Halftime Report: Gold, A Balloon That Floats Higher Or Breaks?
Investors are carefully watching the gold trade after the precious metal hit a record high at $1,170.55 an ounce on Monday as dollar weakness pushed the metal through key technical resistance levels.
"Gold has a lot of momentum. It is trading off the back of the dollar which is lower," explains Daniel Major, an analyst at RBS.
What’s the trade?
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I’d play it with the miners, says Mike Khouw of Cantor Fitzgerald. They’re more leveraged to the upside. The higher gold goes the more they should make. That’s where I focus my efforts in this space.
I think gold is a pure momentum trade, adds Zach Karabell of RiverTwice, but there’s no denying that miners such as Freeport McMoRan have outperformed.
Yes gold is driven by momentum, but I still think there’s plenty of momentum left, adds Steve Grasso of Stuart Frankel. Momentum is being generated by inflationary risks, goe-political unrest and economic uncertainty. It’s a helium balloon but I’m not worried about it popping right now.
STOCKS HIGHER AS DOLLAR DECLINES
Both the Dow and S&P 500 rallied on Monday, with better-than-expected home sales data providing bulls with some strong tailwinds ahead of the Thanksgiving holiday.
The Dow hit a new ’09 intraday high and the S&P reversed a 3-day sell-off after the National Association of Realtors said sales of previously owned U.S. homes rose at a faster-than-expected pace to the highest level in more than 2-1/2 years.
Meanwhile, the U.S. dollar index slid on comments by St. Louis Federal Reserve President James Bullard who said that the Fed should extend its mortgage-related assets purchase program to give policy-makers more flexibility.
How should you be positioned now?
The S&P is now above 1100. That’s an important technical signal and it says to me stocks want to go higher, explains Steve Grasso. In fact, I think stocks climb for the next 6 months.
I'm also long term bullish. I expect to see nothing but a weak dollar for quite some time, adds OptionMonster Jon Najarian and that should be good for stocks.
Also fear seems to be coming out of the market, adds Mike Khouw. And I, too, don’t expect the fundamental story behond the dollar to change.
As far as I'm concerned, the wind at the back of this market is global growth, reminds Zach Karabell. And there are real pockets of domestic strength in specialty areas that continue to exist even as another part of the economy lags. I'm also bullish.
TAKE YOUR POSITION: RETAIL AHEAD OF BLACK FRIDAY
The Retail ETF traded higher on Monday as investors game the start of the holiday shopping season.
More than 172 million shoppers visited stores and websites from Thanksgiving Day through Sunday after Thanksgiving last year, according to the National Retail Federation. The average amount of money spent by shoppers over that weekend rose was $372.57 per person.
Those numbers, however, did not prevent a sales slide of 3.4 percent for the entire shopping season last year, marking the first decline since the NRF began tracking such data.
What’s the trade?
I’m long Walmart, Target and Best Buy, says Jon Najarian. I think they all move higher. However I also think the battle between Walmart and Amazon continues to keep pricing pressure on all retailers in general.
I’m more favorable to the Amazon side of the retail equation than the big boxes because online retail is levered to the new economy, adds Zach Karabell. If you go online, you can avoid crowds, wear what you want and you don't have to drive.
Given what we know about consumer shopping patterns, even this month, I would suspect it will turn out to be a very strong performance, speculates Michael Niemira, chief economist of the International Council of Shopping Centers.
I’m also bullish on retail says Pete Najarian.
CALL THE CLOSE
Steve Grasso: I think momentum is to the upside and I’m a buyer.
Mike Khouw: Keep riding this trade as long as it works
Zach Karabell: I’m a buyer.
Jon Najarian: I like buying into the close. But if you have profits take them into the holiday.
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Trader disclosure: On November 23rd, 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); Terranova Owns (POT), (GOOG), (AAPL); Terranova Owns (UNG) April 2010 Calls; Finerman's Firm Owns (PLCE), (MSFT), (NOK), (WMT), (FLS), (PDE), (RIG), (TGT), (CDY), (ACL); Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (USO), (UNG), (KFT); Finerman's Firm Owns (PEET) Call; Finerman's Firm Owns (AAPL); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Calls; Finerman Owns (BAC) Preferred, (BAC); Najarian Owns (AAPL) Call Spread; Najarian Owns (DELL) Calls; Najarian Owns (DE) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (INTC) & (INTC) Calls; Najarian Owns (LAZ) & short (LAZ) Calls; Najarian Owns (SEED) Call Spread; Najarian Owns (CLF) & Short (CLF) Calls
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CNBC.com with wires