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Rally Denied, Has the Market Topped Out?

The S&P broke a six-day winning streak on Wednesday, ending a hair lower ahead of earnings from JPMorgan and Google .

Pessimism prevailed into the close after minutes from the Fed’s June meeting showed the central bank has grown more concerned about the pace of recovery.

Adding to the negative sentiment, new economic data showed retail sales declined for the second month in a row with car dealers and gas stations particularly weak.

All combined, the commentary served as a sobering reminder that the economy continues to face strong headwinds.

Has the market topped out? How should you be positioned now?

Instant Insights with the Fast Money traders

I think the news out of the Fed gave investors an excuse to take profits, muses Joe Terranova, especially in riskier assets. Oil had a significant intra-day reversal.

I’m one of those people who took profits, admits Pete Najarian; we've had almost a 100 point move off the bottom in the S&P. It's prudent to take profits.

Chatter on the Street suggests Intel results could be a short-term top in this market, says Guy Adami. It opened on the high, had big volume and good numbers. Peak margins sometimes lead to peak price in a stock. Personally, I agree – I think the market topped out.

I agree with you, says Karen Finerman. The Intel numbers were really good; bulls couldn't have hoped for anything more. They should have lifted the market and they didn't. And the Vix was higher; it all says to me this rally is probably over in the short term.

I added to my short positions on Wednesday, says Brian Kelly. And I’m long the TLT .

I don’t think we got any new information from the Fed on Wednesday that we didn't already know, counters Mike Darda of MKM Partners. Growth will be choppy but I expect corporate profits will be fine and I think equities as an asset class are more attractive that corporate debt or Treasuries.

To Mike Darda's point, stock bears now outnumber bulls for the first time since April 2009, adds Adami. And we know what happened in April 2009, the the market exploded higher!

What do you think? We want to know!

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INTEL IMPACT

One day after earnings, investors continued to pore over the record breaking profits and sales numbers issued by Intel looking for insights into the broader technology sector and overall market.

What must you know?

Intel trades around 11 times earnings, reminds Joe Terranova. The valuation is a little rich – the space tends to trade at single digits.

In the space, I see upside in programable chip makers such as Xilinx , Altera and ARM Holdings , says Pete Najarian. Results from Intel suggests the second half should be good for these names.

On the back of the Intel news I like HPQ , adds Karen Finerman. I find it attractively priced right here.


Qualcomm seems to be showing signs of life, adds Guy Adami. That may come back.

The aspect of Intel earnings that I thought was most impressive was their data storage growth, adds Brian Kelly. I’d play it long Emulex and Qlogic .

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MARKET BUZZKILL: FINANCIALS

Ahead of big bank earnings, financials ended the session as the biggest drag on the markets with the XLF solidly in the red.

What should you make of it?

Volume in the options market was heavy, says Pete Najarian, with many more calls trading than puts in bank stocks. That’s largely bullish.

I’ll be watching JPMorgan earnings closely, says Joe Terranova. I really want to hear what they have to say about consumer loan losses.

As far as I’m concerned the most telling earnings will come next week from Goldman , says Guy Adami. Post earnings it wouldn’t surprise me to see Goldman trade down to $128.

Goldman may trade down on disappointing results, admits Karen Finerman, but I’d own it ahead of earnings; it’s a premiere franchise that’s inexpensive.

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BP FALLS ON THREAT OF RIG LEASE BAN

BP experienced another down day after a House committee passed a bill that would ban BP from new oil and gas leases for 7 years.

Meanwhile, BP said it will go forward with an integrity test of its well.

What’s the trade?

I’m hard pressed to think the story is over, says Guy Adami. It wouldn’t surprise me to see BP drift back down to $32.

In the space I had been bullish Anadarko but now I’d move away from it - it’s had a heck of a run over the last week – I’d also move away from BP, counsels Terranova. I’d look at refiners instead.

If you think the refiners have upside, keep an eye on Valero , says Pete Najarian.





