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Intel Aftermath: Trading In The Chipmaker's Wake

In extended trade shares of Intel climbed as much as 3% after the company reported earnings that blew past expectations.

What must you know before you make your next move?

The world's largest semiconductor maker, a component of the Dow Jones Industrial average, reported fourth-quarter earnings of $2.3 billion, or 40 cents a share.

According to CNBC's Jim Goldman, that's 875 percent year over year. And no, that's not a typo.

He goes on to say that, looking ahead to the first quarter and full year, the good news gets even better for those long in Intel shares.

The company looking for $9.7 billion in revenue, far better than the $9.347 billion analysts expected.

For the quarter, Intel expects 61 percent in gross margins, versus the 59.2 percent anticipated. That's also significant since Wall Street expected a seasonal sequential gross margin dip in the first quarter. That is clearly not the case.

(Click here for Goldman's complete analysis of Intel earnings)

Considering these results, what’s the trade?

I can’t see any reason to get off the tech train, says Pete Najarian. I think technology stocks go higher as well as chip stocks. If you’re looking for your next move, look at a long position IBM, he says. And elsewhere in the market I’m watching JPMorgan . If they report strong earnings I can see the S&P 500 going to 1200.

I think we’re setting up for a move lower in Intel, counters Guy Adami. It’s what happened last time and I think it happens again. If you’re looking for a tech play, look at longHewlett-Packard . At 11 times forward earnings it’s more interesting than Intel. Or if you’re looking for a chip play, keep an eye on Qualcomm , he adds.

I added to my position in Microsoft, reveals Joe Terranova. I think Intel’s strength all comes back to the PC upgrade cycle and Windows 7 should be the big beneficiary. It also seems to me money managers are under-invested in this name.

I’m watching AMAT and Texas Instruments, explains Mike Khouw of cantor Fitzgerald. They are among the most highly correlated names to Intel, especially after earnings. Whatever happens to Intel, these names trade similarly. Take a look:

Moves After Intel Reports Earnings
+3% +5% -2% -3% +7 +6% +2% +2%
Intel & Amat Intel & Amat Intel & Amat Intel & Amat

Moves After Intel Reports Earnings
+3% +3% -2% -2% +7% +4% 2% 0%
Intel & TXN Intel & TXN Intel & TXN Intel & TXN


I'm long AMAT calls, adds Pete Najarian. I think this stock has plenty of upside over the next 6 months.

> For CNBC's complete coverage of Intel earnings click here

EAR TO THE WALL: M&A IN TECH?

Jon Najarian has spotted unusual options action in ENER . The volume of Feb 12 calls suggests to him this stock could make a sharp move higher.

Or if you’re bullish on the space broadly, you can play the space with Trina Solar , adds Guy Adami.


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Trader disclosure: On January 14th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Pete Najarian Owns (AMAT) Calls; Pete Najarian Owns (CLF), Is Short (CLF) Calls; Pete Najarian Owns (HUM) Call Spread; Pete Najarian Owns (INTC) Call Spread; Pete Najarian Owns (MS); Pete Najarian Owns (PFE); Pete Najarian Owns (QCOM) Calls; Pete Najarian Owns (TCK), Is Short (TCK) Calls; Pete Najarian Owns (TXT) Call Spread; Pete Najarian Owns (XLF) Calls; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Is Short (IYR), (MDY), (IWM), (USO), (UNG), (TLT), (BCR); Finerman Owns (AAPL); Finerman's Firm And Finerman Own (CVS); Finerman's Firm Owns (MSFT), (TGT), (WMT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman's Firm And Finerman Own (GOOG); Terranova Is Long March British Pound Futures; Terranova is Long Copper Backwardation Futures: Long May 2010, Short July 2010; Terranova Owns (QCOM), (MSFT), (EMC), (FCX), (JPM), (FTO), (XOM), (BAC); Terranova Is Short (CMA), (JCI), (CAL), (ESS), (AGU), (ICE); Terranova Owns (POT) Feb. Puts; Terranova Owns (XHB) March Puts

For Joe Terranova:
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For Moshe Orenbuch:
(JPM) Is Or In Past 12 Months Was A Client Of Credit Suisse
Credit Suisse Provided Investment Banking Services To (JPM) In Past 12 Months
Credit Suisse Provided Non-Invetment Banking Services To (JPM) In Past 12 Months
Credit Suisse Has Managed Or Co-Managed A Public Offering Of Securities For (JPM) In Past 12 Months
Credit Suisse Has Received Investment Banking Compensation From (JPM) In Past 12 Months
Credit Suisse Expects To Receive/Seek Investment Banking Compensatoin From (JPM) In Next 3 Months
Credit Suisse Has Received Non-Investment Banking Compensation From (JPM) In Past 12 Month

For Mike Khouw:
Cantor Fitzgerald & Co. Is A Market Maker In (INTC)
Cantor Fitzgerald & Co. Is A Market Maker In (TXN)
Cantor Fitzgerald & Co. Is A Market Maker In (AMAT)


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