GO
Loading...

Did The Bulls Blow It?

Monday, 21 Jun 2010 | 5:38 PM ET

Investors were struggling to figure out what’s next for stocks after the Dow closed in the red after making a triple digit advance Monday, only to erase the gains.

Adding to the negative sentiment, the S&P 500 briefly broke above 1,130, the midpoint between its 2010 high and low - a key technical level - but gains didn't hold and it too closed in the red.

The session had looked promising after reports out of Beijing suggested China would loosen the currency's peg to the U.S. dollar.

The news triggered a sharp rally in many natural resource names, however, the euphoria was short lived as doubts surfaced about the speed and magnitude of Beijing's intentions.

How should you be positioned now?

Instant Insights with the Fast Money traders

The market should have broken out on the strong fundamental news, says Joe Terranova, but it didn’t. The weakness in the afternoon led me to pare down my long positions. Investors have to listen to the market.

No doubt the roll-over was disappointing, echoes Karen Finerman, but I think the negative action was a bit premature especially in retail stocks. We don’t have a time frame or even how much of a change we’re looking at in the yuan - yet retailers were sold off as if China said they intended to revalue the yuan tomorrow.

I agree with Karen, says David Riedel of the Riedel Research Group. Don’t forget Beijing made the announcement on the eve of a G20 meeting. It could be as much politically motivated as anything else.

Technically, it seems to me that the S&P is in a range between 1040 and 1135, muses Guy Adami. I’d start taking some profits off the table because we're probably embarking on the next leg lower.

If you need to establish long positions look at defensive names with low P/Es, adds Anthony Scaramucci - for example Pfizer .

-------------

MARKET BUZZKILL: RETAILERS

Retailers struggled on Monday with investors worried that a revaluation of the yuan could have significant impact on pricing power as sourcing costs increase.

What’s the trade?

I think the sell-off generated opportunity, says Karen Finerman. I’m a buyer of JCrew on the dip. If you’re interested in a pairs trade I’d go short Abercrombie against it.

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

If you're worried about the stronger yuan's impact on Walmart, it's important to know that their contracts are nominated in dollars so they shouldn’t be terribly hurt by a revaluation, adds Patty Edwards. Elsewhere in retail, I'd take a look at Gap and American Eagle; they source both inside and outside China and should be facing a little less pricing pressure than some of their rivals that only source inside China.

I’m also bullish Walmart, echoes Anthony Scaramucci.

Forget China, I'm concerned retailers are starting to crack, adds Guy Adami. Look at the price action in California Pizza Kitchen and Callaway. They're not lower because of China.

-------------

EAR TO THE WALL: VISA, MASTERCARD

Credit card names rallied Monday on word that Rep. Barney Frank may make changes to the proposed cap on debit card "swipe" fees.

What’s the trade?

I don’t think fin reg will have a terribly negative impact on Mastercard or Visa, speculates Joe Terranova. I’d stay with both names.

I agree long-term, however in the short term I think both Visa and Mastercard could pull back, adds Guy Adami.

I’m hopeful that once we learn the details of financial regulation we get a bounce in the space, adds Karen Finerman. I’m bullish Bank of America and JPMorgan.


-------------

TICK BY TICK: OIL & GAS

Commodities opened higher on the session but saw a big mid-day reversal as the dollar hit the highs of the day.

How should you trade it?

It appears money is rotating out of the nat gas , says Joe Terranova. I’d take a little off the table.

The fundamentals for nat gas are awful, adds Guy Adami, and now the price action on Monday gives me pause, too.

Elsewhere in the space, I’m keeping an eye on gold , says Joe Terranova. I think we could be close to a near-term top.

-------------


MARKET BUZZKILL: TECH FALLS AFTER PRICE CUTS

Nasdaq ended lower Monday partly due to Amazon, which announced a $70 price cut on the Kindle. The move came hours after Barnes and Noble cut the price its e-reader called the Nook.

What must you know about the move?

iPads are flying off the shelves and the price cut at Amazon is much more a reaction to that, explains Piper Apple Jaffray analyst Gene Munster. Half of Amazon’s business is from media and Amazon is facing challenges. I think a $99 Kindle is going to be critical for their long-term success.

And elsewhere in tech…

I’m out of Apple , reveals Joe Terranova, but I’m looking to get it back cheaper around $250.

I don’t trade in and out of a stock short-term, reminds Karen Finerman, I’m long Apple and intend to stay long.






