong week. Intel put pressure on the Nasdaq after the company accused Advanced Micro Devices of breaching the terms of a cross-licensing agreement between the rival chip makers.

Oppenheimer's Carter Worth has been bullish on the semis reminds Guy Adami. This might be a good opportunity to get into the SMH .

On a pullback I’d own Intel and Broadcom , adds Joe Terranova. Inventories are being worked down.

Everyday the market is open is a good day to get out of Intel, counters Jeff Macke. I don’t understand the love affair with tech and if you’re counting on the semis to lead us higher, don’t expect to go anywhere soon.

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DR. DOOM A DAY TRADER?

Noted Bear Nouriel Roubini struck again, saying the recent rally was a “dead cat bounce” Did the late-day slide confirm Roubini's prediction?

I would focus on what traders are doing in the market, suggests Joe Terranova, more than someone who just anlayzes.





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Trader disclosure: On Mar. 16th, 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 (GE), (GS), (MS), (SDS), (MOS); Macke Is Short (BRK.b); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (KCE), (JPM), (X), (POT), (WYNN), (XBI), (HESS), (INTC), (BRCM), (DELL), (JOYG), (FXC), (EOG); Terranova Owns (IBM) & (IBM) Calls; Terranova Owns (DIS) & (DIS) Calls; Terranova Owns (COP) Calls; Terranova Owns (AMGN) & (AMGN) Puts; Terranova Owns MACI Oil Futures; Karabell Owns (BHP), (CSCO), (FCX), (FXI), (GOOG), (GLD), (GE), (JPM)

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  Price   Change %Change
DJIA
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NASDAQ
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S&P 500
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AA
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AMD
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ALXN
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BP.
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BRCM
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CVX
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HES
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INTC
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UNP
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SPDR FIN SEL
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MV SEMI
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