Halftime: Will Market Chatter Move Disney?
The Fast Money desk is closely monitoring the action in Disney after new and potentially shocking allegations surfaced on Wednesday.
According to court documents, there’s chatter that CEO Bob Iger may be looking to get rid of ABC.
Now, Fast Money isn’t looking to say if the speculation is true or not – rather how the chatter might move the stock.
What must you know?
First it’s important to note that the information surfaced as authorities investigated individuals associated with Disney for insider trading. (Click here to read about that.)
E-mails seized in the investigation say Disney CEO Bob Iger "is in serious and advanced negotiations with two private equity firms to sell the ABC Network, though no prices has been determined yet."
Also it’s important to note that these e-mails were written by somebody who was arrested – and somebody who was trying to gain the confidence of a potential buyer of insider information.
Nonetheless it’s generated chatter that Disney may be looking to unload ABC in much the same way GE entered a deal with Comcast to jettison NBC Universal.
What’s the trade?
A great point of reference is the 200-day moving average, explains Fast Money trader Joe Terranova. That’s $31, he says. Personally I don’t think the chatter is any reason to sell Disney. If anything a move to shed costs could buoy the stock higher.
CORRECTION AND COMEBACK
Both the S&P and Dow traded in positive territory on Wednesday after a handful of upgrades suggested that the market have over reacted to negative news earlier in the week.
Industrials led the way higher after Goldman Sachs added Boeing to its Conviction Buy list citing positive global themes.
Banks also were a source of strength after Oppenheimer upgraded Citigroup; this was the third positive note on Citi this week.
How should you be positioned now?
I think we saw a huge sentiment shift in the market, says Brian Kelly. Bad news came out of Europe, Germany had a terrible auction and the sector is higher. I'd either get long or cover shorts.
CHART OF THE DAY
If you’re looking for a barometer to take the temperature of this market, you might want to take a close look at the action in Goldman Sachs.
Over the last 10 trading days, Goldman and the S&P have traded almost in identical patterns, explains Jon Najarian.
TOPPING THE TAPE: CITIGROUP
As we mentioned above, Oppenheimer upgraded Citigroup on Wednesday to an outperform, saying it’s attractively priced after a recent pullback.
What must you know?
Reports have surfaced suggesting Qatar is looking at buying a portion of the US government's 27% stake in Citigroup, reveals Anthony Scaramucci of Skybridge. I think it’s a sign of the bottom. Bright days could be ahead for this company. (For the record Skybridge acquired a hedge fund business Citigroup earlier in the year.)
Citi and Bank of America both look interesting, says Terranova. All the increased volatility bodes well for their prop trading desks.
OIL, COMMODITIES POP
An increased appetite for risk sent commodities higher on Wendesday with oil rallying sharply, gold seeing a sizable gain and copper push higher, too.
What must you know?
For me the question is – has the storm passed or are we in the eye of the storm, explains Brian Kelly. I think we’re in the eye. More trouble lies ahead.
I disagree, says Joe Terranova. I think we’re seeing a shift in the market. It looks like investors are rotating into energy names and I expect energy and materials to perform well through the end of the year.
TOPPING THE TAPE: TRANSOCEANTransocean traded in the green on Wednesday after Macquarie Research analyst Waqar Syed upgraded the name from Neutral to Outperform.
The analyst said the bad news associated with the Gulf of Mexico oil spill is already priced into the stock.
What else must you know?
Check out our exclusive conversation withWaqar Syed. Watch the video above!
CALL THE CLOSE:
Jon Najarian I’m a buyer.
Anthony Scaramucci: I’m a buyer
Joe Terranova I think the market heads higher
Brian Kelly: I’m a buyer
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Trader disclosure: On May 26, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Anthony Scaramucci and SkyBridge owns (AAPL), (EBAY), (GOOG), (MSFT), (INTC); Joe Terranova owns (AXP), (BBY), (BMO), (BTU), (DIS), (FTO), (GLD), (IPSU), (OIH), (PFE), (RSX), (STLD), (SWN), (TER), (XCO), (YHOO); Terranova Works For (VRTS); Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.; Virtus Investment Partners Owns More Than 1% of (IGE); Brian Kelly owns (FCX), (CLF).
For Brian Kelly
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CNBC.com with wires