INTEL POINTS TO HIGHER OPEN
Comments made by Intel CEO Paul Otellini after hours could be bullish for stocks at Wednesday's open. "Looking at order patterns, billings patterns, (outlook) is a little better than expected," he said. “This quarter is incredibly dependent on the month of June, but so far so good."
That’s a pretty significant sign of optimism, explains CNBC’s Jim Goldman.
Intel’s forecast is widely considered a barometer of health for the entire tech sector considering its chips are used in so many products from computers to gadgets and more.
What’s the trade?
The whole space tends to move together, explains Karen Finerman. I think Cisco could be a beneficiary.
I would be shortAMD against Intel, counsels Tim Seymour.
I’m seeing bullish options action in AMD, counters Pete Najarian. That stock could move higher.
In the sector I like IBM , adds Jared Levy of Peak6 Investments.
Meanwhile, it's worth noting that EU antitrust regulators are expected to issue a ruling Wednesday that Intel illegally paid PC makers to postpone or cancel the launch of products using chips made by AMD, sources have told Reuters.
The European Commission believes the violations occurred during a period stretching back eight years, the sources said. Intel could be hit with a sizable fine.
LITTLE CHANGE AS BULLS, BEARS BATTLE
Tuesday ended as a mixed day on Wall Street. The Dow recorded modest gains while the S&P ended little changed and the Nasdaq fell into negative territory.
Worries over whether an apparent lack of incentives to drive the market higher would put an end to the rally helped put a cap on gains.
"We're right at the precipice and people can't decide if the rally's still got room left or if we're priced about right and due for a sell-off," says Warren Simpson, managing director at Stephens Capital Management.
Strategy Session with the Fast Money Traders
Once we broke 900 in the S&P I expected it to go to 875 but it didn’t, muses Jeff Macke. What’s important now, is that we didn’t close beneath 900. We went under that level for about 90 minutes and then shot back up.
I think that's because there’s a lot of put protection in place, adds Pete Najarian. Institutional investors were buying puts in companies such as Wells Fargo last week and I think it prevented them from panicking.
After 7 or 8 weeks of screaming higher it wouldn’t be shocking to see the S&P rest here, speculates Karen Finerman.
FINANCIALS CAN’T FIGHT HIGHER
Financials including Bank of America were among the biggest drags of the day with investors booking profits on worries that last week’s run higher may not be sustainable.
But investors were also pouring over bullish comments from the widely followed Rochdale Securities analyst Richard Bove who raised his price targets on Goldman Sachs and Morgan Stanley .
"The world has changed dramatically in the past two months. The month of April was a substantial improvement for financial companies compared to a very dismal March. May is better than April," the veteran banking analyst wrote in a note to clients.
DEFENSE, DEFENSE: CONSUMER STAPLES
Coca-Cola ranked among the Dow's biggest advancers as investors rotated out of financials and into the more defensive consumer staples stocks.
I’ve been adding to my position in this area lately, explains Karen Finerman. Valuations remain attractive. P&G, Clorox , Kraft and Wal-Mart are all worth a look.
I’ve been watching Nike , reveals Tim Seymour. I think it has a little more room to run.
OIL HITS 6-MONTH HIGH
Oil rose to a six-month high on Tuesday on optimism an economic recovery may prompt rising fuel demand and on buying to hedge against a weaker U.S. dollar.
U.S. crude settled up 35 cents to $58.85 a barrel after earlier reaching $60.08, its highest level since November.
In the space I love Petrobras, says Tim Seymour.
In commodities I’d keep an eye on coal, adds Pete Najarian. Speculation of further M&A sent coal stocks higher, broadly. The move comes after Alpha Natural Resources said it will acquire Foundation Coal for $1.5 billion to create the third-largest U.S. coal producer.
Alpha offered a 41 percent premium for Foundation in the first of an anticipated spate of deals seen to bring together smaller players in the industry to better compete with larger rivals.
I’m long Agrium as a commodities play and I’m holding it, adds Jeff Macke.
CONSUMER NAMES CRUNCHED TODAY
Investors don’t appear to be shopping for retail stocks. On Tuesday, Macy’s , Target and Sears all sold off ahead of earnings due later this week.
It’s a very bad time to be a heavily indebted retailer, bristles Jeff Macke. The only retailer I like is Target.
TOPPING THE TAPE: BIG PHARMA
Weakness in the broad market was tempered by relative strength in the health care space. Big cap pharma including Merck and Pfizer closed higher as investors rotated out of financials and tech and into these names.
The move may have been sparked by Credit Suisse analyst Catherine Arnold; after a meeting with Pfizer management, she said in a research note "expectations for future cash flow suggest to us that it would be surprising if Pfizer didn't raise the dividend in the future," post Wyeth deal closure and early integration.
Arnold, who has an "outperform" rating on Pfizer shares, also said the company may be able to finance the Wyeth deal at lower than expected interest rate.
Also pharma investors are keeping an eye on ASCO and the website www.asco.org, adds CNBC Pharam reporter Mike Huckman. New data about cancer treatments is coming out 6pm ET on Thursday that could move a slew of players including OSI Pharmaceuticals, Cougar Biotech , Medarex, Exelixis, and Allos .
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Trader disclosure: On May 12th, 2009, 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 (PCLN),(GS), (WFC), (AGU), (NFLX), (TGT), (WFC), (AMZN), (SDS); Finerman's Firm Owns (BAC) Preferred; Finerman;s FIrm Is Short (BAC), (MSFT), (PBR), (RIG), (UNH); Seymour Owns (AAPL), (BAC), (BX), (EEM), (FXI), (PBR), (POT), (TSL); Najarian Owns (AMD) Calls; Najarian Owns (BX) Calls; Najarian Owns (CROX) Calls; Najarian Owns (F) & (F) Calls; Najarian Owns (INTC) Call Spread; Najarian Owns (MS) & (MS) Calls; Najarian Owns (MOS) Call Spread; Najarian Owns (PALM) & (PALM) Calls; Najarian OWns (XHB) Call Spread; Najarian Owns (XLB) Call Spread; Najarian Owns (XLU) Calls
CNBC.com with wires