Halftime Report: Will September Swoon Continue?
Neither the bulls nor the bears were able to ignite market momentum on Wednesday with stocks trading mostly flat around lunchtime.
Investors weren’t sure what to make of disappointing economic reports; factory orders rose a smaller-than-expected 1.3% in July, while ADP showed private employers cut 298,000 jobs – more than expected though less than the month prior.
Considering the ADP survey is seen as a precursor to Friday's closely-watched jobs report, will the September swoon continue?
Instant Insights with the Fast Money traders
Friday’s jobs number will be the big market mover of the week, muses Tim Seymour. Right now the S&P 500seems to be finding support around 992, that’s good news for the bulls. But it seems that many investors expect the market to go lower.
I think the psychology is shifting, says Christoper Zook of CAZ. Sentiment seems to have changed from buy the dip to sell the rip.
In the options market I’m seeing investors taking bets that the market could rally this month, reveals Jared Levy of Peak6. Personally, I expect downside in September. Historically September is the worst month of year for the S&P.
FINANCIALS ON-EDGE AFTER YESTERDAY'S SELL OFF
The financials were on edge Wednesday with investors closely watching Wells Fargo after yesterday’s speculation that the company would make a secondary offering. (It’s a claim the CEO of Wells denied.)
What’s the trade?
I think Wells needs additional money it’s just that they may not need it yet, muses Christopher Zook.
Options action suggests to me investors are semi-bullish on this name, reveals Jared Levy.
Meanwhile Reuters reports at least 20 top hedge funds boosted their positions in financial institutions in the latest quarter in a sign that Wall Street is ready to bet on more risky sectors in the hope of longer-term rewards.
The push into financials indicates that fund managers including Steven Cohen and John Paulson, who are watched closely as barometers of risk, have shifted from routine merger arbitrage plays to directional bets that have more potential.
OIL CAN'T KEEP GAINS
Crude oil traded in and around $68 on Wednesday as investors weighed reports that showed crude inventories and gasoline supplies fell last week against a belief the dollar could grow stronger.
Meanwhile, shares of oil giant BP traded higher after the company said it had made a "giant" oil discovery in the Gulf of Mexico.
What’s the trade?
I think oil will remain under pressure, says Tim Seymour. However the news for BP seems very bullish. And, in the interest of full disclosure, right now I’m short Petrobras, Seymour adds.
Gold extended gains past the $970 mark on Wednesday to hit its highest level in almost three months. Should you get in?
September is historically a good time to buy gold, says Jared Levy. It seems options investors are betting the price goes higher.
COMMODITY ETF IMPLOSION
Deutsche Bank said it would redeem all of its most bullish oil exchange-traded notes, as the U.S. government moves to boost regulation in commodities markets.
Deutsche said in a release Tuesday it would redeem outstanding PowerShares DB Crude Oil Double Long Exchange notes by Sept. 9. As of Tuesday, the outstanding double-long notes were worth around $425 million.
What must you know?
Because of the rumored regulations coming from the CFTC, volumes have been drying up, explains Jon Najarian. Personally, I think a lot of commodity ETFs could fall by the wayside.
TRADE TO GO: AG
I think ag is a fundamental story, says Tim Seymour. But beyond that it's also a takeover play. Both BHP and Vale have expressed interest to diversify into the fertilizer space. I think Mosaic and Potash are targets. And at current price points, I think they both look good.
CALL THE CLOSE
Tim Seymour: I’m flat.
Jared Levy: I’m a seller.
Danielle Hughes: I’m a seller.
Christopher Zook: I’m a seller.
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Trader disclosure: On Sept. 2nd, 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); Terranova Owns (AMZN), (FCX), (QCOM), (POT), (WFT), (SU); Terranova Is Short (TM); Terranova Owns (GS) Puts; Terranova Owns Gold Futures; Terranova Works For (VRTS); Finerman Owns (RIG); Finerman's Firm Owns (MSFT), (NOK), (WMT), (RIG), (TGT); Finerman's Firm Owns (WFC) Preferred Shares And Is Short (WFC), Finerman Owns (WFC) Preferred Shares ; Finerman's Firm Owns (BAC) Preferred Shares, Finerman Owns (BAC) Preferred Shares And Owns (BAC); Finerman's Firm Is Short (USO), (IJR), (MDY), (IWM) ; Finerman's Firm Owns (AXL) Calls; Najarian Owns (BAC) & Short (BAC) Calls; Najarian Owns (BUCY) & Short (BUCY) Calls; Najarian Owns (FCX), Owns (FCX) Put, Is Short (FCX) Calls; Najarian Owns (JPM) & Is Short (JPM) Calls; Najarian Owns (MS) And Is Short (MS) Call; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (MOS) Call Spread; Najarian Owns (PALM) Calls; Najarian Owns (TXT) Call Spread; Najarian Owns (TEVA); Najarian Owns (V) & Short (V) Calls; Najarian Owns (WFC) Put Spread; Najarian Owns (YHOO) Calls; Najarian Owns (IPI) Calls; Najarian Owns (OXPS) Calls
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