Once again the market experienced late day volatility, but instead of a sell-off this time in the last hour of trading buyers pushed stocks to session highs.
Materials and financial shares led the way, as investors looked for bargains in beaten down names.
The Nasdaq, however, failed to close in positive territory with investors worried that big-cap technology may be particularly vulnerable to a slowdown overseas.
From a technical view, the market still looks challenged. Short-term momentum is showing negative signals as the S&P's 14-day moving average has traded below the 200-day moving average for a week.
However, on a positive note, at its lowest point during the session, the S&P hit the key technical level of 1,040 then bounced – that’s a somewhat bullish move.
What should you make of it?
Instant Insights with the Fast Money traders
It’s interesting to me that the S&P held at 1040, says Guy Adami. The bounce was a key technical move. It suggests that over the next couple days the market goes higher.
If you’re looking for a market tell, check out the action in JPMorgan , Adami adds . The stock shrugged off bearish comments from Dick Bove and closed higher. However, long term I’m still bearish, he says.
We’re coming up on the end of the quarter, reminds Jon Najarian. There’s no way I think the S&P gets above 1100 and sustains. But I also think 1040 is a level of support. I expect to see the S&P trade in a range through June 30th (1040-1100). But long term I’m bullish and expect 20% growth through the end of the year.
The Transports closed on the high of the day and the intra-day reversal in energy and financials suggests to me the market has found a bottom, at least for now, says Joe Terranova.
If you’re looking for a trade look at Blackstone , Pfizer or other defensive names that can weather a financial storm, Terranova counsels.
Low multiple high dividend yielding names are also on my radar, says Anthony Scaramucci.
IS 3M THE FIRST OF MANY?
The traders kept a close eye on 3M after the company announced that it EPS will be affected by 5-cents due to recent currency fluctuations. McDonalds and Burger King also made similar comments earlier today.
Is this the beginning of a wave of warnings to come?
Danaher generates 50% of their revenue from Europe and they haven’t warned, observes Jon Najarian. I’ve been to Europe twice in the past month and I’ve seen people spending. If anything I think Europe is an excuse for companies already looking to reduce estimates.
BP SLIDE CONTINUES
Shares of BP continued their march lower with Goldman Sachs lowering the stock to ‘Neutral’ from ‘Buy. Transocean was also a big loser on the session also down sharply.
What’s the trade?
I think investors should look outside the gulf for opportunities, says Joe Terranova. The output from the gulf is probably going to decline in years to come because of the spill.
If you’re looking for an energy trade, I’d look at nat gas, says Guy Adami. I think it’s starting to break out. I’d play it with royalty trust names that pay dividends. Or look at Apache . The right price for this stock is probably $105 in a benign tape.
If you want to play the space I’d do it with calls so you can limit your downside risk, counsels Karen Finerman.
On the Halftime Report Whitney Tilson of T2 made the case for a long position in BP for the long-term. Click here to read "BP Is Just Too Cheap”
NOT OUT OF WOODS YET
Plenty of people are now beginning to worry about Britain’s pound as the next shoe to drop.
Our own Tim Seymour, the Ambassador is in London and he sent us this message:
“Hey it’s the Ambassador coming to you from London, where my dollars are actually spending a lot more these days. Lotta’ pressure on the pound. Is it the next Euro crisis? I say not."
"What they can do in the UK a little differently – or what the prospects are that are more rosy for the pound: they can raise revenues via GDP, and that will take significant pressure off the pound. In the short run though, people focused on debt to GDP levels that are unsustainable for this country. The pound is not the euro however. Stay tuned."
What’s the desk think?
I disagree with Seymour, reveals Brian Kelly, and I do think the pound is the next shoe to drop. And I’m short the FXB.
I’m long the FXB, counters JoeTerranova. I believe the UK can rectify a lot of the problems they’re facing in ways that the EU can’t.
THE MAN WHO KILLED TECH TODAY
The Nasdaq was the only major index to close in the red on Tuesday after Susquehanna downgraded a number of key names in the sector citing a rough PC environment.
Analyst Chris Caso downgraded both Intel and Broadcom ; and he launched coverage of NVIDIA with a negative rating and $10 price target.
What is Caso so bearish? Watch the video and find out.