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] and S&P 500 [.SPX
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] suffered their worst one-day fall in three months on Thursday after economic reports fueled fears about the recovery's strength.Negative sentiment was triggered by weak manufacturing data and worse-than-expected jobless claims released before the bell, which overshadowed more positive reports on construction spending.
Cyclical stocks, which are sensitive to the economy's cycles, were among the worst performers with technology [XLK
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] and bank shares [XLF
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] selling off badly.
What’s the trade?
We closed on the lows today, muses Guy Adami. That’s not good no matter how you slice it. If you’re looking to buy a dip on Friday I think you’re making a mistake. I think we’re heading to 1005 on the S&P [.SPX
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].
I’m nervous about the jobs report on Friday, adds Joe Terranova. Late in the day Goldman suggested the number could be worse than consensus. I’m watching 1010 on the S&P as a critical level in the S&P.
I couldn’t help but notice that we didn’t have buyers in Thursday’s market, adds Pete Najarian. When the market moved lower nobody stepped in like they had in the past. As a result we lost some of the leadership that the market once had. That makes me cautious.
I did a little buying on Thursday, reveals Karen Finerman. I’m not reading too much into Thursday’s market action. I got long Clorox [CLX
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] and other big cap names that are trading at extremely attractive valuations. Don’t get thrown by one day’s data.
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WINNERS BECOME LOSERS
For the second day in a row the top drags in the session were some of last quarter's best performers, including industrials [XLI
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], materials [XLB
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] and banks [XLF
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].
3RD QUARTER WINNERS TODAY'S LOSERS
3rd Quarter Today
Financials (XLF) +25% -3%
Industrials (XLI) +20% -2%
Materials (XLB) +20% -3%
What's the trade?
As far as I’m concerned these sectors are over-owned and it could get ugly if people have to get out of these trades all at once, says Guy Adami. Part of the issue is the stronger dollar. That will take commodities down and it could send investors to the exits.
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BERNANKE COMMENTS SPARK SELLOFF?
Testifying before Congress Fed Chairman Ben Bernanke issued a few words of caution about the dollar, “(Although) I believe there is no immediate risk to the dollar…. I also agree (that) if we don't get our macro house in order that will put the dollar in danger.”
Bernanke also said, "We are confident that we can manage our policies to support the economy without inducing inflation in the medium term. We fully believe we have the tools and political will necessary to achieve that."
What must you know?
Bernanke didn’t say anything we didn’t know, adds Karen Finerman. I’m not focused on moves in the dollar. Instead I think the next earnings season is the big catalyst that moves the market.
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DOLLAR RALLY
The U.S. dollar [UUP Loading... ()] firmed on Thursday as worse-than-expected jobless claims and weak manufacturing data reminded investors the economy remained fragile.
What’s the trade?
Dollar strength is disastrous for commodities, explains Guy Adami. If you’re a risk taker I think you can short Schlumberger [SLB
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I think the secular trend in the dollar will probably be lower, muses Joe Terranova. Depsite strength today, I’d bet on dollar weakness long-term. I think the play in Q4 is long commodities.
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BANKS TAKE A HIT
The XLF [XLF
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] took a tumble after BofA [BAC
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] Chief Executive Ken Lewis announced plans to retire at the end. His decision comes after months of being dogged by a series of government investigations into the company's acquisition of Merrill Lynch. The company did not name a successor.
What’s the bank trade?
I think the Ken Lews retirement is good long-term for stock, says Karen Finerman, because it removes uncertainty. Ken Lewis was leaving anyway so I don’t think it’s that big a deal.
I’m comfortable with best of breed banks for the long-term, adds Joe Terranova.
I’m watching Wells Fargo [WFC
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], adds Guy Adami. It has trouble around $30 – you might want to play it short. And on the other side of the coin, Jefferies [JEF
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] closed unchanged in a terrible tape. That’s extraordinarily impressive. It may be telling you something for the long-term.
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WEAK AUTO SALES HIT CONSUMER SHARES
U.S. auto sales tumbled in September, as showrooms emptied after the cash for clunkers incentive ended. Specifically, GM sales dropped 45 percent while sales at Chrysler were off 42 percent. Ford [F
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], meanwhile, managed to hold its sales decline to 5 percent.
These declines as a whole were about double what the Street had expected.
What’s the trade?
It can’t be a surprise that cash for clunkers ended and sales were down, muses Karen Finerman. That just can’t be a surprise.
I’m out of Ford right now, reveals Joe Terranova. And if you interpret these results as further consumer weakness, you might want to think about playing Garmin [GRMN
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], Carnival [CUK
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] and Wynn [WYNN
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] from the short-side.
- Your First Move For Tuesday November 24th
- Pops & Drops: Cigna, Verizon...
- Giving Thanks: Energy
- Web Extra: Winning The Chocolate Wars
- Holiday Travel Outlook
- Trading The Dollar Drama
- Prepare For Large Decline In Stocks, Next Year?
- Unusual Options Action w/ Pete Najarian
- Take Your Position: Black Friday
- Mutual Fund Mondays
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Trader disclosure: On October 1, 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): Finerman's Firm Owns (BAC) Preferred Shares, (BAC), (BAC) Call Spreads: Finerman Owns (BAC) Preferred Shares And (BAC): Finerman's Firm And Finerman Own (WFC) Preferred Shares: Finerman's Firm Owns (DRI), (MSFT), (YUM), (BKC): Finerman's Firm Is Short (CAKE), (TLT), (IJR), (IWM), (SPY), (MDY), (USO), (UNG), (TLT): Terranova Owns (XOM) Calls: Terranova Owns March Sugar Futures: Terranova Owns December Crude Oil Futures: Terranova Owns December Gold Futures: Terranova Is Short (GRMN), (ESS), (CCL), (WYNN): Najarian Owns (ACI) Call Spread: Najarian Owns (C) Calls: Najarian Owns (DELL) Call Spread: Najarian Owns (ERTS) Calls: Najarian Owns (GE) Calls: Najarian Owns (MSFT) And Is Short (MSFT) Calls: Najarian Owns (RIMM) Call Spread: Najarian Owns (ORCL): Najarian Owns (TEVA): Najarian Owns (WFC) Put Spread: Najarian Owns (YHOO) Call Spread
GE Is The Parent Company Of CNBC
For Rich Greenfield
Pali Makes A Market In Shares of (CMCSA)
Cortes Owns U.S. Dollar
Cortes Is Short (FXI)
CNBC.com with wires
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