HALFTIME REPORT: MARKET ON EDGE
It appears traders have hit the “pause” button, unsure which direction they should move. By lunchtime both the Dow and S&P 500 were in negative territory, though declines were relatively modest.
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.
Also, the technology-heavy Nasdaq lost ground, with big-cap tech stock Apple leading the decline.
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.
He raised his price target on Goldman Sachs' stock to $200 from $152 and that on Morgan Stanley to $35 from $30.
Are we in for a rebound or breakdown?
Instant Insights from the Fast Money Traders
I think this market is getting long in the tooth, muses Fast Money trader Guy Adami. If the S&P 500 closes below 900 on Tuesday it sets us up for 875.
I’m keeping an eye on the SPDR’s , adds Jeff Tomasulo of SMB Capital. If they can stay above $90, that’s a good sign.
I think we’re looking at a market in need of a catalyst, adds technical analyst Dan Fitzpatrick of StockMarketMentor.com. We’re starting to get classic rotation into sectors that haven’t done so well, such as Pharma.
The decline in short interest on the S&P combined with the decline in the Vix makes me bullish on S&P over the next few months, adds Jared Levy of Peak6 Investments. I’d play it with by selling the 82 puts in the SPY.
If you’re looking for a bank trade, look at Wells Fargo, adds Adami. If it dips down to $22 on its secondary I think you can dip a toe, he counsels.
Investors don’t seem to be in the market for retail stocks. On Tuesday, Macy’s , Target and Sears were all trading lower ahead of earnings due later this week.
A lot of these names are in danger of breaking much like the overall S&P, muses Jeff Macke. I would protect profits.
TECH IN FOCUS
Technology appears to be pulling back sharply on Tuesday with the chip sector under considerable pressure. Should you buy the dip?
Every time Intel has traded down to $15 it’s bounced, reminds Guy Adami. But the real trade is longIBM. I think it’s a $120 stock and a buy on any pullback.
If Intel break $15 I would expect to see a lot of heaviness, adds Dan Fitzpatrick.
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Tomasulo Owns (GS)
Tomasulo Owns (MS)
Adami Owns (GS)
Adami Owns (C)
Adami Owns (INTC)
CNBC.com with wires