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Halftime Report: The Struggle To Go Higher

BANKS WEIGHING ON MARKET

The bulls initially dominated trading on Tuesday after the Treasury Department said 10 big banks have gotten the okay to pay back $68 billion they received from the government.

However the tone changed quickly with the Dow and S&P pairing gains ahead of the 3-year Treasury note auction. Markets are worried that an oversupply of government debt could push interest rates higher and increase the cost of borrowing to consumers and businesses.

Instant Insights with the Fast Money Traders

It seems to me that the SPY is stuck between 93 and 95, reveals Jeff Tomasulo of SMB Capital. It doesn’t seem to me that big players are buying or selling

There seems to be more selling pressure in this market, but I also think we’re stuck in a range, adds Dan Fitzpatrick of StockMarketMentor.com.

IS IT PRICED IN?

On Tuesday the Treasury said 10 of the nation's biggest banks were approved to pay back a combined $68 billion of taxpayer money pumped into them last year to combat the credit crisis.

Treasury refused to name the banks but some quickly stepped forward, including Morgan Stanley and JPMorgan to say they were among those cleared to return money.

U.S. Bancorp, American Express, Bank of New York Mellon and BB&T Corp also said they had received approval to repay funds.

A source familiar with the matter said Northern Trust, State Street, Capital One Financial Corp and Goldman Sachs Group Inc had also received a green light.

It seems to me that TARP is priced into the financials, muses Jeff Tomasulo. If you want to play the space, I’d now look to play a good pull back.

In the space, Capital One and American Express are moving higher, explains Lucas Rosen of The Schottenfeld Group. It seems to me that investors are betting on a further recovery in the consumer. Personally, I don’t agree with that thesis.

It seems to me that market has known about these results for about 3 weeks now, reveals Brian Schaeffer of VDM Capital Markets. I’m a buyer of banks – I think investors should take a shot.

I also still think bank stocks go higher, adds Steve Grasso.



OIL CLIMBING HIGHER

Again oil changed directions Tuesday, this time it climbed about a $1 to top $69 a barrel; boosted by the weaker dollar and expectations of another draw in U.S. crude inventories.

U.S. crude traded up $1.04 to $69.13 a barrel by 11:56 a.m. EDT, rebounding from two days of losses.

Oil prices have more than doubled since February, largely propelled by the slide in the dollar; a weaker greenback makes dollar-denominated commodities cheaper.

I’m looking for oil to go to $75, reveals Dan Fitzpatrick of StockMarketMentor.com. And I’d play it with explorers and drillers such as Transocean, Diamond OffShore and Hercules. I think all these stocks are poised to move higher.

Overall I also expect oil to move higher and follow along with other commodities, speculates Lucas Rosen.

TOPPING THE TAPE: TEXAS INSTRUMENTS

Technology shares led the Nasdaq higher on Tuesday after Texas Instruments raised its outlook and earnings targets late Monday.

"Any time you get a company discussing guidance and increasing guidance, its going to be taken as out-sized positive news," explains Dan Greenhaus, an analyst at Miller Tabak & Co.

In tech, I’m watching the SMH, explains Dan Fitzpatrick. Patterns in the chart suggest the space is poised to move higher. And I’m keeping my eye on Intel – I expect to see a lot of bulls pile into this stocks.

I’d trade the SMH over Intel or Texas Instruments, reveals Jeff Tomasulo. I think there’s more of a pop to be had there.

TRADE TO GO:

As a technical play, I’m looking to short Goldman Sachs $150 for a retracement down to $140. However, I’m keeping stops tight.



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Trader disclosure: On June 9th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders

Schaeffer Owns (C)
Schaeffer Owns (BAC)
Tomasulo Owns (AAPL)
Tomasulo Owns (RIMM)
Tomasulo Owns (GS)


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