HALFTIME REPORT: RECESSION ENDING PLAYS
Investors are hopeful that the jobs number released Friday morning signals the recession is near its end.
The S&P 500 bounced after the latest data showed 345,000 jobs were lost last month, the smallest since September and far less than forecast.
However, don’t expect a smooth ride. The market pared most of the gains due to the unemployment rate, which raced to 9.4 percent -- the highest since July 1983.
How should you be trading?
Instant Insights from the Fast Money Traders
I wouldn’t go overboard and say this is a good jobs report it just wasn’t as bad as investors had expected, muses Zach Karabell of RiverTwice. But stocks are anticipating a rebound and as a result investors should be in the market. Going forward earnings should start to show some growth on the upside.
It’s not clear whether the recession is over or not, adds Bill Strazzullo of Bell Curve, but what is clear is that the rally off the March lows is still in tact. I think the S&P gets to 1000. I’d stay long. 1,000 might not be the end of it but at that level I’d take profits.
I hate to be captain kill joy, adds Jared Levy of Peak6, but I’m lessening how bullish I am. I think you can continue to play it long but also play it smart. Use out of the money put spreads to protect your investments from a turn lower.
If we do recover I think the retail stocks will be great beneficiaries, adds JJ Kinahan of ThinkOrSwim. I’d look at Target or the XRT.
I don’t think Target is going to run away from you, counters Zach Karabell. Instead I’d look Amazon, Netflix and Priceline because they have not participated as much.
Or check out the DBA, adds Jared Levy. I think you can play the recovery with ag. But I would not buy until we have a retracement.
OIL TOPS $70 BUT CAN'T HOLD ON
Positive aspects of the jobs report gave energy bulls a jolt – and they sent crude oil to a seven-month high above $70 a barrel.
However the gains didn’t hold because “the rate of unemployment rose more than expected," explains Addison Armstrong of Tradition Energy. Once that sunk in, oil pulled back pretty fast.
Right now it seems $70.10 is a point of resistance, says Armstrong. However, longer term I see the potential for oil to move up to about $79 this summer, he adds. That won’t be a good thing for consumers because that probably translates into prices at the pump of $3 to $3.25. In turn, that could put the breaks on the recovery people are looking for.
OUTSIDE THE STOCKS: DOLLAR SURGING
The better than expected jobs number also had a significant impact on currencies, commodities and the bond market.
It buoyed the dollar on hopes of a quick economic recovery -- and sent both gold and Treasuries tumbling as investors lost interest in their safe haven appeal.
Patterns in gold suggest we could see a major break, muses Bill Strazzullo, although the direction is still unclear. If gold breaks to the upside it could go to $1200 and to the downside it could go to $700. I’d buy straddles and strangles until the directional move becomes more clear.
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Trader disclosure: On June 5th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (MSFT), (NUE), (BTU); Finerman's Firm Owns (PBR), (PM), (TBT); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (XRT); 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); Finerman's Firm And Finerman Own (FLS); Finerman's Firm Owns (MSFT), (RSH), (FLIR), (CSCO), (NOK); Seymour Owns (AAPL), (BAC), (F); Terranova Owns (TER), (ABT), (XBI);
Terranova Owns (BTU) And Is Short (BTU) Calls; Terranova Owns (RIMM) And Is Short (RIMM) Calls; Terranova Owns (GENZ) And Is Short (GENZ) Calls ; Terranova Owns (X) And Is Short (X) Calls; Terranova Owns (MS) And Is Short (M)S Calls; Terranova Owns (JPM) And Is Short (JPM) Calls; Terranova Owns (POT) And Is Short (POT) Calls; Terranova Owns (BRCM) And Is Short (BRCM) Calls; Terranova Owns (HES) And Is Short (HES) Calls ; Terranova Owns (IBM) And Is Short (IBM) Calls; Terranova Is Short (XOM) Call Spreads ; Terranova Owns (DIS) Call Spreads; Terranova Is Short (FCX) And (FCX) Puts
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), (CAL), (CLB), (DLR), (EPR), (EXR), (IGE), (MEE), (DBC), (DBV), (DBA), (SKT), (UA), (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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