Stocks ended sharply higher on Friday with the Dow , S&P 500 and the Nasdaq all closing at new highs for 2009.
The bulls were off to the races after new data showed sales of previously owned U.S. homes not only made gains in July, but rose at their fastest pace in nearly two years. Also comments from Ben Bernanke stoked the rally; the Federal Reserve Chairman said the global economy appears to be recovering after a deep downturn.
Since the March 9th lows, the S&P is up 51.68%, the Dow is up 45.19%, and the NASDAQ is up 59.30%
What must you know about this market?
Strategy Session with the Fast Money traders
I keep thinking the market is going to fall, says Guy Adami, so Friday’s action was a slap in the face for me.
The action was all about the tremendous amount of money on the sidelines, adds Joe Terranova. Fund managers can’t afford to miss the move.
I’m surprised at the moves, says Karen Finerman. It seems like a sharp recovery is already priced in and if we don’t see that kind of recovery the bar will be set pretty high for third quarter earnings. I’m skeptical. But as a hedge fund I entirely understand the need to ride the rally.
I’ve noticed that the bears are scratching the heads, muses Steve Grasso. They keep thinking the market has to come in, and so far it hasn’t. I’m not seeing anyone getting short, anymore.
CASH FOR CLUNKERS
In breaking news host Melissa Lee explains that AutoNation is ending its participation in the Cash For Clunkers program on Friday. The program, which offers payments of up to $4,500 to people who trade in old gas guzzlers for new, fuel-efficient vehicles, officially ends everywhere at 8 p.m., August 24.
What must you know?
Now we’ll find out if the automakers can strand on their own, says Joe Terranova.
BREAKOUT: OIL HITS 2009 HIGH
Oil touched a high for this year above $74 a barrel on Friday with oil bulls driving the price higher on a belief the economy was improving and as a result demand for oil would increase.
Oil was last at this level on October 21, 2008 when it closed at $75.22 a barrel on its way down from a record peak above $147.
What’s the trade?
I added to my position in BTU, Suncor, Weatherford and Freeport McMoRan, reveals Joe Terranova, because I want exposure. However, the question is– will higher oil lift the whole market or choke off the recovery?
I think oil goes to $85 before $55, says Steve Grasso. And I’d play it with OXY .
TOPPING THE TAPE: FINANCIALS HIT NEW 2009 HIGHS
It seems Friday was a day of superlatives. The Financials ETF also finished at a new 2009 higher with AIG leading the charge this week after newly appointed Chief Executive Robert Benmosche said the bailed-out insurer may be able to repay its federal debts.
What’s the bank trade?
I think for the long-term Bank of America is a stock investors should own, says Karen Finerman. A year and a half from now I think investors will be happy. And if you’re thinking about shorting the space as a trade, I’d be afraid to short the regionals because it wouldn’t surprise me to see takeovers in that space.
I’m watching Wells Fargo, adds Guy Adami. I think it’s a short at current levels.
Part of the move in financials was a short squeeze, adds Steve Grasso. Be careful of lower quality banks.
TOPPING THE TAPE: RETAILERS
Consumer stocks jumped on Friday after Gap reported a stronger-than-expected quarterly profit and KeyBanc upgraded Gap stock to Buy from Hold.
What’s the retail trade?
I like Gap, says Guy Adami, but the valuations are rich. In fact the entire specialty retail trade looks like it’s way long in the tooth. If you’re looking for a retail trade I’d consider shorting JCrew ahead of earnings.
I think the trade is long Disney, adds Joe Terranova. I think it could go to $30.
In the space I like Aeropostale, adds Karen Finerman. The stock seems cheap. But broadly speaking I’d steer clear of specialty retail. And for the longterm Walmart is probably a good place to be.
BREAKING NEWS: DOW INDEX BUSINESS FOR SALE
Dow Jones has been talking to potential buyers about the sale of its stock-market indexing business, which includes the Dow Jones Industrial Average, The Wall Street Journal reported on Friday.
The Wall Street Journal, in its online edition, reported that the process is being run by Goldman Sachs, and could result in a sale, joint venture or some other type of arrangement. The report cited people familiar with the matter.
Dow Jones would neither confirm nor deny the Journal's report. However, a spokesperson pointed out that rumors of a possible Dow Jones Indexes sale have circulated in the past.
What do you think? We want to know!
TOPPING THE TAPE: HOMEBUILDERS
The Homebuilders ETF shot higher on Friday after the National Association of realtors released data that showed sales of previously owned U.S. homes jumped 7.2% in July, the fastest sales pace in nearly two years.
What’s the trade?
I think we’re starting to see enough data points to say we are seeing a bottom in housing, muses Karen Finerman.
Considering the run in Home Depot I’m now a seller, adds Guy Adami.
PIT BULL: RALLY TODAY BASED ON FALSE DATA
As we mentioned above, the bullish sentiment that pervaded the market on Friday was largely sparked by strong home sales data. Investors interpreted the results to mean housing was pulling out of a three-year slump.
But Rick Santelli sees the situation a little differently. “There is no housing bottom,” he tells the desk. Does that mean Friday’s market action is all wrong?
Find out now! Watch the video.
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Trader disclosure: On Aug 21st, 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 (BAC) Preferred Shares, Finerman Owns (BAC) Preferred Shares And (BAC); Finerman's Firm Owns (MSFT), (ARO), (WMT), (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 Is Short (IYR), (IJR), (MDY), (IWM); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Grasso Owns (ASTM), (BAC), (C), (COST), (PRST), (V), (WMT), (FAZ), (AAPL); Terranova Owns (FCX), (BTU), (SU), (WFT), (AMZN), (MSFT); Terranova Is Short (CCL), (ESS)
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