Stocks ended lower on Wednesday while the Dow suffered its worst drop of 2010 due to fears that China's curbs on bank lending might jeopardize the global recovery, while IBM's outlook sparked caution about the technology sector.
However the Fast Money traders spotted buys amid the sell-off. What are they picking?
Strategy Session with the Fast Money traders
I bought more Bank of America calls on Wednesday, reveals Karen Finerman. I think it’s a great franchise.
I also like BofA on weakness, adds Joe Terranova. The investment banking contribution from Merrill is impressive.
I love Morgan Stanley, adds Pete Najarian. I think the stock still has a lot of upside. However, I’m also asking myself if there’s even more upside in BofA than MS.
I’m looking at Jefferies although I wouldn’t establish a new position at $27, adds Guy Adami. However I like the direction of the company.
Looking at the market broadly, I used the pullback to increase my position in a number of names including Freeport McMoRan, adds Terranova. But make no mistake; this is a stock pickers’ market.
AFTER HOURS ACTION: SEAGATE
In the after market shares of Seagate Technology gained 4.2 percent to $18.50 after the company reported better-than-expected results on cost cutting and increased demand for personal computers.
What’s the tech trade?
These results bode well for Western Digital, says Guy Adami. I think you can establish a new position right here.
In the space I also like Marvell , reminds Pete Najarian. I’m also playing Intel , he adds. Options action suggests to me this stock should make a sharp move higher.
I’m bullish on semis, adds Joe Terranova. And I like EMC.
AFTER HOURS ACTION: EBAY
In the after hours eBay traded higher after earnings beat Wall Street estimates, helped by growth in PayPal and its main online marketplaces unit.
The global e-commerce and payments company said on Wednesday that fourth-quarter net profit was $1.4 billion, or $1.02 per share, up from $367 million, or 29 cents per share, a year earlier.
On an adjusted basis, profit was $585.8 million, or 44 cents per share -- above analysts' average forecast for earnings of 40 cents per share, according to Thomson Reuters I/B/E/S.
What’s the tech trade?
On the results I'd play Akamai, says Pete Najarian.
AFTER HOURS ACTION: STARBUCKS
Starbucks moved higher in extended trade after the company whipped up a quarterly profit that topped Wall Street's estimates.
Perhaps most noteworthy, the java giant said sales at U.S. restaurants open at least 12 months rose 4 percent during the quarter ended Dec 27. The last time Starbucks posted a gain in U.S. same-store sales was the fiscal fourth quarter ended September 2007.
The Seattle-based chain, which slashed costs and shuttered more than 900 outlets in a broad-based restructuring, also raised its forecast -- calling for earnings per share in the range of $1.05 to $1.08, excluding about 3 cents per share in restructuring charges. It would be an increase of more than 30 percent from the previous year.
What's the trade?
I think Starbucks has a lot of upside leverage, muses Gary Kaminsky. These results make me bullish.
EAR TO THE WALL: THE DOLLAR BREAKOUT
The dollar hit a one-month high versus a basket of currencies after a Republican victory in Massachusetts signaled a shift of power in the Senate. The results led investors to bet an empowered GOP would work harder to rein in spending and cut the fiscal deficit.
Meanwhile the euro hit five-month lows as concern over finances in Greece pushed the currency decisively below a key support level and triggered widespread selling.
What’s the trade?
I think we’re seeing a watershed shift in favor of the dollar, explains strategic investor Dennis Gartman, and as a result I expect further pressure on commodities prices.
Now who are the beneficiaries, he asks. Live stock producers such as Smithfield Foods , as well as ethanol producers are both beneficiaries. If you’re looking to be a buyer, be a buyer there -- but be careful. The stock market will probably remain under pressure as the dollar gets stronger. In other words, buy the users of commodities and avoid the sellers of commodities.
In commodities, I'm watching gold, says Guy Adami. I think it's attractive around $1065.
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Trader disclosure: On January 21st, 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), (MDY), (SPY), (IWM), (USO), (UNG); Finerman Owns (AAPL); Finerman's Firm Owns (ACL), (CLX), (MSFT), (TGT), (WMT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (CVS); Finerman's Firm And Finerman Own (GOOG); Najarian Owns (CLF) Call Spread; Najarian Owns (HUM) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (MS); Najarian Owns (PFE); Najarian Owns (CIEN) Calls; Najarian Owns (STX) Call Spread; Najarian Owns (MRVL), Is Short (MRVL) Calls; Najarian Owned (INTC) Calls Today; Terranova Is Short (CMA), (ICE), (ESS), (JCI), (CAL), (AGU); Terranova Owns (BAC), (JPM), (XOM), (FTO), (FCX), (EMC), (AAPL), (DELL), (MSFT), (QCOM); Terranova Owns (XHB) March Puts; Terranova Owns (POT) February 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 Gary Kaminsky
Kaminsy Is Short (QQQQ)
For Dennis Gartman
Funds Managed By Dennis Gartman Are Short Euro
Funds Managed By Dennis Gartman Are Short Euro, Long Gold, Long Canadian
For Youssef Squali
Jefferies Is A Market Maker In (GOOG)
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