GO
Loading...

Stocks Threatening to Break Down?

Wednesday, 19 May 2010 | 5:21 PM ET

Both the Dow and S&P continued their march lower Wednesday, again dragged down by fears that the crisis in Europe could quickly spread.

Germany's unilateral action to ban specific trades on some stocks and bonds sparked a fresh wave of selling with investors taking the move as a sign the European Union was not, in fact, unified.

"It's become increasingly clear that these are still separate countries with their own political agendas," says Kim Caughey of Fort Pitt Capital Group in a Reuters interview.

What must you know to trade this market?

Strategy Session with the Fast Money traders

The S&P found support around 1100, explains Pete Najarian, and it happened when the price of oil turned higher. I liked that we rallied off the low. I wouldn’t say it makes me bullish but I found the action impressive.

And we now have a point of reference, adds Guy Adami. 1100 seems like it should hold. Over the next 48 hours I’d expect the market to bounce. But that’s a trading call.

Wednesday’s action still makes me nervous, explains Karen Finerman.

I thought the action in the market was terrible, says Gary Kaminsky. It doesn’t matter that the market rallied off the low. Maybe we bounce on Thursday but the trend is lower.

Word on the Street
The Fast Money traders take a look at today's top business stories.

My sources tell me institutions are taking risk off, Kaminksy adds. And it will stay that way at least through the summer. They feel that this isn’t the end of the crisis in Europe, it’s the beginning.

I agree that the fundamental problems in Europe are unchanged, adds Brian Kelly of Kanundrum. They still have a big debt problem and almost zero growth. Big picture, I'm bearish and I added to my short positions in Caterpillar , Expedia, and Wynn.

With so many names 20% off their highs I’d start looking for opportunities, adds Mike Khouw of Cantor Fitzgerald. It doesn't mean trouble is off the table but I'd definitely look for opportunities if people are getting shaken out.

South of $50 I think Bucyrus is starting to look interesting, adds Finerman. That stock was at $72 a little over a month ago.

What do you think? We want to know!

-------

FLASH CRASH LEGITIMATE

As the market continues to break through key technical levels, traders now find themselves asking a difficult question: was the so-called "flash crash" legitimate, possibly signaling a coming deterioration in the global economy?

Fast Money Executive Producer writes about this topic at length. Click here to go to "Was Flash Crash Legitimate?"

-------

WHERE ARE SHORTS HOVERING NOW?

Meanwhile, if the markets are heading lower, investors are eager to hear where the shorts may be hovering. According to John Tabacco of LocateStock.com the following names are the most requested shorts – at least at his firm:

NBG - National Bank of Greece
FSLR - First Solar
SPWRA - SunPower
CSIQ - Canadian Solar
WYNN - WYNN Resorts
LVS - Las Vegas Sands
VALE - Vale (ADR)

Of all the stocks listed above Tabacco says Vale looks like it's heading to $16 and if it breaks it could be going a whole lot lower.

Looking at the market broadly, he also says, I think there's a whole lot more downside here. The behavior of the market tells me it needs to retest the 'flash crash' intra-day low of 1066.


In fact 2010 could be a replay of 2008. I think there could be as much as 1500 points to the downside in the DJIA. However, at Dow 9000, retail investors would be wise to come in a seek value.

-------

HEAVY PUT ACTIVITY IN THE S&P 500

Brian Kelly of Kanundrum has spotted unusual options action in the SPY .

I’m seeing an awful lot of activity in the December SPY 60 puts, says Kanundrum. The open interest on the puts is now larger than it was in 2008 pre-Lehman and post Lehman.

-------

TOPPING THE TAPE: FINANCIALS REBOUND

Some financials bucked the trend in Wednesday’s trading, with Citi , Goldman Sachs and JP Morganall ending the day in the green.

The moves seems surprising, considering reports suggest the Senate is entering the home stretch in its efforts to pass a massive financial regulation bill.

What’s the story?

The cloture motion did not pass in the senate, says Sandler O’Neill analyst Jeff Harte. It suggests that we may be looking at a friendlier financial regulation bill.

Harte is cautiously bullish on the sector. In fact, he thinks Citi, Goldman Sachs and Morgan Stanley all belong on your radar. You read that right. He's a buyer.

* Get all the details. Check out our entire interview with Jeff Harte. Watch the video now!

Topping the Tape: Financials
A look at why financials are rebounding, with Jeff Harte, Sandler O'Neill.




