Halftime Pt. 1: Can S&P Hold 1060?
Investors couldn’t make up their mind Monday with stocks modestly higher around lunchtime after a morning sell-off.
Large industrials were among the primary laggards, with Caterpillar and United Technologies taking a hit on fears these companies would be hardest hit if Europe drags down the global recovery.
Looking at the technicals, the Fast Money traders are keeping a close eye on the S&P, after it slipped to 1060 then bounced.
What should you be watching now?
For market tells I'm watching copper and Goldman Sachs, and both are lower explains Brian Kelly. Looking at the market broadly my line in the sand is 1040 on the S&P. If we break below that level, I think we see significant downside. I used strength in Monday's market to get out of my longs, he adds.
It’s clear that investors are taking risk off the table and crushing it, explains Dennis Gartman. Investors are just getting smaller.
I’m a seller of this market as long as it sits below the 200-day moving average, adds Steve Grasso of Stuart Frankel. As far as I'm concerned rallies are selling opportunities.
Looking at the chart of the day- copper, which is often considered an economic barometer, hit a new 6-month low on Monday.
What should you make of it?
Cooper is trading at a key level and if it falls much more technical analysis suggests it could go all the way down to 2.50, says Tim Seymour. If you follow the space, you may think that valuations in Freeport , the world's largest copper producer look attractive, but in the space valuations often don’t matter.
If you’re looking for a metal play, look at gold , counsels strategic Dennis Gartman. But I’d own gold in non-US dollar terms. I’d own in sterling, euro or yen. And I’d play it by buying the Gold ETF and shorting the currency ETF such as the FXB against it, he explains.
FAST FX: WATCHING EURO
The Fast Money traders are also closely watching the euro once again Monday as it continues to hover around 1.19. Fears over the weekend that Hungary could be the next domino to fall sent it to a new 4-year low earlier in the session.
Is the euro heading to parity?
I do think the euro is heading to parity, says Brian Kelly. In fact, a lot of Europe thinks parity is great; it makes their exports cheaper.
Daimler and other European companies just upgraded their forecasts because of the weaker euro, adds Tim Seymour. It should be good for their sales.
You might actually want to be long European stocks that benefit from the weaker euro, muses Dennis Gartman.
MARKET BUZZKILL: TECH
Tech was the big market buzz kill on Monday with chip names leading the declines in the sector.
How should you trade it?
By and large I’m seeing clients trading out of this sector and rotating into more defensive positions, says Steve Grasso.
In the space I love Sprint, says Brian Kelly, but I can’t get long in this tape.
BP REBOUNDS ON CONTAINMENT CAP HOPES
BP rallied on Monday after the company said over the weekend its latest efforts to contain the oil is beginning to work. However the cost of the spill has also gone through the roof.
Should you game the stock for its dividend yield or is that dividend as good as gone?
There’s a lot of chatter about the dividend, but I think investors should be looking at the capex, muses Gary Kaminksy. If they have to pay the dividend; what’s the cost of containing the spill? It suggests they may have to go out and borrow money.
I don’t think BP has any choice but to cut the dividend, muses Dennis Gartman.
Crisis creates opportunity, adds Steve Cortes. I think the entire sector was oversold but if you’re looking for names I like PBR and PTR .
BIG BLOCK TRADE: FORD
Large blocks of Ford traded Monday with the stock seeing major buying on intra-day lows.
What’s the trade?
With the positive trend in this name, I’m thinking about getting long, says Dennis Gartman.
STOCKS ARE ON SALE
Widely followed strategist Doug Kass says that the markets are making too much about troubles in Europe.
He's slowly buying now, saying stocks have gone on sale.
Kass first made the case on Fast Money on May 27th. Click here to read Kass: Market Storm Clouds Bring Rays Of Opportunity
CALL THE CLOSE
Dennis Gartman: Sell strength. I think the market is going lower into the close.
Tim Seymour: I think we go lower
Brian Kelly: I’m a seller. Watch copper and Goldman as tells.
Steve Grasso: Rallies are selling opportunities
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TRADER DISCLOSURE: ON JUNE 7, 2010, THE FOLLOWING STOCKS AND COMMODITIES MENTIONED OR INTENDED TO BE MENTIONED ON CNBC’S FAST MONEY WERE OWNED BY THE FAST MONEY TRADERS; GRASSO OWNS (ABK); GRASSO OWNS (BP); GRASSO OWNS (BAC); GRASSO OWNS (BGP); GRASSO OWNS (C); GRASSO OWNS (DYN); GRASSO OWNS (JPM); GRASSO OWNS (LPX); GRASSO OWNS (NDAQ);GRASSO OWNS (PRST); SEYMOUR OWNS (AAPL); SEYMOUR OWNS (INTC); SEYMOUR OWNS (BAC); SEYMOUR’S FIRM IS SHORT (RTP); GARTMAN IS SHORT YEN; GARTMAN IS SHORT STERLING; GARTMAN IS LONG GOLD
FOR STEVE GRASSO
STUART FRANKEL AND ITS PARTNERS OWN (AMR)
STUART FRANKEL AND ITS PARTNERS OWN (APC)
STUART FRANKEL AND ITS PARTNERS OWN (BAX)
STUART FRANKEL AND ITS PARTNERS OWN (CUBA)
STUART FRANKEL AND ITS PARTNERS OWN (DHR)
STUART FRANKEL AND ITS PARTNERS OWN (DYN)
STUART FRANKEL AND ITS PARTNERS OWN (GERN)
STUART FRANKEL AND ITS PARTNERS OWN (GLW)
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 (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 (SYMC)
STUART FRANKEL AND ITS PARTNERS OWN (TLM)
STUART FRANKEL AND ITS PARTNERS OWN (TRV)
STUART FRANKEL AND ITS PARTNERS OWN (XRX)
STUART FRANKEL AND ITS PARTNERS OWN (SDS)
STUART FRANKEL AND ITS PARTNERS ARE SHORT (QQQQ)
CNBC.com with wires