Are the dog days of August ahead? Stocks pulled back from their highs of the week, with the S&P 500 off 0.85%, the Dow sliding 0.82% and the Nasdaq down 1.19%. Consumer sentiment weighed on stocks today as the University of Michigan reported a drop from 66 in July to 63.2 in August as Materials and Energy stocks led the market lower.
On the other hand, Industrial production turned out better than expected in July, and consumer prices remained unchanged, giving the market a silver lining to its economic data.
Word On The Street
Markets ended the day lower, but the major indexes ended significantly off their session lows. Tim Seymour explains the rebound as late-comers covering shorts at the end of the day as he sees traders taking into consideration the S&P's 992 technical level. "I don't think any of these pullbacks will be that steep," he predicts.
"The entire week was about technicals battling fundamentals," adds Joe Terranova, agreeing that future pullbacks will indeed be shallow and sees the market basically treading water until another fundamental market mover comes along, which may have to wait until the next earnings season.
"We've had such a huge run, I wouldn't be shocked if we just tread water," says Karen Finerman, who thinks that consumer confidence numbers are one of the least important pieces of data in the market, despite the headlines.
Mike Khouw of Cantor Investments adds that the late-day rally has been on light volume, "all things conisdered, we had a sharp move early, but there wasn't the volume to back it up," he said, suggesting that a large number of traders may have simply gone fishing for the day.
Joe Terranova also throws in the fact that financials were the part of the market that led the late-day rally, bolstered by names like Bank of America , Capital One and Morgan Stanley .
"Cash is no longer satisfied with being in treasuries," says Tim Seymour, who is seeing growing sentiment that investors are looking to pull money off the sidelines. "People are putting money into credit and equities," he adds.
After Hours Action: Whale Watching
There was some activity of note after the bell on Friday which has the potential to push markets higher in the coming week. Of the most notable news after the bell are the 13f filings due this week, which are SEC filings publicly disclosing the positions of major market players.
Karen Finerman has been sifting through the fine print to determine whether there is any holdings of note that will be moving markets on Monday. She notes a position by Ackman on McDonalds, which could prove to be a thorn in the side of McDonalds' share price if investors fear he has made another poor call after his high-profile position in Target didn't play out in his favor, the traders say.
Joe Terranova also notes moves made by Warren Buffett to divest himself of ConocoPhillips, creating natural selling pressure and an opportunity to buy ConocoPhillips. Buffett is also raising his stake in Johnson & Johnson, which has been slow to participate in the rally, Mike Khouw points out, suggesting the company might present a quality buying opportunity.
Another big investor, George Soros, has cut his investment in Walmart from 1.8 million to approximately 90,000 shares, as well as buying 210,000 shares of Cisco and selling 4.1 million shares of ConocoPhillips.
However, Melissa Lee reminds viewers, these positions are as of last quarter, and may not be current stakes held by these investors.
Retail Detail: Where Is The Consumer?
The weakness in the American consumer has again been reaffirmed by both consumer confidence and JCPenney failing to meet expected levels in consumer activity. Entering the back to school season, is there upside potential for retail names?
"Expectations of the consumer were too high," says Karen Finerman, who thinks the sector has more downside and expects to see divergence of Walmart share price (going upwards) and the retail sector as a whole moving downwards.
Tim Seymour also sees mixed news in the consumer space, with certain companies such as the watch maker Swatch reporting good numbers, seeing recovery in demand.
One of the bright spots in the sector and the market is Abercrombie & Fitch, posting positive revenue data but earnings numbers that missed expectations. "The market responded favorably to this data," notes Mike Khouw, who saw several positive caveats to the company's negative data and says that "the company is leveraged to the upside if we get a turnaround."
The Oil Trade
Noting technical markers in the price of oil - namely a classic double-top and steep contango on the chart - Joe Terranova sees the technicals unable to match the fundamentals and sees a flat trade in oil right now.
Some of the integrated oil names pulled back during Friday's trading session, and Mike Khouw sees this pullback to be a buying opportunity, noting that "if the market broadens out a little bit, this is one of the spaces that I am going to look for it. I'd be a buyer of the integrateds on these types of pullbacks."
"A name I'm concerned about here is Petrobras ," adds Tim Seymour, noting that they just announced poor numbers and they have been the beneficiary of an upward run of late. Mike Khouw suggest looking at Chevron or ConocoPhillips instead.
For full analysis and Tim Seymour's perspective on Chinese stocks and policy and a special Chartology segment on the S&P 500's key resistance level, check out the video!
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Trader disclosure: On Aug. 14th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: GE Is The Parent Company Of CNBC Cantor Fitzgerald & Co. Is A Market Maker In (AAPL) Cantor Fitzgerald & Co. Is A Market Maker In (DELL) Cantor Fitzgerald & Co. Is A Market Maker In (GOOG)Cantor Fitzgerald & Co. Is A Market Maker In (HPQ)Cantor Fitzgerald & Co. Is A Market Maker In (INTC) Cantor Fitzgerald & Co. Is A Market Maker In (MSFT) Cantor Fitzgerald & Co. Is A Market Maker In (QQQQ) Cantor Fitzgerald & Co. Is A Market Maker In (WFMI) Cantor Fitzgerald & Co. Is A Market Maker In (WIRE)Cantor Fitzgerald & Co. Is A Market Maker In (YHOO) Finerman's Firm Is Short (IYR) Finerman's Firm Is Short (IJR)Finerman's Firm Is Short (MDY) Finerman's Firm Is Short (SPY) Finerman's Firm Is Short (IWM) Finerman's Firm Is Short (USO)Finerman's Firm And Finerman Own (BAC) Preferred Shares, Finerman Owns (BAC)Finerman's Firm Owns (MSFT)Finerman's Firm Owns (TGT) Finerman's Firm Is Short (USO)Finerman's Firm Owns (WFC) Preferred Shares And Is Short (WFC), Finerman Owns (WFC) Preferred Shares Finerman's Firm Owns (WMT) Terranova Owns (AMZN)Terranova Owns (MSFT); Terranova Is Short (KBH); Terranova Is Short (AVB);Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO
Virtus Diversifier PHOLIO Owns (IGE)
Virtus Diversifier PHOLIO Owns (DBC)
Virtus Diversifier PHOLIO Owns (DBV)
Virtus Investment Partners Owns More Than 1% Of (ABD)
Virtus Investment Partners Owns More Than 1% Of (CAL)
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 (DBC)
Virtus Investment Partners Owns More Than 1% Of (DBV)
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 (CLB)
Seymour Owned (AA) On 8/3/09
Finerman Owned (CTX) On 8/4/09
Finerman Owned (WFMI) Puts On 8/3/09
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