Worst 2-Day Plunge In 7 Months
After hours action points to a lower open Friday; that after the Dow closed out its worst two-day percentage drop since June.
The negative sentiment on Wall Street largely stems from tough new restrictions on banks proposed by the White House that could eliminate proprietary trading --when a firm uses its own money to make bets on markets.
The proposal drew widespread concern because proprietary trading has been an engine of earnings for some major banks.
How should you be positioned, now?
Strategy Session with the Fast Money traders
The Vix spiked above its 50-day moving average and is now approaching the 100-day, explains Pete Najarian. That says to me there’s a whole lot of uncertainty in the market.
Complacency was way too high in this market, adds Tim Seymour. At 1114 the S&P is hovering at a key level.
I’m scared, says Guy Adami. And it’s not just Obama that scares me. Weakness in Greece as well as rhetoric out of China about curbing growth are a very bearish catalysts. If you’re aggressive I think it’s time to get short. The market goes down a lot faster than it goes up.
I would try and avoid having a reactionary response as an investor to what appears to be a reactionary response by the government, says Karen Finerman. I’m playing it with BofA 2011 leaps. That way I know how much I have at risk and I’m not harmed by day traders who panic based on 1-day of negative comments.
I’m watching the action in Goldman Sachs, adds Pete Najarian. I think this stock is starting to get awfully cheap.
I told clients to buy Goldman, reveals Sanford Bernstein analyst Brad Hintz. I think they’re in a relatively good position no matter what happens.
Or put Raymond James on your radar, adds Guy Adami. I wouldn’t chase it but on a pullback I think it’s attractive.
KeyCorp and Fifth Third are also stocks that worked in the negative tape, adds Tim Seymour.
AFTER HOURS ACTION: GOOGLE
Shares of Google moved aggressively lower in extended trade Thursday after better than expected earnings and revenue weren’t enough to please investors.
Google's revenue grew 17 percent, as advertisers and Web surfers turned to the Internet search engine during the holiday shopping season. But Google's revenue came in at the low end of the "whisper numbers" expected by some investors, and its shares fell.
The company reported a profit of $6.79 a share in the fourth quarter excluding one-time items, against earnings of $5.10 a share in the same period last year.
Sales for the most recent period, excluding traffic-acquisition costs, rose to $4.95 billion, up from $4.221 billion last year.
Analysts who follow Google saw the company turning in a profit of $6.48 a share, according to a consensus estimate from Thomson Reuters. Sales were seen at $4.919 billion
What’s the trade?
It was a good number but not enough to justify the run in the stock, explains Jon Najarian. However, I think $540 is support.
I like Google at $550, echoes Tim Seymour. This sell-off seems overdone.
AFTER HOURS ACTION: AMERICAN EXPRESS
In the after hours, shares of American Express edged lower despite an earnings report which showed profit more than doubled from a year ago on a per-share basis, helped by rising consumer spending and lower credit losses.
The credit card issuer, a component of the Dow Jones Industrial Average, reported earnings excluding one-time items of 59 cents a share in the fourth quarter, up from 57 cents a share in the same period a year ago.
Sales hit $6.49 billion. In the same period a year prior, sales came in at $6.141 billion.
Analysts who follow AmEx were expecting it to report a profit of 57 cents a share, according to a consensus estimate compiled by Thomson Reuters.
What must you know?
This is another case of good results, bad stock market reaction, says Guy Adami. That's a market 'tell.'
Of all the names in this space, I'd look at Visa on any pullback, adds Pete Najarian.
> For complete coverage of American Express earnings, click here
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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; Finerman Owns (AAPL); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (TGT); Pete Najarian Owns (BBT) Calls; Pete Najarian Owns (BP), Is Short (BP) Call; Pete Najarian Owns (GS) Call Spread; Pete Najarian Owns (INTC) Calls; Pete Najarian Owns (MS), Is Short (MS) Calls; Pete Najarian Owns (MRVL); Pete Najarian Owns (PFE); Pete Najarian Owns (XLF) Calls; Pete Najarian Owns (CLF) Call Spread; Pete Najarian Owns (TCK), Is Short (TCK) Calls; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU)’ Seymour Owns (FXI), (AAPL), (BAC), (GOOG), (INTC), (POT)
For Tim Seymour:
Seygem Asset Management Is Short (PBR)
Seygem Asset Management Is Short (FCX)
For Jon Najarian:
Jon Najarian Owns (GOOG) Put Spread
Jon Najarian Owns (POT) Call Spread
Jon Najarian Owns (GOOG)
For Brad Hintz:
Hintz Owns Morgan Stanley And Discover
Hintz Owns (CME)
Accounts Over Which Bernstein And/Or Affiliates Exercise Investmet Discretion Own More Than 1% Of (GS), (MS)
(GS), (MS) Are Or In Past 12 Months Were Clients Of Bernstein (Non-Investment Banking-Securities Related Services)
An Affiliate Of Bernstein Received Non-Investment Banking Compensation From (GS), (MS) (Securities Related Services)
For Richard Kugele:
Needham & Company Is A Market Maker In (STX)
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