The S&P 500 traded lower on Monday after weak data on holiday retail sales prompted questions about the consumer's ability to spend.
Also, investors continued to monitor developments in Dubai after that nation’s government said on Monday it would not take responsibility for the debts of the Dubai World conglomerate, which asked to postpone debt payments last week.
The Dubai government's statement squashed creditors' hopes that the emirate would guarantee Dubai World's liabilities.
However, many domestic banks traded higher after Goldman Sachs said Citigroup , Bank of America, JP Morgan and others will avoid a major hit stemming from Dubai’s debt problems, because they have a lot less direct exposure than European banks.
How should you be positioned?
Instant Insights with the Fast Money traders
Some investors are gobbling up shares of overseas banks on the Dubai dip, explains Zach Karabell of RiverTwice. Although I think the concerns about Dubai are overblown, I also think concerns about balance sheets of global banks are still viable. I’d be careful about buying the dip.
I wouldn’t take my eye off the 'Dubai' ball either, adds Mike Khouw of Cantor Fitzgerald. We need to find out more about the scale and scope of the problem. Personally, I don’t anticipate too many more shoes to drop.
As far as I'm concerned, the resiliency of this market on Monday says to me the bull market remains in tact, muses Joe Terranova. There were plenty of reasons for stocks to trade much lower and they're off the lows.
CHART OF THE DAY: AIG
Shares of AIG fell sharply on Monday after Bernstein estimated the firm's property-casualty operations could face an $11 billion reserve deficiency in the next year.
Bernstein also cut its target price for AIG to $12 from $20.
What’s the trade?
I’ve spotted unusual options action in AIG, reveals OptionMonster Jon Najarian. Big out of the money put buying suggests to me that options investors think trouble could lie ahead. This is the kind of bearish action we saw in Lehman and Bear Stearns. Pay attention to this.
RETAILERS IN FOCUS
The S&P Retail index traded lower on Monday after the National Retail Federation said that total Black Friday holiday spending was down from last year, suggesting that consumers were still reluctant to open their wallets.
However, there were some bright spots. Online retailers' shares rose after analytics firm comScore said that online spending was the highest it had ever been on Black Friday, with Cyber Monday spending expected to be even stronger.
The grand-daddy of them all -- Amazon -- hit an all-time high of $135.25 in intraday trading on Nasdaq on Monday after it said its Kindle electronic book reader posted its best sales yet in the month of November.
What’s the trade?
The momentum clearly favors those investors who are playing Amazon from the long-side, says Joe Terranova. Some analysts have a $160 price target on the stock and I think it might get there.
On the back of strong online sales, I think the losers are mid-level retailers such as Target and even Lowe’s , adds Zach Karabell.
As the holiday season goes on, I think retail sales will surprise to the upside, muses Jon Najarian. But consumers seem very focused. In this space, I’d keep my eye on TJX , Apple and Amazon .
TIME TO BUY STEEL?
U.S steel traded higher on Monday after Goldman Sachs raised its rating on the steel making sector to attractive from neutral, citing the sector's overall underperformance as well as the rise of "incrementally positive data points."
Goldman said these data points included, "Steel and scrap prices in the U.S. have bottomed in our view, Chinese prices are rising, inventories remain low, a weak dollar has brought the U.S. close to being a net exporter, and we expect better industrial and auto demand in 2010."
What’s the trade?
Steel is a mean reversion trade – it’s all about underperformance, says Joe Terranova.
And steel is complex, adds Zach Karabell. If you trade the space you must educate yourself to the various companies - not all steel makers are the same. If a company is a high-end steel producer China a net-importer but if it's a low-end producer China already has a glut of capacity. That's key.
FAST & FURIOUS: THE KEY QUESTIONS INTO THE CLOSE
BUY ARO?Aeropostale was one of the few retailers in the green today ahead of its earnings on Thursday; should you buy?
I’m not a buyer, says Joe Terranova.
BUY DE? JPMorgan upgraded Deere today, should you buy?
If you own Deere, it’s okay but I don’t think it goes to the moon, says Mike Khouw.
BUY SNDA? With China-cased online gaming company Shanda Interactive on deck to report earnings tomorrow, should you buy?
I think you’ll do fine with Shanda, says Zach Karabell. But I’d rather be in NetEase or Sina .
BUY SPLS? The second largest online retailer, Staples, is on deck to report ahead of the bell. Should you buy?
I’d be a buyer on a dip, counsels Jon Najarian.
CALL THE CLOSE
Joe Terranova: I’d look at health care.
Mike Khouw: Stay in.
Zach Karabell: As long as the market doesn’t overcorrect, I’d be long.
Jon Najarian: I’d be a buyer, cheaper.
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Trader disclosure: On November 30th, 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 (PLCE), (MSFT), (WMT), (PDE), (RIG), (TGT); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Calls; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (USO), (UNG); Najarian Owns (AAPL) Call Spread; Najarian Owns (BRCD) & (BRCD) Calls; Najarian Owns (INTC) & Short (INTC) Calls; Najarian Owns (DELL) Calls; Najarian Owns (DE) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (INTC) & (INTC) Calls; Najarian Owns (UAUA) Call Spread; Terranova Owns (SU), (GOOG), (AAPL)
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