Halftime Report: Getting Positioned For June
With only a few hours left to trade in the month of May, the Street is already trying to get a handle on what’s to come in early June. And by mid-day Friday it seemed one of the biggest catalysts will be rising oil prices.
Chevron was the top boost to the Dow as U.S. crude oil futures topped $66 a barrel, buoyed by a slumping dollar, lower oil inventory and OPEC's decision to keep output steady.
Traders are also closely monitoring the latest economic data.
Results from the Institute of Supply Management-Chicago showed that business activity in the U.S. Midwest contracted at a much more severe rate than expected in May.
However, the Reuters/University of Michigan Surveys of Consumers, showed consumer confidence in May improved to its highest level since last September, boosted by hope the government's economic stimulus plan will help lift the economy out of the recession.
How should you be positioned into June?
Instant Insights with the Fast Money Traders
A lot of economic data has come out, oil has hit new highs, the dollar has gotten killed, gold has taken-off and yet there is no catalyst to help this market break out of its range – either higher or lower, explains Jeff Tomasulo of SMB. We’re stuck between 88 and 93 on the SPDRs . So I’m trading the range. I get light when we get to the top of the range and when it pulls back I get long.
We’re also having a tough time getting through the 200-day moving average on the S&P 500 , adds Dan Fitzpatrick of StockMarketMentor.com. That shows more resistance on the upside. I think Jeff's trade is the way to go -- trade the range.
In the bond market I would keep an eye on the TBT (also known as the ProShares UltraShort 20+ Year Trea ETF) , adds OptionMonsterJon Najarian. Yesterday we told you about concerns some investors had with the flood of Treasuries coming onto the market, but Thursday's auction was well received. As a result I think the TBT drops - it could test $50.
I’m looking at the regional banks as a play, adds Mike Khouw of Cantor Fitzgerald. When you have a steeper yield curve like we have now, they have better margins. But you have to take a hard look at their balance sheets and steer clear of regionals with big exposure to commercial real estate.
OIL’S BEST MONTH IN A DECADE
As we told you above, oil rose to a six-month high above $66 per barrel on Friday, on track for its largest monthly percentage gain in more than a decade, after new data suggested the economic downturn may be easing.
Oil prices have jumped around 30 percent this month, the largest monthly rise since March 1999, buoyed by expectations of a global economic recovery later this year.
I think oil is a little over-extended, muses Jeff Tomasulo. And I’m concerned about what the rapid increase does to the recovery in the economy.
In the space, I’m long Petrobras , Diamond Offshore and Transocean , adds Dan Fitzpatrick. I think oil could go to $75. And I too am concerned about what the upside does to the economy.
THE OBAMA TRADE: MICHELLE OBAMA THAT IS
It appears people want to dress like Michelle Obama. The First Lady’s fondness for clothing from J. Crew probably helped the company post a quarterly net profit that came in way above Wall Street's expectations; largely driven by a 21 percent rise in revenues.
It seems to me that Michelle Obama may be as influential as Oprah, chuckles Jon Najarian.
If the stock can stay above $25.25 I’d get long and if it falls to $24.60 I’d get short as a intra-day play, muses Jeff Tomasulo.
RESILIENT TECH TRADE THIS WEEK
The tech sector continues to be a bright spot in this market with Apple , IBM and Dell all higher for the week. What’s the best tech play?
The wireless industry has been on fire, admits Pete Najarian, but the bullish moves are related to inventory reduction. Demand still isn’t there. Trade these stocks cautiously.
If you’re looking for a play in the space look at companies that have a lot of growth potential. Personally, I like Broadcom, he adds. I think they have growth ahead.
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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
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