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Did Intel Just Ignite A Brand New Bull?

Tuesday, 13 Jul 2010 | 5:43 PM ET

After the close investors were starting to wonder if Intel’s blockbuster earnings signaled that the bull is back. These results were the company’s best in its 42-year history!

Citing "strong demand from corporate customers," the chip giant posted its best ever sales and best ever profits, setting a new record and easily blowing past Wall Street forecasts.

Intel, whose chips run more than 80 percent of the world's computers, has posted three straight quarters of sales growth, and according to Intel CEO Paul Otellini that's not about to change anytime soon.

"The PC and server segments are healthy and the demand for leading-edge technology will continue to increase for the foreseeable future," Otellini says.

Considering Intel's future looks very bright, is the bull back?

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Intel issued an excellent report, says the usually bearish Brian Kelly. Those results say to me that companies are starting to spend money on IT and that spending could be just like a stimulus. Their data storage numbers were especially impressive and make me interested in the area as a whole; check out Emulex , QLogic .

The Intel report also suggests that tech is a theme money managers can't ingore and I expect they will begin to attach themselves to stocks that benefit from that theme, adds Joe Terranova.

The financials are what I’m watching next, Terranova adds. They report later in the week and I’m curious to see if they can take the hand-off from Intel. Personally, I think they can. I think that could send the market higher, broadly.

I don’t think Intel as well as strong results from Alcoa or CSX mean the S&P is going to 1200 anytime soon, says Tim Seymour. But I do think it’s a sign we’re not falling apart and that there are pockets of real strength in this market.

Looking at the market broadly, I’m now watching 1105, adds Brian Kelly. If we close above that I’d turn substantially more bullish. I have to respect what Intel is showing me which is companies are spending money on technology.

I'd keep an eye on the Nasdaq says Tim Seymour. I think Google and Microsoft are under-owned and these Intel results could change that.


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CLOSER LOOK AT INTEL

Looking at Intel's numbers more closely, the company said it earned 51 cents a share in the second quarter, against a loss of 7 cents a share this time last year.

Revenue swelled to $10.8 billion, up from $8.024 billion last year.

Analysts who follow Intel expected on average for the company to report a profit of 43 cents a share, according to Thomson Reuters.

Intel now expects its sales for the current quarter to reach $11.6 billion. Analysts were looking for sales of $10.9 billion for the period.

What’s the tech trade?

In the after market the stock traded to about $22, says Guy Adami. Typically the trade is to be long Intel right after earnings because it immediately trades higher at the open then trades off. But at $22 I think the stock is in no man’s land.

There’s a great deal of short interest in Intel and I think those shorts will start getting squeezed, says Joe Terranova. That makes me think this quarter Intel won’t trade off, as it has in the past.

I think we could see some follow through in related names such as Hewlett-Packard and IBM, muses Karen Finerman.

I think you can also look at as AMD, says Tim Seymour. The Intel numbers are really impressive.

> Click here for more coverage of Intel earnings

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AFTER HOURS ACTION: YUM

Shares of Yum tumbled about 3% in extended trade Tuesday after the company issued an outlook that disappointed investors.

By the numbers, Yum reported second-quarter earnings of 58 cents a share, excluding one-time items. Yum earned 50 cents a share during the same period a year earlier.

The company was seen earning 55 cents a share on revenue of $2.54 billion, according to a consensus estimate from Thomson Reuters.

Sales increased for the most recent quarter to $2.57 billion, up from $2.48 billion last year.

"A key driver of our overall growth continues to be new unit development in China and Yum Restaurants International," said David Novak, Chairman and CEO. "We continue to expect to open about 1 400 international units this year and remain the industry's leading international new unit developer."

What’s the trade?

Yum beat the quarter but didn’t raise guidance, says Guy Adami, that’s the rub there. In the space I like McDonald’s more, Adami adds. It’s a better operator.

> Click here for more coverage of Yum earnings

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AFTER HOURS ACTION: BENIHANA

The traders were keeping a close eye on Benihana after a published report stated the company wanted to explore strategic alternatives including a possible sale, in order to maximize shareholder value.

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S&P 500’S BEST WINNING STREAK IN 7 YEARS

Stocks rallied for a sixth straight day on Tuesday after Alcoa's quarterly results gave investors confidence that the recovery might not have been derailed after all.

