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Halftime Report: Is Market About To Bounce?

Published: Thursday, 4 Feb 2010 | 1:16 PM ET

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By: Lee Brodie
Producer

Halftime Report

The Dow [.DJIA Loading... () ] tumbled by triple digits on Thursday, as investors ran for the exits again, this time spooked by new data which showed Americans claiming jobless benefits rose unexpectedly.

That combined with renewed fears of sovereign debt problems in Europe led investors to dump riskier assets.

Considering economic weakness triggered the sell-off, should you take profits or is the market about the bounce?

(.SPX)

Loading... (%)

Instant Insights with the Fast Money traders

When Intel reported earnings a few weeks back, we saw good news and bad market action, reminds Fast Money trader Guy Adami. As far as I'm concerned that was the market 'tell'. Now, if you want to make money in this market you have to skate backwards. (In other words the trade is go short.) But you need to be nimble. Stocks go down faster than they go up.

I also expect the S&P [.SPX Loading... () ] to break lower, adds Oppenheimer's Carter Worth, to about 1050 before we see buying. But I don’t think a correction cuts much below that level.

1070 is a critical area on the S&P, adds OptionMonster Jon Najarian. It seems the bears are trying to get the market lower. If we break below 1070 I agree that we go to 1050.

If you’re an investor, look at buying solid natural resource companies such as Freeport McMoRan [FCX Loading... () ] on the dip, counsels Zach Karabell of RiverTwice. The global growth story will be ‘theee story’ going forward. But it’s all about time frame. This isn’t a two week trade. It’s a long term investment.

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COMMODITIES LEADING THE SELLOFF

In the currency market, the euro slid to a seven-month low against the dollar on worries about sovereign debt troubles in Greece, Portugal and Spain. As a result the dollar [US@DX.1 Loading... ()] made further gains, largely due to the greenback's safe-haven appeal.

Commodities such as oil [US@CL.1 Loading... () ] and gold [US@GC.1 Loading... () ], which are denominated in dollars, were among the worst hit by the developments -- as both those commodities became more expensive to buyers using other currencies.

What’s the trade?

It seems to me that the chart of FCX and other commodities names are broken, says Tim Seymour. Unlike comments made by Zach Karabell above, I would not run out a buy right here.

Although I agree with Tim in the short term, says Zach Karabell in defense of his trade, I don’t agree in the long term. Ultimately, the question is whether the worry mentioned above triggers another leg down. I don’t see it.

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TOPPING THE TAPE TODAY: CISCO

Cisco [CSCO Loading... () ] was among the day’s gainers, with investors turning bullish after the company reported higher-than-expected revenue growth late on Wednesday as more customers resumed upgrading their networks to handle increasing wireless and Internet traffic.

Also, CEO John Chambers generated positive sentiment with his earnings commentary. "...We believe [the results] provide a clear indication that we are entering the second phase of the economic recovery," Chambers said in a statement.

What’s the trade?

If you’re a long term investor names such as Akamai [AKAM Loading... () ], Western Digital [WDC Loading... () ] and Intel [INTC Loading... () ] are attractive on the pullback. However if you have a short-term time horizon these names are broken.

Chart patterns suggest marquis names in tech have already given back enough, counters Carter Worth. Technical analysis suggests a lot of the damage is done in Google [GOOG Loading... () ], Apple [AAPL Loading... () ], Hewlett-Packard [HPQ Loading... () ] and other big names. Buyers have emerged.

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CALL THE CLOSE

Guy Adami: I think the dollar is on the rise and commodities will feel the pain.

Zach Karabell: I’m a buyer of commodities name on the dip.

Carter Worth: I think we’ve seen the lows for the day.

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Trader disclosure: On February 4th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Jon Najarian Owns (AAPL) Collar; Jon Najarian Owns (AXP) Collar; Jon Najarian Owns (BAC); Jon Najarian Owns (C); Jon Najarian Owns (CSCO), Is Short (CSCO) Calls; Jon Najarian Owns (JPM); Jon Najarian Owns (PG), Is Short (PG) Calls; Jon Najarian Owns (QCOM) Call Spreads; Jon Najarian Owns (WFC); Jon Najarian Owns (WMT), Is Short (WMT) Calls; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO); Finerman Owns (AAPL); Fineramn's Firm Owns (BAC) Leap, (BAC); Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (KFT), (PLCE), (TGT), (WMT), (YUM); Grasso Owns (ABK), (AAPL), (ASTM), (BAC), (BGP), (C), (COST), (CSCO), (FAZ), (PFE), (PRST), (WMT), (V); Terranova Owns (BAC), (JPM), (OIH), (GOOG), (EMC), (AAPL), (DELL), (MSFT); Terranova Is Short (OIH) Feb. Calls; Jon Najarian Owns (WYNN)
Jon Najarian Owns (PG); Finerman's Firm And Finerman Own (CVS)

For Steve Grasso:
Stuart Frankel & Co. Inc. And Its Partners Own (ABX)
Stuart Frankel & Co. Inc. And Its Partners Own (CUBA)
Stuart Frankel & Co. Inc. And Its Partners Own (GERN)
Stuart Frankel & Co. Inc. And Its Partners Own (GLG)
Stuart Frankel & Co. Inc. And Its Partners Own (HSPO)
Stuart Frankel & Co. Inc. And Its Partners Own (NWS.A)
Stuart Frankel & Co. Inc. And Its Partners Own (NXST)
Stuart Frankel & Co. Inc. And Its Partners Own (NYX)
Stuart Frankel & Co. Inc. And Its Partners Own (PDE)
Stuart Frankel & Co. Inc. And Its Partners Own (PRST)
Stuart Frankel & Co. Inc. And Its Partners Own (RDC)
Stuart Frankel & Co. Inc. And Its Partners Own (ROK)
Stuart Frankel & Co. Inc. And Its Partners Own (TLM)
Stuart Frankel & Co. Inc. And Its Partners Own (TOL)
Stuart Frankel & Co. Inc. And Its Partners Own (XRX)
Stuart Frankel & Co. Inc. And Its Partners Are Short (QQQQ)
Stuart Frankel & Co. Inc. And Its Partners Are Short (CL)

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 (XLP)
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 Brian Kelly
Kelly Owns (FXE) Puts
Kelly Owns (SPY) Puts
Kanundrum Capital Is Long U.S. Dollars vs. Short Euros
Kanundrum Capital Is Long Dollar vs. Short Swiss Franc
Kanundrum Capital Is Long Dollars vs. Short Yen
Kanundrum Capital Owns (WMT)

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Topics:Gold & Precious Metals | U.S. Dollar | Stock Market | Stock Picks

Sectors:Oil and Gas

Companies:Apple Inc | Intel Corp | Western Digital Corporation | Freeport-Mcmoran Copper & Gold Inc