Halftime Report: Time To Unwind Equity Exposure?
The S&P 500 traded lower on Friday with investors again questioning the strength of the recovery.
Dell dragged down the tech sector after the PC maker reported a 54 percent drop in third-quarter profit and sales that missed estimates.
Meanwhile, D.R. Horton added to the bearish sentiment after the No. 2 U.S. homebuilder reported a fourth-quarter loss that was wider than expected and said market conditions were "still challenging."
Also gains in the dollar dragged down energy and natural resource names.
How should you be positioned in this market?
It seems like the market is dominated by action in the dollar, says Steve Grasso of Stuart Frankel. But I still believe stocks will end the year higher as money managers chase performance.
I’ve been watching the chart of the S&P closely and if you’re a short term trader I think it’s got 10 or 20 clicks to the upside, but if you’re a long-term investor it’s time to step back, counsels Bill Strazullo of Bell Curve. Now that the index has broken below 1100 I would start to unwind my equity exposure. Get into harvest mode. The rally is in its late innings
Looking at technology and the impact Dell had on Friday’s market, I would just remind everyone that what’s bad for Dell is good for H-P , says OptionMonster Jon Najarian. I expect this stock to move. However, Hewlett Packard is heavily reliant on exports and right now the dollar is getting stronger.
I think if you’re looking for a fast trade – look at tech, counsels Brian Stutland of Stutland Equities. I’d look at Microsoft , Oracle and Yahoo!-- all of these names sold off on Dell’s weakness – and probably overshot to the downside. I think MSFT could go to $30, ORCL could to go $23 and YHOO could go to $16. I’d pick up all three – but only short term.
COMMODITY/ INDUSTRIAL STOCKS HIT
Once again the dollar traded inversely to natural resource names – such as Freeport McMoRan with a stronger greenback dragging down the commodity related plays.
Oil fell more than 1 percent below $77 on Friday – not only due to dollar strength but also due to growing concerns about the strength of the economic recovery and the resulting outlook for energy demand.
Should you buy the dip?
Oil is clearly still tied to broader financial markets and seeing losses due to a stronger dollar and a drop in stock prices. To rally, we'd need to see more significant signals of economic activity perking up, says Gene McGillian, analyst at Tradition Energy.
ONE WEEK TO BLACK FRIDAY
The RTH traded lower this Friday, one week before Black Friday -- the all important day after Thanskgiving shopping fest. How should you game retail?
I’d be a seller of the RTH in the mid 90’s, says Bill Strazzullo. At these levesls, I’d sell into strength and even get short.
OPTIONS ACTION: LIZ
Brian Stutland has spotted unusual options action in LIZ .
I’m seeing a high volume of selling of the Jan 2011 calls but at the same time investors appear to be buying stock. People don’t usually sell premium that far out unless they believe the credit worthiness of the company is solid.
That suggests to me get long LIZ ahead of Black Friday – because options investors wouldn’t t make this kind of trade if they expected any kind of shakeout in the near term.
TREASURY MARKETS RALLY
Short-dated U.S. Treasuries rallied on Friday, sending two-year yields to 11-month lows, as investors sought the safety of government bonds on fears that this year's stock market recovery had finally come to end.
What must you know?
There’s a lot of cash on the sidelines, and it seems to me rather than put it all in stocks, money managers may be putting some of that in Treasurys, speculates Rick Santelli. That may be part of the inflow.
CALL THE CLOSE
Steve Grasso: I’m a buyer into year’s end.
Jon Najarian: I’m a buyer
Brian Stutland: I’m a buyer
Bill Strazzullo: Take profits.
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Trader disclosure: On Nov. 20th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;
Stuart Frankel is Short (QQQQ)
Stutland Owns (MSFT)
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