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Markets On Brink, Or Holding Up Under Pressure?

Another tough day in the market ended with investors unsure whether the market is on the brink of a breakdown or holding up well under pressure.

The S&P bounced between gains and losses as two big catalysts shaped the market action.

In the morning, Wall Street was blind-sided by economic data that showed new home sales plunged 33%, to their lowest level in at least four decades.

In the afternoon, the Fed released statement in which the central bank renewed its vow to hold benchmark interest rates exceptionally low.

However they also used language considered far less optimistic about the strength of the recovery triggering concerns the economy could stall.

How should you position?

Instant Insights with the Fast Money traders

If you’re bullish what do you have left to hang your hat on, says Guy Adami. I don’t think investors realize how precipitously close we are to a market breakdown.

I you’re bearish what do you have to hold onto, counters Tim Seymour. The data out over the last few days has been lousy and the market has held up. We've continuously found support at 1080 and that’s optimistic.

I just can't feel bullish, adds Brian Kelly. The housing numbers mentioned above were horrific and housing is 40% of GDP. In turn, that means GDP is going to be lower than what economist's expect -- which probably means earnings expectations are too high. I agree with Guy that the market looks a little scary.

But one single data point is not enough to make a trend, counters Karen Finerman, especially if your're using the housing data to extrapolate about the consumer. Don’t forget that Master Trust data is improving. (Master Trust data tracks credit cards trends and the latest data showed fewer delinquencies.)

As for the upcoming earnings season I’m cautiously optimistic, adds Finerman, The XRT has already pulled back dramatically. I think the bar is set very low, at least in retail. Most companies are very well capitalized. In fact, at 10 times earning I think Best Buy is attractive, here.

I can’t agree with you Karen, counters veteran trader Gary Kaminksy. Signs suggest to me that the consumer is struggling. After the bell, Bed Bath & Beyondforecast weak second-quarter earnings. I think retailers have further to fall.

The probability of a double dip has grown over the past two months or so, says David Rosenberg, chief economist and strategist at Gluskin, Sheff. I think odds are around 50/50, now.

We’ve had a substantial withdrawal of fiscal stimulus with programs coming to and end, explains Rosenberg. And we’ve had this shock from Europe that’s led to a tightening of financial conditions. That’s something new that showed up in the Fed statement. As a result I think we see a slowdown materially over the next couple of quarters.

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FAST FLASH: 10-YEAR YIELD HITS 3.1%

The 10-year Treasury note yield tumbled on Wednesday to 3.11% from 3.16% and now is the lowest since April 2009. By comparison it was 4% two months ago.

Why is this level important?

If you take out the late 2008-2009 timeframe, going back to 1962, the yield touched 3.11 only one day in mid-June 2003, says Miller Tabak strategist Peter Boockvar. That was less than 2 week before Greenspan cut rates to 1%.

Holding the level is crucial and whether we hold is an important ‘tell’ revealing the bond market’s attitude toward the US economy.




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Trader disclosure: On June 23, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Kelly owns (BP) puts; Kelly owns (FCX) puts; Kelly owns (GLD); Kelly owns (GDXJ); Kelly is short (GS); Finerman and Finerman’s Firm owns (AAPL); Finerman’s Firm owns (AEO); Finermans’ Firm owns (ANF); Finerman’s Firm owns (BAC) stock and calls; Finerman and Finerman’s Firm own (BAC) preferred; Finerman and Finerman’s Firm owns (BBY); Finerman owns (BP) calls; Finerman and Finerman’s Firm owns (C); Finerman and Finerman’s Firm own (CVS); Finerman owns (GLW); Finerman & Finerman’s Firm owns (GOOG); Finerman & Finerman’s Firm owns (HPQ); Finerman & Finerman’s Firm owns (IBM); Finerman & Finerman’s Firm owns (JPM) stock & calls; Finerman’s firm owns (PM); Finerman’s Firm owns (RIG); Finerman’s Firm owns (TGT); Finerman’s Firm owns (WMT); Finerman’s Firm is short (IJR); Finerman’s Firm is short (IWM); Finerman’s Firm is short (MOY); Finerman’s Firm is short (SPY)

For Brian Kelly
Accounts managed by Kanundrum Capital own (AUY)
Accounts managed by Kanundrum Capital own (GFI)
Accounts managed by Kanundrum Capital is short (AMZN)
Accounts managed by Kanundrum Capital is short (RCL)
Accounts managed by Kanundrum Capital is short (XLY)
Accounts managed by Kanundrum Capital is short (AFL)
Accounts managed by Kanundrum Capital is short (CME)
Accounts managed by Kanundrum Capital is short (EWI)
Accounts managed by Kanundrum Capital is short (EWO)
Accounts managed by Kanundrum Capital is short (GS)
Accounts managed by Kanundrum Capital is short (HIG)
Accounts managed by Kanundrum Capital is short (XLF)
Accounts managed by Kanundrum Capital is short (XLI)
Accounts managed by Kanundrum Capital is short (FCX)
Accounts managed by Kanundrum Capital is short (XLB)
Accounts managed by Kanundrum Capital is short (XLK)
Accounts managed by Kanundrum Capital is short (CLF)
Accounts managed by Kanundrum Capital is short (JOYG)

Peter Boockvar
Boockvar owns Euros

David Rosenberg
***No Disclosures***

Ed Mills
***No Disclosures***

Nishu Sood
***No Disclosures***

Mike Khouw
***No Disclosures***


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