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Halftime Report: Relief Rally After Madoff Sentencing?

Monday, 29 Jun 2009 | 1:15 PM ET

HALFTIME REPORT: RELIEF RALLY AFTER MADOFF SENTENCING?

It appears the sentencing of Bernard Madoff has restored at least some investor confidence to a nervous market. On the same day the disgraced financier received 150 years in prison, both the Dow and S&P were trading higher.

Will relieved investors trigger a relief rally?

Fast Money Halftime Report
The Fast Money traders weigh in on the markets and share their midday trading advice.

Instant Insights with the Fast Money Traders

I do think Monday’s rally stems from the Madoff sentencing, muses OptionMonster Jon Najarian. Investor sentiment feels more positive after seeing Madoff get the maximum sentence possible.

Madoff has been a metaphor for a very troubled time, adds Zach Karabell of River Twice. And that fact that this chapter comes to a close clearly helps. But I wouldn’t go overboard and say now we’re done and it will never be an issue again.

I think there could be some overhang, notes Patty Edwards of Storehouse. Everyone in the investment business is going to be scraping this mess off the bottom of their shoes for a while here.

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RETAILERS ROCKING

Retailers traded higher on Monday led by shares of J.C. Penney which received an upgrade from JPMorgan analyst Charles Grom. In a note to investors he wrote that department store stocks have fallen out of favor, but that could present a buying opportunity, particularly in J.C. Penney's case. He raised his rating on J.C. Penney to "Overweight" from "Neutral" and lifted his share price target to $33 from $28.

What’s the trade?

I’m watching JC Penney, explains Patty Edwards. When I walk the malls I see a lot of JC Penney bags. I think you can look at this stock but I prefer Wal-Mart.

I’ve noticed that implied volatility has continued to drop in the RTH, muses Mike Khouw of Cantor Fitzgerald. That’s suggests to me volatility is likely to come in – even further in this space.


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TRANSFORMERS TRADE

Regal, Cinemark and IMAX are all trading higher after the new "Transformers" sequel won the weekend racking up sales of $201 million domestically.

The haul handily beat industry expectations, and falls just short of the five-day opening record of $203.8 million set last year by "The Dark Knight," the second-biggest film of all time in North America before adjusting for inflation.

What’s the trade?

I like IMAX, reminds Jon Najarian. And I spoke about it on Fast Money last week. (Click here to read Najarian's comments on IMAX) However I’ve taken profits recently. And because so many movie theaters are in malls, overall mall traffic should increase as these hot movies attract kids. As a result I think mall staples Abercrombie & Fitch and Aeropostale are both buys.

I think the play may be Hasbro , adds Patty Edwards. The success of this film is huge for them. And they’ve got a GI Joe movie coming.


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OIL BACK UP

Oil rose nearly $2 to top $71 a barrel on Monday, lifted by word of fresh rebel attacks on oil installations in Nigeria and gains in equity markets.

Nigeria's main militant group said its fighters had attacked an oil facility belonging to Royal Dutch Shell in the Niger Delta on Monday, days after President Umaru Yar'Adua proposed an amnesty.

What’s the play?

I wouldn’t short oil; I think investors should either be long or flat, counsels Joe Terranova.


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APPLE CONFIRMS JOBS’ RETURN

In breaking news CNBC’s Jim Goldman confirms that Apple Chief Steve Jobs is back to work following a near six-month medical leave, the company said Monday.

And according to an Apple spokesman, "Steve is back to work. He's currently at Apple a few days a week, and working from home the remaining days. We are very glad to have him back."

What’s the trade?

Steve Jobs is obviously a key player at Apple, explains Mike Khouw. But the news that he’s back in the game was widely expected. If you own Apple stock stick with it but I’d also look to sell some upside calls and buying some downside puts to protect myself.


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Trader disclosure: On June 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; Adami Owns (C), (GS), (BTU), (AGU), (INTC), (MSFT), (NUE); Seymour Owns (AA), (AAPL), (BAC), (BX), (EEM), (FXI), (INFY); Seymour's Firm Owns (QCOM), (NOK), (EEM); Terranova Owns (TER), (RIMM), (MSFT), (XBI), (MS), (ABT); Finerman Owns (RIG), (ELX); Finerman's Firm Own (NOK), (PBR), (RIG), (TBT), (ELX), (HPQ); Finerman's Firm Owns (BAC) Preferred; Finerman Owns (BAC) Preferred; Finerman's Firm Owns (WFC) Preferred; Finerman Owns (WFC) Preferred; Finerman's Firm Is Short (IJR), (IYR), (MDX), (SPY), (USO)

CNBC.com with wires

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DJIA
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ARO
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CNK
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HAS
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IMX
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JCP
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RGC
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WMT
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AAPL
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