GO
Loading...

Halftime Report: Setting Up For A Pullback?

BANKS DRAG DOWN MOMENTUM

Investors appear to be proceeding cautiously on Wednesday after disappointing results from top banks more than offset the positive sentiment generated by robust earnings from Apple.

Strong results for the April-June quarter have propelled major stock indicators more than 8 percent in the past seven days with many investors now anticipating a pullback.

What should you be on your radar?

Perhaps investors were most disappointed by Morgan Stanley which reported its third-consecutive quarterly loss falling further behind chief rival Goldman Sachs. While Goldman posted a blowout quarter with strong gains in trading and profit, Morgan Stanley was saddled with red ink from the repayment of government bailouts and the accounting ramifications of improvements in its debt prices. Its loss was even wider than Wall Street had expected.

Meanwhile, Wells Fargo added to the pessimism after it posted disappointing second-quarter results as a big surge in bad loans overshadowed record profit.

Also, KeyCorp, the Ohio-based regional bank, posted a wider-than-expected loss on Wednesday as it built its reserves to cover anticipated loan weakness.

How should you play it?

It seems the way to play it is long the “good banks,” counsels Scott Nations of NationShares. That's JPMorgan, Goldman, and Morgan Stanley. And sell the banks that can’t do anything right like Wells Fargo.

----

APPLE JUMPING

Shares of Apple were trading higher on Wednesday after the tech titan smashed profit forecasts. The company continued to defy the global recession with a solid 13 percent jump in fiscal third-quarter net profit. It sold more than seven times as many iPhones -- 5.2 million units of its latest signature device -- as the year-ago period.

"The numbers are great. Their gross profits continue to surprise people and there is a return to product momentum ... a return to growth in the Mac business," says Andy Hargreaves, an analyst at Pacific Crest Securities. "And then the iPhone is doing tremendously well and that is a potent combination."

Is it too late to get into this trade?

It’s not too late to get into Apple, counsels Tim Seymour. The average Street target is now $195, I think the stock has plenty of room to run.


----

YAHOO DEAL TALK

Investors are grappling with the Yahoo trade, trying to balance a weak forecast with chatter of a Microsoft deal. After the bell, the company's forecast fell short of Wall Street's expectations, as the Internet company announced plans to step up spending and cited continued weakness in the advertising market.

However on Wednesday, speculation resurfaced that Microsoft could be close to inking a deal with Yahoo! – a market rumor first generated a few days back by AllThingsDigital.

What’s the trade?

I bought Yahoo! on the dip and it still looks good to me, counsels Jon Najarian. I’d stay long Yahoo!

----

BUY AMERICAN EXPRESS?

Credit card giant American Express is trading lower ahead of its release tomorrow; should you buy?

I think the stock is facing overhead resistance, counsels Danielle Hughes of Divine Capital. I wouldn’t buy the stock right now but if you own it I’d play earnings with $32 calls and $22 puts.


______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On July 22nd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman's Firm Owns (MSFT), (PBG), (TYC), (YUM), (NOK), (WMT), (TGT); Finerman's Firm And Finerman Own (BAC) Preferred Shares, Finerman Owns (BAC); Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (USO), (MCO); Seymour Owns (AAPL), (MSFT), (SBUX), (UNG); Grasso Owns (BAC); Terranova Owns (MCD), (QCOM), (AMZN), (AXP), (MSFT), (SUN), (FTO); 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)

For Steve Grasso:
Stuart Frankel Clients Own (V), Grasso Owns (V)
Stuart Frankel ClientsOwn (OXY), Grasso Owns (OXY)
Stuart Frankel Clients Own (WMT), Grasso Owns (WMT)
Stuart Frankel Clients Own (GS), Grasso Owns (CSCO)
Stuart Frankel Clients Own (UNH)
Stuart Frankel Clients Own (DD)
Stuart Frankel Clients Own (INTC)
Stuart Frankel Clients Own (JPM)
Stuart Frankel Clients Own (MS)
Stuart Frankel Clients Own (AXP)
Stuart Frankel Clients Own (MHP)

For Joe Terranova:
Virtus Investment Partners Owns More Than 1% Of (ABD)
Virtus Investment Partners Owns More Than 1% Of (CBL)
Virtus Investment Partners Owns More Than 1% Of (CAL)
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (MEE)
Virtus Investment Partners Owns More Than 1% Of (DBC)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (DBA)
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
Virtus Investment Partners Owns More Than 1% Of (SKT)
Virtus Investment Partners Owns More Than 1% Of (TNB)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (WBMD)

For Danielle Park:

Park And Venable Park Investment Counsel Own (SPY)
Park And Venable Park Investment Counsel Own (XCB)

For Deane Dray:

FBR Capital Markets Is A Market Maker Or Liquidity Provider For (ROP)
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (ATU)



CNBC.com with wires

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET