Stocks Bust Out Of Rut
STOCKS BUST OUT OF RUT
The Dow and S&P 500 rallied Thursday after Ben Bernanke withstood congressional questioning without problems. Lawmakers were investigating whether the Fed Chief bullied Bank of America to acquire Merrill Lynch.
Retailers and home builders led stocks higher for much of the session, helped by a surprisingly strong profit report from Bed Bath & Beyond .
However, the biggest tailwind came from the successful auction of Treasuries. You could almost hear a collective sigh of relief sweep across Wall Street after Thursday’s sale, which ended a week long sale totaling a record setting $104 billion in debt.
How should you be positioned?
Strategy Session with the Fast Money Traders
I would have thought the market would have sold-off today, speculates Karen Finerman. We had negative employment data out in the morning. Also long term bonds rose with the dollar up and gold up. Typically they don’t correlate that way. I find the strength in Thursday's market odd.
I was impressed by Mr. Bernanke, adds Pete Najarian. He sounded very confident before Congress. And the endorsement from Warren Buffett played well, too.
AFTER HOURS ACTION: PALM
In extended trade shares of Palm surged as much as 14% higher after the smartphone maker posted a narrower-than-expected quarterly loss.
The results come as the company's turnaround effort, led by the just-unveiled Pre handset, picks up steam. The device, which was launched at the beginning of June, has been well- received by reviewers and saw strong demand in the weeks following the release.
The Pre's impact will be more fully reflected in the current quarter, because of its June launch date. Analysts estimate around 150,000 units have shipped so far.
"Such significant growth means there is room for three to five players to win in this space. We don't have to beat each other to prosper," Jon Rubinstein, the company's new chief executive, said on a conference call with analysts.
Even though they came in with a loss, they must be feeling pretty good at Palm, muses CNBC's Jim Goldman. This was a good quarter.
For me it comes down to when they become profitable, adds Guy Adami. Maybe 2010.
TOPPING THE TAPE: COMMODITIESU.S. crude oil futures shot back above $70 on Thursday, supported by a rally in gasoline futures and news that a militant group had sabotaged a Royal Dutch Shell oil pipeline in Nigeria.
Meanwhile, U.S. copper futures rose to their highest levels in nearly two weeks on Thursday, as technical momentum kicked in after prices took out the previous session's highs, setting the stage for further gains ahead of the second quarter's end next week.
What’s the commodities play?
I’d get long US Steel at current levels with a stop around $34, counsels Guy Adami.
I like URS , adds Pete Najarian.
I like copper, adds Tim Seymour. The chart looks good to me.
OPTIONS ACTION: XLF
Pete Najarian has spotted some unusual options action in the Financial Select Sector SPDR. Unusual call buying suggests the XLF could go higher, he explains.
Don’t forget that the financials start to report earnings in July, reminds Karen Finerman. Those reports should be a big catalyst one way or another.
In the space, I’d look at JPMorgan, says Guy Adami. I’ve been telling you to get short but technical action on Thursday suggests now it wants to go higher.
TOPPING THE TAPE: CONSUMER SHARES
Shares of Bed Bath & Beyond led consumer stocks higher after the retailer posted stronger than expected earnings. And JC Penney also buoyed the sector after a J.P. Morgan analyst upgraded the clothing store's rating to overweight from hold.
The positive sentiment was also fueled by Hertz CEO Mark Frissora who told CNBC, "We've seen continued improvement every single week for the last 10 weeks in the U.S rental car space.”
The comments from Hertz could provide a tailwind for Honda and Toyota, muses Tim Seymour. They’re among the biggest providers of cars to rent-a-car companies.
It seems to me all these pieces of information suggest we’re seeing stabilization, says Pete Najarian.
In the space, I’d keep an eye on Gap and Home Depot, counsels Guy Adami. I think they go higher from here.
The whole space seems very frothy to me, counters Karen Finerman. I think it’s pricing in a huge recovery which I just do not see. I’d trade it by going long Wal-Mart and shorting the XRT against it.
GOLD UP AGAIN
Gold climbed on Thursday, rising above $939 per ounce as the precious metal found support after the Federal indicated that it was in no hurry to raise borrowing costs from current levels.
Also gold bulls were encouraged by a published report that said the Chinese government may buy more gold if the dollar declines further. The report also said China has been steadily increasing its gold reserves over the past six years.
BULL MARKET OR BS?
As you know, on Fast Money we try to talk with strategists and money manager every day about whether the recent rally is a new bull market or just bs.
On Thursday we spoke with Danielle Park of Venable Park Investment Counsel who told us she thinks the bear market began in 2000 and could last until 2020. That’s right, she says we’re only halfway through.
However there is some good news. She does thinks cyclical bull markets will play out in the interim and not too far off.
"I'm still skeptical about the enmormous spike we've seen since March," she says. "I haven't seen the follow through and we're up against resistance."
Also she's concerned that the summer months tend to be horrendous for gains.
As a result she suggests parking your money and making buy lists. Following are her post-correction buys.
Danielle Park's List
PowerShares QQQ (QQQQ)
emiconductor HOLDRs (SMH)
iShares MSCI Canada Index (EWC)
"I do think there's lots of good things going on in this market," adds Park. "I just think we're going to have some re-tests and I don't like to lose money!"
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Trader disclosure: On June 25th, 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), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (LM) Call Spread;’ Najarian Owns (PALM) Call Spread; Najarian Owns (YHOO) Call Spread; Finerman's Firm Owns (MSFT); Finerman's Firm And Finerman Own (FLS), (RIG); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (IWM), (IYR), (IJR), (MDY), (SPY), (USO); Seymour Owns (AAPL), (BAC); Seygem Asset Management Owns (FCX), (MOS)
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