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Halftime Pt. 1: Market On Brink Of Breaking Higher?

Tuesday, 15 Jun 2010 | 1:16 PM ET

The S&P 500 made another run at the all-important 200-day moving average on Tuesday with gains largely triggered by a rally in the euro .

Bulls were also encouraged by positive action in the energy names as well as the financials ; both sectors are widely considered the backbone of the market and many investors believe the rally can't be sustained without them.

How should you be positioned now?

Instant Insight with the Fast Money Traders

It seems to me the market is trying to test its trend lines, muses Fast Money trader Joe Terranova, and the reaction will be critical. Bulls are hoping the S&P trades above the 200-day moving average of about 1107. If we do, the bullish bet is that money mangers step in and buy aggressively. The way to play this market may be to buy high and sell higher. I think we’re on our way up.

I wouldn’t get too excited, muses Brian Kelly of Kanundrum. I wouldn’t be buying up here at the 200-day moving average. As far as I can tell we’re in a correction. There’s no need to be hero. Sell into the madness of crowds. And if I’m wrong and we’re about to break-out higher, investors will have plenty of time to get in.

Fast Money Midday Market Check
The Fast Money traders share their market insight and midday trading advice.

I’m keeping my eye on the financials, reveals Fast Money trader Pete Najarian. They’re the backbone of the market and quite possible the ‘tell’. I’m not sure the market can advance without them. Lately they haven’t participated in market gains. I’m curious to see if they test their 200-day moving average.

If you’re in this market I’d make sure to hedge your portfolio with something like the Vix , counsels Patty Edwards of Storehouse. I just don’t feel like we’re breaking out, broadly. However, I do think there are opportunities in the market but selectively. Right now I like Corning .

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WATCHING NATURAL GAS AND COMMODITIES

The traders were also keeping a close eye on crude oil and nat gas; both commodities rallied in the wake of euro strength.

What’s the trade?

It seems to me the trajectory for nat gas is higher, muses Joe Terranova. And coal appears to be moving in the same positive direction.

In the space I like Teck Resource and as a second derivative trade I like railroad Canadian National, adds Pete Najarian.

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BP CUT BY FITCH NOW

The story of the moment continues to be BP with the CEOs of major oil companies testifying before Congress, Tuesday.

Meanwhile, Fitch downgraded BP by six-notches, to BBB from AA citing an increased risk BP would have to place sums in an escrow account ti compensate spill victims.

Despite all the negative tailwinds, shares of BP traded higher on Tuesday?

What should you make of it?

If you want to play the energy space, I’d look at Exxon or Total , counsels Patty Edwards. There are better places to put your money than BP.

I have no interest in BP, adds Joe Terranova. There’s just too much uncertainty.

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MARKET BUZZKILL: BEST BUY DISASTER

Best Buy was probably the biggest market buzz kill on Tuesday after it messed estimates on both EPS and revenue.

The company cited rising costs and weaker consumer demand which translated into lower sales of flat panel TV's, video games and movies.

By the numbers, net profit was $155 million, or 36 cents a share, compared with $153 million, or 36 cents a share, a year earlier. Analysts on average were expecting a profit of 50 cents a share, according to Thomson Reuters.

Best Buy Earnings
David Strasser, retail analyst at Janney Montgomery Scott, shares his reaction to Best Buy's dramatic earnings miss.

How should you trade it?

I’d use the pull back as a buying opportunity, says Janney Montgomery analyst David Strasser. There are so many great products coming that I think they have a strong second half. But you have to be patient.

In case you’re wondering Strasser has a ‘Buy” rating on Best Buy with a $41 price target.

*Watch the video here to see our entire conversation with David Strasser.

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CBOE BEGINS TRADING…OPENS AT $32.80

CBOE , the last of the U.S exchanges to go public, successfully IPO’d on Tuesday morning, with the stock sharply higher in afternoon trade.

How should you play it?

I like this stock and see no reason to get out, says Pete Najarian. I think it goes higher. Fin reg should benefit the CBOE as well as all the exchanges; it should increase their volumes, Najarian says.

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CALL THE CLOSE

Patty Edwards: Wait for the market to trade above the 200-day.

Brian Kelly: Sell into the madness of crowds

Joe Terranova: The market is going higher.

Pete Najarian: Take a little off and let a little ride.



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Trader disclosure: On June 8, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Pete Najarian owns (C) calls; Pete Najarian owns (BAC); Pete Najarian owns a (BBY) call spread; Pete Najarian owns (TEVA); Pete Najarian owns (CELG); Pete Najarian owns (PFE); Pete Najarian owns (HPQ); Pete Najarian owns a (CEPH) call spread; Pete Najarian owns (MRVL); Pete Najarian owns (NOVL) and calls; Pete Najarian owns (CNI) & short calls; Pete Najarian owns (TCK); Kelly owns (GLD); Kelly owns (GDXJ); Kelly owns (BP) puts; Kelly is short (GS); Terranova owns (IPSU), (BX), (PFE), (GMCR), (RSX), (TER), (AXP), (BMO), (BBY), (DIS), (XCO), (SWN), (GLD), (AAPL), (IPI), (SU), (V), (TEVA); Terranova owns UK Pounds; Terranova owns Euros; Terranova is short the US Dollar

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 (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 Patty Edwards
Edwards owns (XOM) for clients
Edwards owns (CVX) for clients
Edwards owns (COP) for clients
Edwards owns (RIG) for clients
Edwards owns (NE) for clients
Edwards owns (SLB) for clients
Edwards owns (HAL) for clients
Edwards owns (WFT) for clients
Edwards owns (DO) for clients
Edwards owns (VZ) for clients
Edwards owns (C) for clients
Edwards owns (BAC) for clients
Edwards owns (WFC) for clients
Edwards owns (JPM) for clients
Edwards owns (STI) for clients
Edwards owns (PNC) for clients
Edwards owns (BBY) for clients
Edwards owns (HPQ) for clients
Edwards owns (AMZN) for clients
Edwards owns (VXX) for clients
Edwards owns the S&P500 for clients
Edwards owns (QQQQ) for clients
Edwards owns the Russell 2000 for clients
Edwards owns gold for clients
Edwards owns silver for clients
Edwards owns platinum for clients

For David Strasser
Janney Montgomery Scott makes a market in BBY

CNBC.com with wires

  Price   Change %Change
S&P 500
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BBBY
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BP.
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CBOE
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CGYV
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GLW
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KOL
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TCK.B
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FP
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VIX
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SPDR NRG SEL
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SPDR FIN SEL
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XOM
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