______________________________________________________
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 June 21, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova owns (IPSU), (BX), (PFE), (GMCR), (RSX), (TER), (AXP), (KO), (BMO), (BBY), (DIS), (XCO), (SWN), (AAPL), (IPI), (AGU), (SU), (XOM), (RDS.A), (FXB), (V), (TEVA), (COP), (OXY); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Finerman’s firm own (AAPL); Finerman & Finerman’s firm owns (BBY); Finerman’s firm owns (BP) calls; Finerman’s firm owns (C); Finerman & Finerman’s firm owns (CVS); Finerman owns (FRO); Finerman & Finerman’s firm owns (GOOG); Finerman & Finerman’s firm owns (IBM); Finerman owns (JPM) and calls; Finerman’s firm owns (JPM); Finerman owns (RIG) calls; Finerman’s firm owns (RIG) calls; Finerman owns (TGT); Fienrman owns (WMT); Finerman owns (TK); Finerman is short (IJR); Finerman is short (IWM); Finerman is short (MDY); Finerman is short (SPY); Finerman owns Russell puts; Finerman is short (IYR); Finerman is short (SPY); Finerman owns (IWM) puts’; Grasso owns (ABK); Grasso owns (BAC); Grasso owns (BGP); Grasso owns (C); Grasso owns (DYN); Grasso owns (JPM); Grasso owns (LPX); Grasso owns (NDAQ); Grasso owns (PRST)

For Anthony Scaramucci
Scaramucci & Skybridge Capital own (AAPL)
Scaramucci & Skybridge Capital own (C)
Scaramucci & Skybridge Capital own (GOOG)
Scaramucci & Skybridge Capital own (GS)
Scaramucci & Skybridge Capital own (JPM)
Scaramucci & Skybridge Capital own (WMT)
Scaramucci & Skybridge Capital own the S&P 500
Scaramucci & Skybridge Capital own the U.S. Dollar

For JoeTerranova
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 (ADBE) for clients
Edwards owns (AAPL) for clients
Edwards owns (AMZN) for clients
Edwards owns (BAC) for clients
Edwards owns (BBY) for clients
Edwards owns (C) for clients
Edwards owns (COP) for clients
Edwards owns (CVX) for clients
Edwards owns (DELL) for clients
Edwards owns (DO) for clients
Edwards owns (GE) for clients
Edwards owns (GLD) for clients
Edwards owns (GOOG) for clients
Edwards owns (GLW) for clients
Edwards owns (HAL) for clients
Edwards owns (HPQ) for clients
Edwards owns (INTC) for clients
Edwards owns (JPM) for clients
Edwards owns (MS) for clients
Edwards owns (MSFT) for clients
Edwards owns (NE) for clients
Edwards owns (NSC) for clients
Edwards owns (NVDA) for clients
Edwards owns (ORCL) for clients
Edwards owns (PNC) for clients
Edwards owns (QQQQ) for clients
Edwards owns (RIG) for clients
Edwards owns (SLB) for clients
Edwards owns (SPY) for clients
Edwards owns (STI) for clients
Edwards owns (STM) for clients
Edwards owns (TXN) for clients
Edwards owns (UNP) for clients
Edwards owns (V) for clients
Edwards owns (VXX) for clients
Edwards owns (VZ) for clients
Edwards owns (WFC) for clients
Edwards owns (WFT) for clients
Edwards owns (XOM) for clients
Edwards owns (YHOO) for clients
Edwards owns gold for clients
Edwards owns platinum for clients
Edwards owns silver for clients
Edwards owns the Russell 2000 for clients
Edwards owns the S&P500 for clients

David Riedel
***No Disclosures***

Gene Munster
Piper Jaffray makes a market in (AAPL), (AMZN), (BIDU), (DRIV), (EBAY), (GOOG), (IACI), (SINA), (YHOO)

Mike Khouw
Cantor Fitzgerald makes a market in (LEN)

Doug Sipkin
Ticonderoga Securities LLC Is A Market Maker In (SF), (MS), (RJF), (BLK)




CNBC.com with wires

  Price   Change %Change
DJIA
---
NASDAQ
---
S&P 500
---
AEO
---
AMZN
---
ANF
---
BAC
---
BKS
---
ELY
---
GPS
---
JPM MLP ETN
---
MA
---
PFE
---
V
---
WMT
---
SPDR SPRET
---
AAPL
---
MCD
---

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