The S&P 500 is up about 8 percent from its intraday low on July 1, though trading volume has been lackluster.

In fact volume over the past two sessions was the lightest of the year and although Tuesday's volume fared better, it was still below average.

How should you trade?

I’m a buyer of puts on the S&P, says Karen Finerman. The move higher has been enormous and I think it’s prudent to put on some protection.

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FINANCIALS LEAD THE RALLY AND CORRECTION COMEBACK

The Bank ETF closed higher Tuesday after finreg gained support suggesting the market may have greater clarity.

Morgan Stanley and Goldman Sachs led the gains despite a note from Wells Fargo cutting estimates for both banks.

What’s the bank trade?

Find out what Chris Whalen of Institutional Risk Analytics tells the desk. Watch the Word on the Street video above or click here!


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Trader disclosure: On July 13, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Seymour Owns (AAPL), (BAC), (INTC), (MSFT); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (SPY); Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (BP) Calls; Finerman Owns (GOOG); Finerman's Firm Owns (JPM), (JPM) Leaps; Finerman Owns (JPM); Fimerna's Firm Owns (MCD); Finerman's Firm Owns (RIG) Calls; Finerman's Firm Owns (YUM); Terranova Owns (ADI), (GOOG), (APC), (GMCR), (MYL), (BAC), (ABT), (AXP), (HES), (AMZN), (SUN), (SMH), (MYL), (MRVL), (ADI), (EMC), (CVS), (AKAM), (ADBE), (MON), (KCE), (FCX) ; Terranova Owns (FCX) July Calls; Kelly Owns (BP) Puts; Kelly Is Short (GS); Jon Najarian Owns (SCHN), Is Short (SCHN) Calls; Jon Najarian Owns (STLD), Is Short (STLD) Calls; Jon Najarian Owns (BP), Is Short (BP) Calls

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 (CASS)
Virtus Investment Partners owns more than 1% of (LDR)
Virtus Investment Partners owns more than 1% of (LPHI)
Virtus Investment Partners owns more than 1% of (MGRC)
Virtus Investment Partners owns more than 1% of (XLB)
Virtus Investment Partners owns more than 1% of (XLP)
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 (XLK)
Virtus Investment Partners owns more than 1% of (XLU)
Virtus Investment Partners owns more than 1% of (SUBK)
Virtus Investment Partners owns more than 1% of (WDFC)
Virtus Investment Partners owns more than 1% of (YDNT)
Virtus Investment Partners owns more than 1% of (DRYS)

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (NWL)
Accounts Managed By Kanundrum Capital Own (BIG)
Accounts Managed By Kanundrum Capital Own (GME)
Accounts Managed By Kanundrum Capital Are Long U.S. Dollar
Accounts Managed By Kanundrum Capital Are Short (FXI)
Accounts Managed By Kanundrum Capital Are Short (EWA)
Accounts Managed By Kanundrum Capital Are Short (EWI)
Accounts Managed By Kanundrum Capital Are Short (NATI)
Accounts Managed By Kanundrum Capital Are Short (KMX)
Accounts Managed By Kanundrum Capital Are Short (RSX)
Accounts Managed By Kanundrum Capital Are Short (AMZN)
Accounts Managed By Kanundrum Capital Are Short (FCX)
Accounts Managed By Kanundrum Capital Are Short (HIG)
Accounts Managed By Kanundrum Capital Are Short (MET)
Accounts Managed By Kanundrum Capital Are Short (CLF)

For Robert Mackenzie
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (BRNC), (RIG), (SLB), (KEG), (HERO), (ESEA), (TESO), (SBLK), (VTG)
Mackenzie And/Or A Member Of His Household Owns (RIG),
(KEG) Is A Client Of FBR Capital Markets (Non-Investment Banking, Securities

Related Services)
FBR Capital Markets Has Mangaed Or Co-Managed A Public Offering Of (HERO), (VTG), Has Received Investment Banking Compensation In Past 12 Months

For Christopher Whalen
***No Disclosures

For Joe Lavorgna
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For Carter Worth
The Oppenheimer & Co. Analyst Who Covers (JPM) Owns (JPM)

For Paul Miller
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