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Time to Trade on Unemployment

Stocks eked out a gain Friday after a rocky session as investors juggled a disappointing jobs report and some analyst upgrades.

Still, all three indexes pulled off gains for the week: The Dow ended up about 300 points, or roughly 3 percent, from where it ended last week.

The Labor Department said employers cut 190,000 jobs in October and the unemployment rate

jumped to 10.2 percent, its highest level in more than 26 years. Economists had expected to see a job loss of 175,000 and unemployment rate of 9.9 percent.

So, is this the bottom or are we double dipping?

Strategy Session with the Fast Money Traders

Today's market rose in spite of the unemployment numbers. It's a sign the bull market is back, Karen Finerman says. Tim Seymour also is positive on the stability of the markets, saying the bulk of the week's data was outstanding. I think the uncertainty from earlier in the week has been reversed, he says.

Guy Adami, however, says the unemployment was a disaster any way you slice it, and with productivity at a five-year high, companies won't be hiring any time soon. And consumer sentiment also could take a hit, marking a potential spending drawback.

It's a jobless recovery, Pete Najarian says. The unemployment numbers next month will likely climb, but as long as increased unemployment is factored into the market, he says stocks will continue to climb. Fear seems to be gone from the market, though. Now, volatility, is based solely on the expectation of market movement, he says.

What's the trade?

Steve Cortes, Veracruz LLC founder says retail stocks are due for a pullback based in part on unemployment. Specifically, he's watching at employment stocks — staffing stocks, online job sites — things like Monster , Manpower.

These stocks have been on an absolute slide, he says, which is a very ominous sign for unemployment.

Cortes says he's shorting the S&P Retail ETF and buying S&P futures.

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TOPPING THE TAPE: GOLD!

Gold surged 5 percent this week, topping $1,100 intraday to a record. Is it too late to get in on the gold trade? Gold miners Barrick and Goldcorp both were higher.

What's the trade?

Would you rather own Newmont Mining at 18 times forward earnings or Freeport McMoran at 11 times forward earnings, Adami asks? To me it's Freeport Mac. You have a fair valuation for a company that really does something.

He still prefers copper over gold, he says.

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BREAKING NEWS: BERKSHIRE EARNINGS

Berkshire Hathaway reports third quarter earnings above expectations at $1,325 per share versus expectations of $1,308 per share.

What's the trade?

Finerman says she wouldn't buy Berkshire class B when it splits. For some reason, it just seems very awkward, she says.

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TRADE SCHOOL: UUP

The ETF that tracks the dollar index has stopped issuing shares for now until they get approval to issue 100 million new shares.

What else can you do to play?

A stronger dollar indicates a very significant headwind, Seymour says. If he sees that happening, he shorts the iShares MSCI Emerging Markets, at least on a short-term run. The other obvious place is gold, he says. This still is very much a dollar trade right now.

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CALL OF THE DAY: AMAZON

Shares of Amazon.com got a boost Friday after a Bernstein Research analyst upgraded the Seattle-based online retailer, expecting faster revenue growth in 2010.

Analyst Jeffrey Lindsay upgraded Amazon to "Outperform" from "Market Perform," and raised his target price sharply to $160 from $125.

Lindsay expects the company's revenue growth to continue to reaccelerate through next year, driven by growth in the company's North American media business, expansion into high growth categories and "higher than average discretionary spending from the company's superior consumer demographics."

So is Lindsay overvaluing Amazon?

What you've really got to look at is EPS growth, which is over 50 percent right now, Lindsay says. We're still pretty bullish.


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Trader disclosure: On November 6th, 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), (BTU), (C), (GS), (INTC), (MSFT),(NUE),

Adami Owned (INTC) On 10/15/09


Najarian Owns (AA) Call Spread, (BX) Calls, (GE) Calls, (JWN) Calls, (RIMM) Call Spread, (UUP) Calls, (YHOO), (YHOO) Puts

Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (USO), (UNG),
Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spreads;
Finerman Owns (BAC) Preferred, (BAC);
Finerman's Firm Is Short (KFT);
Finerman's Firm Owns (M), (MSFT), (TGT);
Finerman's Firm Is Short (USO), Finerman's Firm Owns (WMT)


For Jeff Lindsay
Accounts Over Which Bernstein And/Or Affiliates Exercise Investment Discretion Own 1% Or More Of (AMZN)
Bernstein Is A Market Maker In (AMZN)

For Steve Cortes

Cortes Is Short (XRT), Owns S&P Futures
***CORTES HAS DISCLOSED FOR: WMT, XRT, SPY, MANPOWER

For Brian Stutland

***BRIAN STUTLAND HAS NOT PROVIDED DISCLOSURES

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