GO
Loading...

Halftime: 'Market Tell' Pros Use To Anticipate Weakness

Friday, 14 May 2010 | 1:28 PM ET

A sea of red washed across Wall Street as the selling intensified on Friday with the S&P and Nasdaq sharply lower and the Dow tumbling by triple digits.

The financial crisis in Europe largely triggered the sell-off with the euro falling to an 18-month low against the dollar .

Adding to the headwinds, Deutsche Bank's chief executive, who had helped to craft a private-sector bailout package for Greece, said he doubted Athens could repay its debt.

What should you be watching?

Fast Money Halftime Report
The Fast Money traders share their market insight and midday trading advice.

Instant Insights with the Fast Money traders

If you’re looking for a market ‘tell’ keep your eye on the yen, says Todd Gordon of Forex.com. Yenstrength has been a precursor to equity weakness. The FX market often acts as leading indicator for equities.

On that same theme I’d keep an eye on the euro / yen cross, counsels Brian Kelly of Kanundrum on Thursday’s Fast Money. Its moves have led the market by about an hour.

Looking at the market broadly, it seems to me a lot of the selling is euro centered, says Steve Grasso. But I don’t think its panic selling just fear of uncertainty. On the S&P, 1142 is the 100-day moving average and although we may pare some losses Friday afternoon, that's probably the lid on this market.

Don’t forget that we’re in a situation of forced selling, reminds Zach Karabell of RiverTwice. The fundamentals of many US companies appear solid. I’d look at some cash rich companies or names that have been too oversold.

-------

EURO DUE FOR BOUNCE?

As we mentioned above the euro languished near a 14-month low versus the dollar. However Todd Gordon is looking for a bounce.

Currency markets tend to overshoot, he explains. I think the euro will bounce. My buy level is around 1.22.

-------

GOLD FALLS, GOLD MINERS SEE BIG DECLINES

The flight to safety trade wasn’t working entirely on Friday at least in terms of gold . The precious metal slipped from its record highs of $1,248.95 an ounce with the weakness dragging down the miners.

What’s the trade?

The move in gold is probably about some profit taking, says Joe Terranova. But fundamentally I’d stay long. It’s all about the euro right now and that weakness should be bullish for the precious metal.

-------

TECH LEADS DECLINES

Tech led Friday’s declines with the Nasdaq sharply lower. However Yahoo bucked the trend and traded higher after Caris initiated coverage of the stock with a ‘Buy’ rating.

What’s the trade?

I’m a buyer of Yahoo! says Joe Terranova. It’s a low beta technology name and I like it around $16.25.


-------

FINANCIALS UNDER FIRE AGAIN

Financials came under fire once again Friday with the Bank ETFsharply lower on the session.

It seems published reports suggesting Wall Street is already discussing a possible global settlement couldn’t cheer investors.

What’s the trade?

In the long run I think the financials will benefit from a steep yield curve but short-term the government is gunning for this space, says Joe Terranova. Right now, I’d only the play with a low beta name like Citi. I’d steer clear of Goldman until financial regulation is passed.


-------

CREDIT CARD NAMES GET SLAMMED

Investors slammed Mastercard and Visa on Friday after the senate passed new rules imposing limits on the fees that they can charge to process transactions.

However FBR analyst Scott Valentin says you should buy on this weakness.

"The legislation will not affect the long-term trend of consumers moving from cash to plastic," he tells Fast Money. "And the trend will continue no matter what happens with a nation’s GDP. Also neither firm has credit risk."

Valentin rates both as ‘Outperforrm’ with a $300 price target on Mastercard and a $150 price target on Visa.

*Check out our entire interview with Valentin in the video above.



-------

TRADE TO GO: COSTCO

Joe Terranova recommends putting Costco on the radar.

It’s gaining market share from Walmart and should continue to do well in either an up or down market, he says.

-------

CALL THE CLOSE

Joe Terranova: I think we see a late day recovery.
Steve Grasso: I think 1142 is the lid in the market.
Todd Gordon: I’m a seller of export commodities against the yen.
Zach Karabell: I wouldn‘t buy the market but I’d pick and choose individual names.


______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On May 14, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns Gold; Terranova Owns (GLD), (PFE), (YHOO), (KSS), (COST), (TER), (SWN); Karabell Owns (GOOG), (GS), (C); Grasso Owns (BP), (NDAQ), (DYN), (LPX), (ASTM), (ABK), (BAC), (BGP), (C), (CVGI), (JPM), (PRST), (PFE), (BA), (T), (CSCO), (X); Finerman's Firm Is Short (IYR), (MDY), (SPY), (IWM), (RTH), (US0); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Call; Finerman Owns (BAC), (BAC) Preferred; Finerman Owns (GOOG); Finerman Owns (GS); Finerman's Firm And Finerman Own (IBM); Finerman's Firm Own (KFT); Finerman's Firm And Finerman Own (JPM); Finerman's Firm Owns (WMT); Seymour Owns (AAPL), (BAC), (GOOG), (MSFT), (UNG); Gordon Is Short Australian Dollar, Canadian Dollar vs. Yen

For Tim Seymour
Seygem Asset Management Is Short (X)

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 (AMKR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Steve Grasso
Stuart Frankel And Its Partners Own (AMR)
Stuart Frankel And Its Partners Own (BAX)
Stuart Frankel And Its Partners Own (DYN)
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (DYN)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (HSPO)
Stuart Frankel And Its Partners Own (MERC)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PALM)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PFE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)
Stuart Frankel And Its Partners Are Short (AAPL)

For Patty Edwards
Edwards Owns (VXX)
Edwards Owns (VXX) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (GLD) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (BAC) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (C) For Clients
Edwards Owns (COST) For Clients
Edwards Owns (CSCO) For Clients
Edwards Owns (JPM) For Clients
Edwards Owns (JNJ) For Clients
Edwards Owns (KFT) For Clients
Edwards Owns (MS) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (V) For Clients
Edwards Owns (WMT) For Clients
Edwards Owns (WFC) For Clients
Edwards Owns (YHOO) For Clients

For Simon Leopold
(DY) Is A Client Of Regions Bank, Which, Like Morgan Keegan, Is A Subsidiary Of Regions Financial

CNBC.com with wires

  Price   Change %Change
DJIA
---
NASDAQ
---
S&P 500
---
C
---
COST
---
GS
---
MA
---
V
---
SPDR FIN SEL
---
SPDR TEC SEL
---
YHOO
---
MCD
---

Featured

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET
  • Scott Wapner is host of the "Fast Money Halftime Report," which airs weekdays from 12 p.m. to 1 p.m. ET.