DOW SURGES TO END WEEK
Stocks rose on Friday, capping their third straight monthly advance, as rising commodity prices lifted shares of natural resource companies, while a sliding dollar boosted the allure of multinationals, including Coca-Cola.
Investors were encouraged by a report that showed consumer confidence hit its highest level in eight months, and the energy bulls pushed up oil related stocks as the price of crude marched ever higher.
Since hitting a 12-year low in early March the S&P 500 has risen 35.9 percent. The third straight monthly advance is the index's longest monthly winning streak since fall 2007.
Strategy Session with the Fast Money Traders
It seems to me the market is looking ahead and seeing good things, says Joe Terranova. I think stocks can continue to climb.
Even though I’ve been a bull I would not put too much credence into Friday’s action, counters Steve Grasso. It seems to me investors are just jumping into and out of positions. I think we trade in a range on the S&P between 850 and 930.
The thing that was most relevant to me was that the data from the Institute of Supply Management-Chicago, says Karen Finerman. It showed that business activity in the U.S. Midwest contracted at a much more severe rate than expected in May. And the market just shrugged it off.
OIL’S BEST MONTH IN A DECADE
Oil prices jumped about 30 percent this month, the largest monthly rise since March 1999, buoyed by expectations of a global economic recovery later this year.
U.S. crude oil for July delivery settled up $1.23 at $66.31, its highest settlement since November 4, after earlier hitting $66.47, the highest intraday trade since November 5.
Ultimately I think the move higher is a good thing because it signals global growth, says Joe Terranova. And I understand that the fundamentals for oil are horrible but you’ve got to trade the momentum.
It seems to me that commodities in general tend to move 6-9 months ahead of the economy, adds Pete Najarian. It’s possible the breakout in commodities stems from investors betting on a strong recovery.
DOLLAR HITS NEW 2009 LOW VS. EURO
Underpinning oil’s march higher was a decline in the dollar , which fell to a five-month low against a basket of currencies. Many analyst interpret the move as a sign the global recession may have passed its worst point – and as a result investors are willing to seek riskier assets.
"We're back to the pro-risk theme, as markets continue to anticipate growth to return in the second half of the year," says Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi. "That may cause the dollar to underperform."
BULL MARKET OR BS?
Investors are closely monitoring the action in this market considering energy bulls have driven the recent gains. Is there still room to run?
Jared Levy of Peak6 thinks the way to play this market is with commodities; they typically outperform the S&P, he says and they should still have room to the upside.
And he suggests gaming it with the PowerShared DB Commodity Index ETF and PowerShares DB Agriculture Fund. However, he also counsels that June will probably be a quiet month so he recommends a modestly bullish position.
BONDS SHOW STRENGTH
U.S. Treasuries rose on Friday sending waves of relief through both the stock and bond markets.
The sharp and swift rise in yields has fed on itself recently, forcing a wave of selling from mortgage investors that now appears to have run its course, while traditional month-end buying has also helped reverse falling bond prices.
"All the factors that were leading us down have withdrawn and we're starting to see some real buying," said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York.
The benchmark 10-year Treasury note was last up 20/32, yielding 3.53 percent versus 3.61 percent at Thursday's close.
I realize the TBT came in today, says Karen Finerman, but I am not at all bullish on long term Treasuries. My trade is to short notes.
FINANCIALS END WEEK HIGHER
The banking sector ended higher on the week, after Keefe, Bruyette & Woods upgraded Morgan Stanley to "outperform" from "market perform" and raised its price target on the stock, saying the bank was poised to benefit from recent improvements in its operating environment.
It seems to me there’s a clear divide in the sector, says Joe Terranova. In my opinion the good banks are JPMorgan, Goldman Sachs, Bank of America and Morgan Stanley. The bad banks are the regionals and I wouldn’t touch them.
I agree with Joe, adds Karen Finerman. If you want to play the space play it with the banks mentioned above.
SECTOR OF THE WEEK: TECH
The tech sector continued to be a bright spot in this market with Apple, IBM and Dell all higher for the week. What’s the best tech play?
In tech, I like RIMM although it pulled back on Friday, says Joe Terranova. I'm a buyer on the dip.
Don’t forget that Palm is up about 100% year to date, says Pete Najarian. I don’t think this stock can go higher unless they steal big market share from the iPhone.
And Citi Internet analyst Mark Mahaney tells the desk to keep an eye on Internet stocks. I like Google going forward, says Mahaney.
In case you’re wondering Citigroup has a ‘Buy’ rating on Google (GOOG) Amazon (AMZN), Priceline.com (PCLN), Expedia (EXPE), and Netflix (NFLX).
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Trader disclosure: On May 29TH, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Grasso Owns (AMZN), (CSCO), (RIMM), (V), (KLF); Stuart Frankel Clients Own (SUN), (YHOO), (AAPL), (AMD) ,(BAC) ,(BHI) ,(BP), (C), (COP) ,(CVX) ,(F) ,(GS) ,(HAL) ,(PFE) ,(SLB) ,(SUN) ,(USO) ,(VLO) ,(WFC) ,(USB) ,(PBR), (JPM), (LMT), (GD), (AET), (GM); Finerman's Firm Owns (MRO); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO); Finerman's Firm And Finerman Own (BAC) Preferred Shares And Are Short (BAC); Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Najarian Owns (PFE); Najarian Owns (BP) Call Spread; Najarian Owns (CLF) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (HIG) Put Spread; Najarian Owns (XHB) Call Spread; Najarian Owns (PCU) Calls; Finerman's Firm Owns (IBB), (XBI), (CSCO), Finerman's Firm And Finerman Own (FLS); Finerman's Firm Owns (BWA) Puts
Terranova Owns (XBI), (ABT), (RIMM), (HES), (TER), (BTU), (MS), (JPM), (MS), (HES); Terranova Is Short (XOM) Call Spreads; Terranova Owns (DIS) Call Spreads: Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO: Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV); Virtus Investment Partners Owns More Than 1% Of (ABD),(ARE),(CAL),(DLR),(EPR),(EXR),(IGE),(MEE),(DBC),(DBV),(DBA),(SKT),(UA),(CLB), (WBMD); Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co; Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights
For Jared Levy
Levy's Firm May Have Or Have Had Positions In (USO), (DBA), (DBC), (MON), (SPY) In The Past 30 Days
For Mark Mahaney
Members Of Mahaney's Team Own (GOOG)
Citigroup Global Markets Or Affiliates Owns 1% Or More Of (PCLN), (YHOO)
Citigroup Global Markets Or Affiliates Received Non-Investment Banking Compensation From (GOOG), (AMZN), (EXPE), (YHOO) In Past 12 Months
(GOOG), (AMZN), (YHOO) Are Or Were Within Past 12 Months Clients Of Citigroup Global Markets (Non-Investment Banking, Securities-Related)
(GOOG), (AMZN), (EXPE), (YHOO) Are Or Were Within Past 12 Months Clients Of Citigroup Global Markets (Non-Investment Banking, Non-Securities Related)
Citigroup Global Markets Is A Market Maker In (GOOG), (AMZN), (EXPE), (PCLN), (YHOO), (NFLX)
Charles Schwab Is A Sponsor Of Fast Money
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