______________________________________________________
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 19, 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), (ITNC), (MSFT), (NUE), (BTU); Kelly Owns (WYNN) Puts; Kelly Owns (EXPE) Puts; Kelly Owns (EMN) Puts; Kelly Owns (CAT) Puts; nerman's Firm Is Short (IJR), (MDY), (SPY), (IWM); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Calls’ Finerman Owns (BAC), (BAC) Preferred; Finerman Owns (GS) Calls; Finerman's Firm And Finerman Own (HPQ)’ Finerman's Firm Owns (JPM), (JPM) Calls; Finerman Owns (JPM); Finerman's Firm Owns (PTV); Finerman's Firm Owns (PM); jarian Owns (AMD) Calls; Najarian Owns (ADSK) June Calls, Is Short (ADSK) May Calls; Najarian Owns (C) Calls; Najarian Owns (HPQ), Is Short (HPQ) Calls; Najarian Owns (JPM) Put Spread; Najarian Owns (MRVL), Is Short (MRVL) Calls; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (V) Call Spread; Najarian Owns (VRSN) Call SpreadTerranova owns (PFE), (GLD)

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 Mike Khouw
Cantor Fitzgerald is a Market Maker in (ADSK)
Cantor Fitzgerald is a Market Maker in (AIG)
Cantor Fitzgerald is a Market Maker in (AMAT)
Cantor Fitzgerald is a Market Maker in (BAC)
Cantor Fitzgerald is a Market Maker in (C)
Cantor Fitzgerald is a Market Maker in (CSIQ)
Cantor Fitzgerald is a Market Maker in (FSLR)
Cantor Fitzgerald is a Market Maker in (GS)
Cantor Fitzgerald is a Market Maker in (JPM)
Cantor Fitzgerald is a Market Maker in (LVS)
Cantor Fitzgerald is a Market Maker in (MGM)
Cantor Fitzgerald is a Market Maker in (MRVL)
Cantor Fitzgerald is a Market Maker in (MS)
Cantor Fitzgerald is a Market Maker in (SPWRA)
Cantor Fitzgerald is a Market Maker in (V)
Cantor Fitzgerald is a Market Maker in (VALE)
Cantor Fitzgerald is a Market Maker in (WYNN)
Cantor Fitzgerald is a Market Maker in (QQQQ)
Cantor Fitzgerald is a Market Maker in (SPY)

For Brian Kelly
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (TLT)
Kanundrum Capital Owns (GFI)
Kanundrum Capital Owns (AUY)
Kanundrum Capital Is Short (XLK)
Kanundrum Capital Is Short (XLI)
Kanundrum Capital Is Short (XLF)
Kanundrum Capital Is Short (WYNN)
Kanundrum Capital Is Short (AA)
Kanundrum Capital Is Short (CAT)
Kanundrum Capital Is Short (EMN)
Kanundrum Capital Is Short (EXPE)
Kanundrum Capital Is Short (CME)
Kanundrum Capital Is Short (STT)
Kanundrum Capital Is Short (XLE)
Kanundrum Capital Is Short (SU)
Kanundrum Capital Is Short (IOC)
Kanundrum Capital Is Short (USO)
Kanundrum Capital Is Short Euro

For Anthony Scaramucci
Scaramucci Owns (BAC), Skybridge Owns (BAC)
Scaramucci Owns (C), Skybridge Owns (C)
Scaramucci Owns (GS), Skybridge Owns (GS)
Scaramucci Owns (HPQ), Skybridge Owns (HPQ)
Scaramucci Owns (JPM), Skybridge Owns (JPM)
Scaramucci Owns (WMT), Skybridge Owns (WMT)
Scaramucci Owns (BUD), Skybridge Owns (BUD)
Scaramucci Owns (INTC), Skybridge Owns (INTC)

For Dennis Gartman
Funds Managed By Dennis Gartman Are Short (GS)
Funds Managed By Dennis Gartman Own (MMM)
Funds Managed By Dennis Gartman Own Gold
Funds Managed By Dennis Gartman Are Short British Pound Sterling
Funds Managed By Dennis Gartman Are Short Euros
Funds Managed By Dennis Gartman Are Long Australian Dollars
Funds Managed By Dennis Gartman Are Long Canadian Dollars

For Jeff Harte
Sandler O'Neill Served As Financial Advisor To Investor Group That Agreed To Buy First Republic Bank From (BAC)
Sandler O'Neill Recvd. Inv. Bank. Comp. From (C), (JPM), (BAC) In Past 12 Mos.
(JPM), (BAC) Was An Investment Banking Client Of Sandler O'Neill In Past 12 Months
Sandler O'Neill Expects To Receive or Seek Inv. Bank. Comp. From (BAC), (BK), (JPM), (C), (NTRS) In Next 3 Mos.
(BAC), (C), (JPM), (MS), (BK), (NTRS) Are Clients Of Sandler O'Neill
Sandler O'Neill Has Received Non-Inv. Bank. Comp. From (C), (JPM), (BAC)

(GS) Is A Non-Inv. Bank. Client Of Sandler O'Neill
Sandler O'Neill Is A Market Maker In (NTRS)

Other Relevant Disclosures
Najarian Owned (VRSN) Calls On 5/18/10




CNBC.com with wires

  Price   Change %Change
DJIA
---
S&P 500
---
C
---
CAT
---
EXPE
---
GS
---
JPM MLP ETN
---
SPY
---
VALE'A
---
WYNN
---
SPDR TEC SEL
---
MS
---
LVS
---
CSIQ
---
FSLR
---
ETE
---

Featured

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET
  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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

  • Guy Adami is a contributor on CNBC's "Fast Money." He also is managing director of stockMONSTER.com.

  • Najarian, the "Pit Boss," is cofounder of optionMONSTER.com, a news site for options traders.

  • Finerman is president of Metropolitan Capital Advisors, Inc., a company she co-founded.

  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

Halftime Report