Strategy Session with the Fast Money Traders
The market lost the leadership from the resource and energy sector , explains Joe Terranova. That does not bode well for the bulls going forward.
I've noticed that major strategists are starting to downgrade the market, adds Tim Seymour. However despite those downgrades the S&P held above the 200-day and that leads me to believe we’re range bound.
I think we grind lower, counters Guy Adami. Traders seem complacent to be long and that’s the wrong trade in my book.
I’m also cautious, adds Jared Levy. Options action suggests to me the next leg is lower.
IPHONE MANIA RETURNS
Tech investors spent Friday sorting through a mixed bag of results. Apple closed higher after its new and improved iPhone hit stores on Friday. The 3GS smartphone features a faster processor, longer battery life and the ability to take videos.
Rival Palm also recorded gains ahead of earnings next week. RIMM, however, traded lower after the firm offered weaker-than-expected guidance.
What’s the tech trade?
I think RIM is a dangerous stock at current levels, says Tim Seymour.
It seems to me RIM trades down into the $60’s, adds Guy Adami. If you’re long you may have gotten in too early.
MICROSOFT A CONVICTION BUY
Goldman Sachs added Microsoft to its “Americas conviction buy list” Friday and raised its price to $29 per share from $25 per share.
Goldman said Microsoft's revenue drivers, improved expense management and cash balances provided opportunities for the company to beat on its profit estimates.
"Looking out to calendar year 2010 and beyond, the new product pipeline, combined with a modest rebound in information technology spending, should buoy top-line growth," Goldman wrote in a note to clients.
What’s the trade?
In terms of valuation Microsoft looks cheap, muses Tim Seymour. And it seems they could experience growth from their new line of products. I think the stock goes higher.
The stock has been very resilient, adds Joe Terranova. I think Microsoft is a buy for its new operating system as well as Bing.
From a technical perspective I think the Microsoft pulls back before it goes higher, adds Jared Levy.
ANALYST SAYS BUY CITI
Shares of Citigroup closed in positive territory on Friday after widely followed analyst Dick Bove upgraded the bank to a 'Buy' and suggested an ultimate price target of $12.
Dick Bove has upgraded the stock a couple times and he’s been wrong, reminds Guy Adami. I wouldn’t be a buyer on this upgrade.
If you’re looking for a bank trade check out Santander, counsels Tim Seymour. I think it’s one of the best banks in the world.
TOPPING THE TAPE: HEALTH CARE’S BIG WEEK
Healthcare finished the week as the only sector in the green with investors rotating money into stocks they feel are better positioned to withstand weakness in a still uncertain economy.
S&P SECTORS THIS WEEK
Cons. Staples -2%
HEALTH CARE +3%
What's the trade?
In the space I like Abbot Labs, counsels Guy Adami. It could go to $50.
I prefer Cigna, adds Tim Seymour.
Also take a look at the XBI , says Joe Terranova.
I’m bearish on the space for the very short term and looking for a pullback, counters Jared Levy. I think you can find your entry point a little lower.