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Halftime Report: Is Goldman Drop A Market Omen?

Friday, 25 Sep 2009 | 1:29 PM ET

The Fast Money traders are closely watching action in Goldman Sachs after the financial bellwether rolled over and broke below $180, after making a 52-week high earlier in the week.

What does it mean?

Instant Insights with the Fast Money traders

Many investors closely watch financials as a ‘tell’ for the market. “Financials are the one sector that investors feel will lead us up or down. So if there’s a chink in the armor this is the first place where it could show up,” says JJ Kinahan of TD Ameritrade.

Perhaps investors just think it’s a good time to take profits, muses Steve Grasso of Stuart Frankel. Also a headline crossed that suggest Goldman may pay more bonuses in the form of stock. Investors may interpret that as dilutive. But I wouldn't read more into it.

Patterns in the charts of the XLF suggest to me there’s still upside in banks, adds Bill Strazullo of Bell Curve. I wouldn’t throw the towel in yet. However, if the XLF slips below $14 then I’d be concerned.

I’m seeing aggressive put buying in the XLF, adds Scott Nations. In fact I’ve seen a lot of put buying in a number of the indexes. But it looks like protective buying and not a bet to the downside.

I’m also watching patterns in the chart of the Nasdaq 100 as an indicator of the market as a whole, adds Bill Strazzullo. TheNasdaq 100 crossed pre-Lehman levels earlier in the week. That's like going back to the scene of the crime. This is where the index fell apart in the fall of 2008. At this key resistance level the action could mean the market is nearing its top.

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TECH FALLS ON RIMM

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

RIM dragged down the tech sector as investors started to doubt that the company will be able to maintain its success in the wake of a profit and outlook report that fell short of expectations.

"RIM is unlikely to maintain its over 50 percent share in North America in the face of increasing competition from Apple, Motorola , and Palm , among others," Goldman Sachs analyst Simona Jankowski wrote in a note to clients.

What’s the smartphone trade?

I’m still seeing investors who like RIM, and they're buying on dips, reveals Steve Grasso.

Palm and Apple are down in sympathy but nowhere near as much as RIM, adds Scott Nations. But that’s to be expected. Both companies are more diversified.

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OIL BACK ABOVE $66.

Oil prices rose above $66 a barrel on Friday largely due to tension around Iran's nuclear program.

President Obama and other Western leaders accused Iran on Friday of building a secret nuclear fuel plant and demanded Tehran immediately halt what he called a "direct challenge" to the international community.

However, it’s worth noting that the market reaction to the geo-political news was likely muted by the large supply of oil already out there.

"I think the risk of geopolitical supply shock is muted somewhat by OPEC spare capacity being higher and U.S. commercial inventories being at a high level. But, that being said, if you have a situation that affects the supply chain, all bets are off," said Rachel Ziemba, lead energy analyst at RGE Monitor in New York.

What’s the trade?

I think oil is range bound between $62 and $70 says JJ Kinahan, I don’t think it makes any big moves unless the dollar gets considerably weaker.

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CREDIT CARD WORRIES DRAG DOWN BANKS

Visa , Mastercard and other credit card names traded lower on Friday after U.S. Senate Banking Committee Chairman Christopher Dodd said earlier in the week that he wants to see more credit card reforms before the end of the year

What’s the trade?

I’m seeing an awful lot of put activity in many names but Visa in particular, reveals OptionMonster Jon Najarian. I think if $70 does not hold the stock could go to $66.

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FAST & FURIOUS: THE KEY QUESTIONS INTO THE CLOSE

BUY CASINOS? With the casino names outperforming today; should you buy?

I’ve missed this trade, says Steve Grasso, but now they’re too toppy.

BUY NKE?Nike shares traded higher today ahead of its earning on Tuesday; should you buy?

I’d put on a bullish trade, counsels JJ Kinahan.

BUY GOLD? With gold trading below $1,000, should you buy the dip?

I’d stay with it, says Bill Strazzulo, unless it closes below $965.

BUY AIRLINES?Airline names were outperforming Friday on analyst upgrades; should you buy?

I don’t like the space but if you must play it, I’d play it with American Airlines.

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CALL THE CLOSE

Steve Grasso: I’m a buyer I think we go higher into quarter end.

JJ Kinahan: I’m a buyer.

Bill Strazzullo: I’d sell 1050 and buy 1020.

Scott Nations: I’m a seller,


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Trader disclosure: On Sept. 25th, 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), (BTU), (GS), (INTC), (NUE), (MSFT); Finerman's Firm And Finerman Own (BAC) Preferred Shares, Finerman Owns (BAC); Finerma'ns Firm Owns (MSFT), (TGT); Finerman's Firm And Finerman Own (WFC) Preferred Shares; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (UNG), (USO); Grasso Owns (AAPL), (ABK), (ASTM), (BAC), (C), (COST), (CSCO), (PFE), (PRST), (V), (WMT), (FAZ); Terranova Owns (F)

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