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Halftime Pt.1: Brace For Market To Break Lower?

Thursday, 24 Jun 2010 | 1:12 PM ET

Nervous investors kept one hand on the rip cord Thursday, with the bulls struggling against strong headwinds.

Bank shares remained under pressure around lunchtime as negotiations over financial reform entered their final hours.

Also investors continued to turn over the Fed’s gloomier statement about the economy. A belief that the Fed would keep rates low, generated dollar weakness and strength in oil , yet the energy ETF did not rally.

Also the euro rallied but the S&P did not, in fact the S&P broke below 1,083 – a key technical level.

How should you be positioned now?

Instant Insights with the Fast Money Traders

The fact that the euro rallied and the S&P didn’t is extraordinarily negative, Guy Adami says. It seems to me that we’re on the edge of really breaking down On the S&P, I think we could be going down to the 900’s.

This is the first time we’ve seen the euro rally and the equities do nothing, adds Steve Grasso. Guy Adami’s technical analysis may be spot on.

If we break hard from here we likely test 1040, concurs Jon Najarian. And if we hold 1080 we could see a bounce.



I use a basket of dividend paying stocks as my market barometer, reveals Patty Edwards and Kraft and Johnson & Johnson are the only two names in my basket that are higher. That’s not good. If you’re long, I’d hedge those long positions.

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CHART OF THE DAY: RETAIL (.MVR)

The Morgan Stanley Retail Index is now in official bear market territory, off more than 20% from its April 26th highs.

What must you know?

Best Buy earnings were a disaster, reminds Guy Adami. The weak performance suggests to me the consumer is floundering.

The only stocks in the space that are working are food stocks, says Patty Edwards.

McCormick Spice is trading near its 52-week high, adds Jon Najarian and I think it’s because consumers are staying home and cooking more. Looking at the sector broadly, I think investors might want to make a shopping list. Personally I like Darden if it trade down to $35 and BedBath & Beyond if it trades down to $37.

If you want to play the space long, I’d play it with the best operators and for me that’s JCrew , Nordstrom and Costco , adds Edwards.

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


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SECTOR TRADE: FINANCIALS

As we mentioned above financials fell on Thursday with financial regulation looming and after the sector received a slew of downgrades. We should note that Morgan Stanley hit a new 52- week low.

What’s the play?

Once financial regulation passes I think the clarity will generate a relief rally, says Steve Grasso.

I agree with Steve about the relief rally in the sector, adds Guy Adami. However I’m concerned by the action in Goldman; that stock has not been performing.

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APPLE ON TRACK FOR 1-MILLION PHONES?

Apple officially released its new iPhone 4 today and the lines around the country just keep growing.

BCG analyst Colin Gillis expects by the end of the day, Apple will have sold 1 million units.

He also expects Apple shares to jump another 30 percent from here over the next 12 months due to explosive sales.

What else does Gillis have to say about Apple? Watch the video and find out now!


Read more:

> Click here for Will iPhone Sales Top One Million Mark Thursday?


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CALL THE CLOSE

Patty Edwards: If you nibble at a few names also use protection on the downside.

Steve Grasso: I’m a seller of the market.

Jon Najarian: I don’t like the action in retail and I think the market is heading lower.

Guy Adami: 1080 is a pivotal level - will we hold or break lower?


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Trader disclosure: On June 24, 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; Jon Najarian owns (TGT) and short calls; Jon Najarian owns (WMT) and short calls; Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (ODP) call spreads; Grasso owns (ASTM), (ABK), (BAC), (BGP), (C), (DYN), (JPM), (LPX), (NDAQ), (PRST); Edwards owns (PM)

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (BAX)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (DHR)
Stuart Frankel & Co and it’s partners own (DYN)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)|
Stuart Frankel & Co and it’s partners own (SYMC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (TRV)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (TBT)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (AAPL)

For Patty Edwards:
Edwards owns (AAPL) for clients
Edwards owns (AMZN) for clients
Edwards owns (BAC) for clients
Edwards owns (BBY) for clients
Edwards owns (BMY) 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 (ERF) for clients
Edwards owns (FFIV) for clients
Edwards owns (GE) for clients
Edwards owns (GLD) for clients
Edwards owns (GOOG) for clients
Edwards owns (GLW) for clients
Edwards owns (KFT) for clients
Edwards owns (KMB) for clients
Edwards owns (HAL) for clients
Edwards owns (HPQ) for clients
Edwards owns (INTC) for clients
Edwards owns (JPM) for clients
Edwards owns (JNK) 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 (PM) 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 (VXX) for clients
Edwards owns (VZ) for clients
Edwards owns (WFC) for clients
Edwards owns (WFT) for clients
Edwards owns (WMT) for clients
Edwards owns (XOM) 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





CNBC.com with wires

  Price   Change %Change
S&P 500
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BBBY
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COST
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DRI
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GS
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JNJ
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JWN
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MDLZ
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MKC
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MS
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SPDR NRG SEL
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SPDR FIN SEL
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AAPL
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