An early stock market rally appeared to lose steam by midday Friday largely due to dollar strength.
Specifically, the greenback rose against a basket of currencies after the Commerce Department said retail sales rose 1.3 percent in November, more than double the increase analysts had expected.
Although the results initially lifted the stock market, enthusiasm began to wane as more investors speculated the results could mean the Federal Reserve will raise interest rates sooner rather than later.
How should you be positioned?
The market seems to be having trouble again, says Joe Terranova. Lately it seems the market is more receptive to going lower on negative news than higher on positive. I think consolidation is coming into the market.
I’m seeing a lot of buyers of January puts in the S&P 500, says Brian Stutland of Stutland Equities. But that may be a protective play - not necessarily a bet the market goes lower from here.
For months we talked about the market consolidation around 1100 and we’re there now, reminds Bill Strazzulo of Bell Curve. This is a good place to take profits. I think we’re at the upper end of the range. If you're a trader and we hold 1100 you can bet on the next 10-20 points to the upside -- but big picture I'm a seller of this market.
TOPPING THE TAPE: RETAILERS
As we mentioned above, the Commerce Department said retail sales increased 1.3 percent last month, the largest advance since August. It was the second straight monthly gain and beat market expectations for a 0.7 percent gain.
A recovery in consumer spending, a major component of U.S. economic activity, is seen as one of the key elements to sustained growth.
What’s the retail trade?
Home Depot and Lowes may be worth a look, says Mike Gurka. And overall inventories are low and retailers by and large have very clean balance sheets. The entire Retail sector may be a benefactor of that.
Best Buy may be forming a base, adds Brian Stutland. I think best Buy is among the many retailer that’s about to break out.
Around $185 I'd look at Apple , counsels Joe Terranova. But if you get long also know it’s stuck in a range. Apple can’t seem to get above $205.
INDUSTRIALS UP ON CHINA RECOVERY SIGNS
Industrials traded higher on news that China’s imports jumped 26.7 per cent in November from a year earlier.
What’s the trade?
I’m watching 3M, says Joe Terranova. That’s a name I think you can still own.
GOLD SLUMPS TO 4-WK. LOW
Gold futures hit a four-week low Friday, largely dragged down by a sharp dollar rally and concerns the Fed may raise rates sooner than expected.
What's the gold trade?
Patterns suggest to me the long-term trend in gold is higher, says Bill Strazzullo. But I don’t think the corrective phase is over. I expect to see gold pull back to around 1090 and then I’d be a buyer.
IS WELL FARGO NEXT?
Wells Fargo has joined a growing list of banks that are exploring options to return government bailout money, CNBC has learned.
The San Francisco-based bank has put out inquiries to institutional funds to see who would be interested in buying chunks of Wells Fargo stock in $250 million to $500 million increments.
Wells received $25 billion in funds under the Troubled Asset Relief Program. Other large institutions are looking to shed their TARP debts in an effort to escape government limits on executive pay.
What’s the trade?
Wells had been a short trade, but if you’re getting short now you’re trading wrong, says Guy Adami. The short trade is done. I’d be taking my short position off on this news.
FAST & FURIOUS: THE KEY QUESTIONS INTO THE CLOSE
BUY YHOO? Kaufman upgraded Yahoo to a buy; should you get in?
With the stock around $15, I’m a buyer, says Joe Terranova.
BUY FINANCIALS? The financials are underperforming this week; is this a buying opportunity?
I think the financials pull back, says Bill Starzzulo, perhaps as steep as $12.50
BUY DOLLAR? The dollar will likely close the week on a positive note, is it time to get on board the greenback?
Absolutely it’s time to get on board, says Mike Gurka. There could be a vacuum if the shorts start to cover.
BUY BBY? With Best Buy on deck to report earnings on Tuesday, is it time to buy?
I’m a buyer, says Brian Stutland.
CALL THE CLOSE
Joe Terranova: Never sell a quiet market.
Bill Strazzullo: I’d buy into 1120 but I’m a seller bigger picture.
Mike Gurka: I’m staying long.
Brian Stutland: I’m a seller.
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Trader disclosure: On Dec. 11th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;
Strazzullo Owns (GLD)
Stutland Owns (GLD)
Stutland Owns (UTX)
Stutland Owns (WFC)
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