The S&P was trading sideways around lunchtime Friday with investors booking gains on this first day of May rather than betting the strong run in stocks will continue.
The Standard & Poor's 500 Index closed out its best month in nine years yesterday, gaining 9.4 percent for April on hopes the worst was over for the financial sector and recession-hit economy. The index is up nearly 29 percent from the bear market low of early March.
Can stocks keep going or have they hit the skids?
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We’ve had a great run in the S&P, says Fast Money trader Guy Adami, but I’d take some money off the table. The market probably moves lower from here.
"I think people are starting to feel they need to take profits on some on the gains they've had," muses Angel Mata, managing director of listed trading at Stifel Nicolaus Capital Markets. I wouldn't be surprised to see the psychology shifting from 'I don't want to miss the move' to 'I should be taking profits here.'"
GM DOWN ON FEAR CHRYSLER BANKRUPTCY WILL DRAG ON
Meanwhile shares of General Motors were trading lower on concerns that Chrysler's bankruptcy may pave the way for a GM to declare Chapter 11.
As CNBC’s Phil Lebau said on Thursday’s Fast Money, he would now be stunned if GM doesn’t move into bankruptcy. That's because Chrysler's situation makes it clear that the Obama administration is intent on playing hardball with bondholders.
Lebeau explained the government is offering 10 cents on the dollar and there's no way bond holders will agree to that. His opinion is that debt holders will take their chances in court.
GM is a trader’s stock, explains Guy Adami, not a long term investment. It could well go to zero.
If you want to play GM, I’d set a profit limit for myself at 5% and then get out, adds technical analyst Dan Fitzpatrick. But remember it’s volatile.
And if you’re looking for an investment in the auto sector look at Ford, Adami counsels. Or, for a downstream trade keep an eye on Borg Warner but right now it looks a little rich.
MasterCard posted better-than-expected quarterly earnings on Friday but said revenue growth this year will fall short of its targets, sending its shares down 6 percent in morning trading.
Net income fell 18 percent to $367 million, or $2.80 per share, from $447 million, or $3.37 per share, a year earlier. But the results beat Wall Street expectations. Analysts, on average, forecast earnings of $2.62 per share, according to Reuters Estimates.
I’d buy Mastercard on weakness, counsels Dan Fitzpatrick. It’s a buy on dips.
I think Mastercard as well as Visa are long-term buys, adds Guy Adami. But I see these stocks as a play on the sea-change. People are using plastic more than cash.
FINANCIALS FACING DOWN STRESS TESTS
Results of the "stress tests" conducted on the nation's 19 biggest financial institutions are being delayed -- and will be released late Thursday afternoon.
The results of the tests, which were conducted during April, will include estimated losses in certain loan categories as well as the banks' resources to absorb potential losses, a source said. The source added that the information is not a solvency test.
It seems to me there are negotiations going on and that’s what’s delaying the stress test results, speculates Scott Nations of NationsShares.
I’m concerned, adds Lucas Rosen of the Schottenfeld Group. After the government cramdown we saw with Chrysler, if I owned Bank of America or Citigroup I’d be worried about what the government plans to do with these banks. Personally, I wouldn’t be involved with them.
CRUDE ABOVE $53...NEARS 1-MONTH HIGH
U.S. crude futures rose on Friday, testing technical resistance above $52 a barrel as the dollar's weakness versus the euro and improved consumer sentiment helped push crude futures higher.
If crude can hold $53.50 I think it could take a run to $54.50, speculates Addison Armstrong Of Tradition Energy, but not much as changed on the fundamental side.
Meanwhile, in coal, Metinvest, part of the sprawling empire of Ukrainian billionaire Rinat Akhmetov, said on Thursday it has acquired miner United Coal, following Russian metal and mining companies that have already bought into the U.S. market.
That news is driving a lot of the Appalachian names higher, explains Lucas Rosen.
I think the trade is Patriot Coal, adds Dan Fitzpatrick. It has a huge short interest and I think it could go higher from here
If you want to play coal look at Bucyrus , adds Guy Adami.
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CNBC.com with wires