The financials traded higher after chief executives from the nation’s largest banks including Goldman Sachs, Morgan Stanley and JPMorgan tackled tough questions and defended their actions before Congress about the causes and aftermath of Wall Street crisis.
They also defended their bonus and compensation practices with the Bank of America CEO saying "the vast majority of our employees played no role in the economic crisis" and do not deserve to be penalized with lower compensation.
What must you know about the financials to game the space?
I think the move in bank stocks on Tuesday has less to do with the “Crisis Commission” and more to do with investors wanting to be involved with financials ahead of JPMorgan earnings, says Brian Kelly of Kunundrum. The yield curve is at record steepness so investors are betting banks are really making money right now.
Yield curve aside, I’m seeing signs that bearish price action could be ahead in the financials, explains Todd Gordon of Forex.com. In the KBW Bank Index patterns suggest to me resistance is around $47.75. And even if we break above that the next level of resistance is around $49.25. Also the patterns in Goldman’s chart suggest it’s making a head and shoulders formation. That’s very bearish.
I’m a buyer of Goldman, counters Fast Money trader Tim Seymour. Typically their earnings surprise to the upside. And I think CEO Llyod Blankfein did a fine job testifying before Congress.
I also like Goldman at these levels, adds Jared Levy of Peak 6.
> Bank CEOs: We Didn't Foresee Severity of Financial Crisis
GOOGLE THREATENS TO LEAVE CHINA
Investors kept a close eye on Internet stocks after Google threatened to withdraw from China because of censorship and cyber attacks.
According to published reports, large-scale cyber attacks have been under way for weeks with the attackers accessing the Gmail accounts of Chinese human-rights activists.
On the news, shares of rival Baidu soared.
What’s the trade?
I’m a buyer of Google on the dip, says Brian Kelly. I think Google’s actions imply that Baidu has an inferior product because they have censorship.
I also think it’s a smart move by Google, adds Jared Levy of Peak 6.
I think the reaction in Baidu was too high on the upside, and I shorted Baidu at the open, reveals Tim Seymour.
CALL THE CLOSE
Tim Seymour: I think it’s a soft move higher and it doesn’t hold.
Brian Kelly: I’m a buyer.
Jared Levy: If the momentum continues I’m a buyer.
Todd Gordon: I’m a buyer.
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Trader disclosure: On January 13th, 2010, 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 Is Short (IJR), (IWM), (MDY), (SPY), (TLT), (UNG), (USO); Finerman's Firm And Finerman Own (GOOG); Finerman Owns (JPM) Calls; Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spread; Finerman Owns (BAC) Preferred, (BAC); Finerman Owns (AAPL), (BDX), (BSX); Finerman's Firm Owns (WFC) Preferred; Seymour Owns (AAPL), (AA), (BAC), (FXI), (INTC), (MSFT); Terranova Is Short (AGU), (CMA), (JCI), (CAL), (ESS), (ICE); Terranova Owns (QCOM), (MSFT), (JPM), (FCX), (EMC), (FTO), (XOM), (BAC); Terranova Owns (XHB) March Puts; Terranova Is Long March British Pound Futures; Terranova Is Long Copper Backwardation: Long May 2010 Futures, Short July 2010 Futures
For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
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