STOCKS RISE IN LATE-DAY SURGE
The Dow rallied late day Wednesday as upbeat housing and durable goods data fueled hopes that the low point in the current economic downturn may have passed.
Trading was volatile, however, with the Vix remaining above 40 showing fear remained front and center -- as poor demand in a U.S. Treasury auction poured cold water on an early rally.
But by the end of the session much of that disappointment had worn off and investors bet the economy was improving and stocks would continue rising from recent 12-year lows.
Strategy Session with the Fast Money Traders
The market takes a beating and it won’t go down, muses Jeff Macke. Stocks have every reason to tank, yet they don’t.
I’m also encouraged, adds Pete Najarian. But don’t get out the pom-poms just yet. The Vix indicates more volatility lies ahead.
The sellers had every reason to take this market out back and crush it, muses Guy Adami. And they didn’t do it. I still think the S&P goes to 900.
As for the trouble with the Treasuries auction (mentioned above), that had to do with Japan being on holiday, says Tim Seymour.
FINANCIALS REBOUND IN LATE TRADING
Sentiment that the banking system is stabilizing was reinforced after Bank of America Chief Executive Kenneth Lewis, in an interview with the Los Angeles Times, said the bank wants to start repaying $45 billion of federal bailout money next month.
Meanwhile, on Wednesday the White House revealed that when President Barack Obama meets with top bankers on Friday, he will discuss ways in which to stabilize the economy.
In the financials, I’d look at Raymond James , says Guy Adami. I think the stock wants to go higher.
DURABLE GOODS ORDERS JUMP
Investors were cheered to learn that new orders for long-lasting manufactured goods unexpectedly rebounded in February, rising for the first time in seven months, according to a government report released Wednesday.
Big manufacturers like Boeing advanced on the news.
It’s important to remember that expectations were terrible, bristles Jeff Macke.
The rate of decline is slowing, counters Guy Adami. That’s an important factor and it’s encouraging to me.
Options action in the Industrial SPDR suggests at least one big institutional investor sees industrials going higher, adds Pete Najarian.
Shares of IBM tumbled after the blue chip said it plans to cut about 5,000 jobs in the United States, adding to similarly large cuts in the past few months, sources with knowledge of the matter told Reuters on Wednesday.
The job cuts will account for over 4 percent of IBM's U.S. workforce, which totaled around 115,000 at the end of 2008. The sources, who were not authorized to speak publicly on the issue, said the cuts will mostly be in IBM's global services business, which includes outsourcing and consulting services.
In tech, I think the trade is Western Digitaland Seagate , says Pete Najarian. Options action suggests these stocks have more upside.
I’d look at AU Optronicsas a trade on electronics demand out of China, adds Tim Seymour.
TRADING THIS ROLLER COASTER
Finding a trade in this crazy market is anything but easy. Fortunately OptionMonster Jon Najarian has some suggestions.
I’m seeing institutional investors flying into semiconductor stocks, says the OptionMonster. I’d look at SanDisk , EMC Corp , Seagate , Western Digital and/or Advanced Micro Devices .
I’m very heartened by the activity in the space, Najarian adds.
CAUSE FOR CONCERN?
U.S. Treasury debt auctions have become so frequent and so large as the budget deficit heads toward a record $1.75 trillion that their impact is beginning to extend beyond the bond market.
A record $34 billion five-year note auction on Wednesday was met with what traders described as subpar demand, with the government forced to offer a higher yield to attract buyers. Following the auction, bonds added to their early losses, slipping to session lows.
In an unusual twist, however, the depressive effect was felt in stocks as well. The move was all the more curious because equity markets tend, almost instinctively, to move in the opposite direction to government debt.
"Everything is becoming more interrelated and we have more concern about government intervention and all of the debt they are going to have sell," said Lou Brien, market strategist at DRW Trading Group in Chicago. "If there is trouble with that then there could certainly be trouble with getting the economy going again."
To date, most government bond auctions have been surprisingly well-received given the sheer magnitude and rapidity of new issuance.
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Trader disclosure: On Mar. 25th, 2009, 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), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Macke Owns (AAPL), (POT), (WMT), (MOS), (GE), (SDS); Macke Is Short (BRK.b); Seymour Owns (AAPL), (BAC), (FXI), (TTM), (AUO), (WBD); Najarian Owns (C) Call Spread;Najarian Owns (AGN) Call Spread; Najarian Owns (AAPL) Call Spread: Najarian Owns (BX) Call Spread: Najarian Owns (GD) Call Spread: Najarian Owns (MS) Call Spread: Najarian Owns (PALM) Calls; Najarian Owns (RHT) Calls; Najarian Owns (XHB) Call Spread; Najarian Owns (SWY) Calls; Najarian Owns (XLI); Najarian Owns (STX) Calls; Najarian Owns (WDC) Call Spread
J. Najarian Owns (FAS), (JPM), (WFC), (VMC)
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