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Trader disclosure: On July 14, 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 (GOOG), (AMZN), (MON), (APC), (SUN), (FCX), (GMCR), (MYL), (MRVL), (BAC), (ADI), (ADBE), (AKAM), (HES), (ABT), (CVS), (AXP), (EMC); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Finerman 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’s firm owns (BP) calls; Finerman owns (C); Finerman and Finerman’s Firm own (CVS); Finerman owns (GLW); Finerman’s Firm owns (GOOG); Finerman & Finerman’s Firm owns (HPQ); Finerman & Finerman’s Firm owns (IBM); Finerman owns (JPM) stock & calls; Finerman owns (SKS); 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); Pete Najarian owns (AAPL) call spreads; Pete Najarian owns (AKAM) call spreads; Pete Najarian owns (ALTR) call spreads; Pete Najarian owns (C) calls; Pete Najarian owns (LOW) calls; Pete Najarian owns (NOVL) and calls; Pete Najarian owns (ARMH) and short (ARMH) calls; Pete Najarian owns (XLNX) calls and short (XLNX) calls; Kelly Owns (BP) Puts; Kelly Is Short (GS)

For Brian Kelly
Accounts managed by Kanundrum Capital own (AUY)
Accounts managed by Kanundrum Capital own (GFI)
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (C)
Accounts managed by Kanundrum Capital own (ELX)
Accounts managed by Kanundrum Capital own (QLGC)
Accounts managed by Kanundrum Capital own (GME)
Accounts managed by Kanundrum Capital own (NWL)
Accounts managed by Kanundrum Capital own (BIG)
Accounts managed by Kanundrum Capital own Gold
Accounts managed by Kanundrum Capital own Treasuries
Accounts managed by Kanundrum Capital own US Dollars
Accounts managed by Kanundrum Capital are short (AMZN)
Accounts managed by Kanundrum Capital are short (RCL)
Accounts managed by Kanundrum Capital are short (XLY)
Accounts managed by Kanundrum Capital are short (XLE)
Accounts managed by Kanundrum Capital are short (AFL)
Accounts managed by Kanundrum Capital are short (CME)
Accounts managed by Kanundrum Capital are short (EWI)
Accounts managed by Kanundrum Capital are short (EWO)
Accounts managed by Kanundrum Capital are short (GS)
Accounts managed by Kanundrum Capital are short (HIG)
Accounts managed by Kanundrum Capital are short (RKH)
Accounts managed by Kanundrum Capital are short (XLF)
Accounts managed by Kanundrum Capital are short (XLI)
Accounts managed by Kanundrum Capital are short (FCX
Accounts managed by Kanundrum Capital are short (GFI)
Accounts managed by Kanundrum Capital are short (JOYG)
Accounts managed by Kanundrum Capital are short (XLB)
Accounts managed by Kanundrum Capital are short (XLK)
Accounts managed by Kanundrum Capital are short (V)
Accounts managed by Kanundrum Capital are short (PCAR)
Accounts managed by Kanundrum Capital are short (COF)
Accounts managed by Kanundrum Capital are short (KMX)
Accounts managed by Kanundrum Capital are short (JOE)
Accounts managed by Kanundrum Capital are short (USO)
Accounts managed by Kanundrum Capital are short (FXI)
Accounts managed by Kanundrum Capital are short (KMX)
Accounts managed by Kanundrum Capital are short (RSX)

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 Richard Kang
Funds Managed By Emerging Global Advisors Own (CHA), (ACH)

For Mark Mahaney
Citi Employees Own (GOOG)
Citigroup Global Markets Or Affiliate Received Non-Investment Banking Compensation From (GOOG) In Past 12 Months
(GOOG) Is Or In Past 12 Months Was A Client Of Citigroup Global Markets (Non-Investment Banking, Non-Securities-Related Services)
(GOOG) Is Or In Past 12 Months Was A Client Of Citigroup Global Markets (Non-Investment Banking, Securities-Related Services)
Citigroup Global Markets Is A Market Maker In (GOOG)

For Mark Schoenebaum
ISI Does And Seeks To Do Business With (AMLN), (HGSI), (GENZ), (DNDN), (GILD) And Has Received Non-Investment Banking Compensation In The Past 12 Months

For Mike Khouw
***NO DISCLOSURES

For Mike Darda
***NO DISCLOSURES***


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