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Halftime Report: Watch Apple As Market Barometer

Both the Dow and the S&P slipped on Wednesday as investors frantically searched for catalysts that would extend the current seven-month rally, especially after disappointing housing data triggered doubt about the strength of the recovery.

Specifically, a government report showed sales of newly built single-family homes fell 3.6 percent last month, their first drop since March.

The number was surprisingly weak. I think that is going to add to the trend that we've seen recently where investors are questioning the robust pace of economic recovery going forward, muses Joe Manimbo of Travelex Global Business Payments.

What else should you be watching as a market barometer?

I’m watching Apple’s chart as a market barometer, explains Brian Kelly of Kanundrum. Apple sold off and then the market sold off. I’m now watching $192.38 – that’s my line in the sand. That was former resistance. If Apple can bounce off that level it’s a bullish sign for the broad market. And if we don’t we could easily see the S&P slide 5%.

And I’m also watching Goldman’s lowered GDP estimates Kelly adds. I wouldn’t want to be on the other side of their trade.

But don’t forget that the Senate minority and majority leaders are now both saying there could be an extension of the first time home buyer tax credit, adds Jared Levy of Peak6. That could be bullish.

I think the expectation that the government was going to extends tax credits are already built in, muses Danielle Hughes of Divine Capital. Also, it seems to me that investors are taking profits because they’re not seeing much top line growth in the recent earnings reports.

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COMMODITY STOCKS FALL ON GLOBAL GROWTH CONCERNS

Oil fell below $78 a barrel on Wednesday after a U.S. inventory report showed a surprise build in gasoline stocks, increasing doubts over demand from the world's largest fuel consumer.

Also, the dollar strengthened against a basket of currencies on Wednesday, adding pressure to oil prices. As the dollar rises, dollar-denominated crude becomes more expensive for holders of other currencies.

What’s the trade?

Look elsewhere in commodities. I think there’s a possibility that demand from China for raw materials, especially met coal, may be stronger than expected, muses Brian Kelly. And I'd play it by getting long ArcelorMittal , he adds. Around $34.50 it’s a buy.

In the short-term I think some coal names such as AKS and Nucor is probably over-sold, muses Jared Levy. I,too, think there is opportunity in the space.

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TECH TRADE IN TROUBLE? NASDAQ NOW LOWER FOR OCT.

Of the major indexes, the tech heavy Nasdaq fared the worst after the WSJ linked Hector Ruiz, the former CEO of AMD to the insider-trading controversy at Galleon. However it doesn't seem like investors need much of an excuse to sell with the entire tech sector lower on the day.

What’s the trade?

The Nasdaq is now negative for October, reminds Jared Levy. Tech was the first to arrive and typically it’s the first to fall. I’d be a seller in the near-term.

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OPTIONS ACTION: LVS

Jared Levy has spotted unusual selling activity in the Las Vegas Sands November 15 calls.

The action suggests to Levy that options investors are mildly bearish.

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TRADE TO GO: MOTOROLA

Pete Najarian suggests putting Motorola on your radar. “I like the direction they’ve taken with the Droid. Maybe this is the gadget that can get it to the next level.”

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CALL THE CLOSE

Jared Levy: I’m a seller

Danielle Hughes : I’m a seller

Brian Kelly : I’m a buyer into the close


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Trader disclosure: On October 28th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (BX), (EEM), (INTC), (MSFT), (FXI); Najarian Owns (BX) Call Spread; Najarian Owns (EXPE) Calls

Najarian Owns (GE) Calls; Najarian Owns (LAZ) & (LAZ) Puts; Najarian Owns (MYL); Najarian Owns (RIMM) Call Spread; Najarian Owns (YHOO) & (YHOO) Puts; Terranova Owns (IBM), (QCOM), (GS); Finerman Owns (PDE), (TGT), (WMT), (BAC); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (PDE), (PBR), (RIG); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (UNG);

For
Deborah Weinswig
Citi Owns (TGT)
Citi Has Received Compensation for Investment Banking from (TGT)
(TGT) Has Been A Client Of Citi in the Past 12 Months
Citi Has Acted As Manager Of An Offering of Securities of (WMT)
Citi Has Received Compensation for Investment Banking from (WMT)
(WMT) Has Been A Client Of Citi in the Past 12 Months
Citi Is Market Maker in Shares of (WMT)

For
Rich Repetto
Sandler O'Neill Expects To Receive Compensation from (CME)
Sandler O'Neill Expects To Receive Compenation from (NYX)

For Brian Kelly
Kelly Owns (QCOM)
Kelly Owns (ORCL)

CNBC.com with wires

Symbol
Price
 
Change
%Change
DJIA
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NASDAQ
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S&P 500
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AKS
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AMD
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LVS
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MT
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NUE
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SPDR TEC SEL
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AAPL
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