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Halftime Pt. 1: Apple Weakness, Opportunity Or Sign Of Trouble?

On Monday the bulls appeared determined to hold the market in positive territory driving big cap tech higher and making tech stocks among the session’s strongest performers.

That is, big cap tech performed well with the exception of good old Apple which traded sharply lower, again.

With shares down about 10% since late June, should you buy Apple on the pull back? Or is the weakness a sign of trouble considering the tech sector moved higher, broadly?

Instant Insights with the Fast Money traders

The iPhone 4 problem seems completely overdone, says Tim Seymour. However the level to watch is $240. I’d want to see Apple touch this level and move higher to establish a position. If the stock breaks lower, then I’d be wary.

The move lower in Apple surprises me, says Pete Najarian. No question there’s fear in this name. However, Mac sales are estimateD to come in north of 3 million. That data point makes me bullish at these levels; I think it’s okay to buy.

My clients are getting involved and buying dips in Apple, says Steve Grasso. The long-term story should remain in tact, However, in the near term economists are lowering their GDP forecasts, he adds Tech has been a little toppy and I think we could see more weakness, broadly.

When you talk about tech I think it’s important to differentiate among companies in the space. Apple is very much consumer oriented companies and I’m bearish for that reason, says Brian Kelly. And for the first time I think Apple has a competitor -- in the Motorola Droid.

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THE “BARRON’S BOUNCE”

Elsewhere in tech, shares of Google turned around Monday after the search giant made the cover story of this week's Barron's, which said Google shares are undervalued by 35% or more.

What must you know?

The author of the Barron’s article says Google has the potential to rise 35% based on the average price target on Wall Street, says Pete Najarian. That’s a big assumption. I wouldn’t base my trade on that. Instead I’d look at Google’s relationship with China. If you feel things are starting to clear up with Beijing, then that’s a good reason to go long.

Online advertising is a major aspect of Google, says Brian Kelly. If the economy gets weaker I worry about advertising rates over the next 6 months.

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TAKE YOUR POSITION: GOLDMAN SACHS

Goldman Sachs lost some of its settlement steam, trading lower ahead of earnings on Tuesday.

How should you position?

I wouldn’t rush into Goldman here, says Pete Najarian. But if you can get the stock around $142 I’d think about establishing a position.

What do you think? We want to know!



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MARKET BUZZKILL: FINANCIALS

Looking at the sector broadly, financials were the big market buzz kill on Monday after analysts slashed their price targets on BofA and Goldman removed the firm from its Conviction Buy List.

However, Sandler O’Neil suggest that investors may be over reacting to the commentary made by BofA when they released earnings on Friday.

What’s the trade?

BofA stock is down 15% in 3 sessions, explains Tim Seymour. I have to wonder just what’s priced in. If nothing more, I’d expect the stock to bounce.

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MARKET BUZZKILL: BP

BP was another market buzz kill with shares sliding sharply on concerns that some oil may be seeping into the Gulf near the well site.

What’s the trade?

In the energy space, I like playing coking coal, says Tim Seymour. I’d look for companies that have been beaten up.

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EURO CONTINUES TO RIP HIGHER

The euro hovered a little short of two-month highs against the dollar on Monday, despite the fact that Moody's downgraded Irish government bonds by one notch due to a deteriorating economic outlook.

Instead, investors have remained focused on the successful bond auctions across the continent.

How should you be positioned now?

I’m surprised the euro traded to 127, says Dennis Gartman. Fundamentally, I see no reason why the euro has traded to these levels. The economies of Europe are weaker than the one in the US. I expect eventually we see much lower prices in the euro.

Markets can get irrational and I think this is an irrational move, says Dennis Gartman. A year from now I think the euro is much closer to 118.


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Trader disclosure: On July 19, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Pete Najarian own (C) calls; Pete Najarian owns (AAPL) call spread; Pete Najarian owns (APC) call spread; Pete Najarian owns (V) call spread; Kelly owns (BP) puts; Kelly is short (GS); Grasso owns (ASTM), (ABK), (BAC), (BA), (BGP), (C), (CSCO), (DYN), (JPM), (LPX), (MO), (NDAQ), (PFE), (PRST)

For Brian Kelly
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (AUY)
Accounts managed by Kanundrum Capital own (GFI)
Accounts managed by Kanundrum Capital own (C)
Accounts managed by Kanundrum Capital own (GME)
Accounts managed by Kanundrum Capital own (BIG)
Accounts managed by Kanundrum Capital own (NWL)
Accounts managed by Kanundrum Capital own Japanese Yen
Accounts managed by Kanundrum Capital are short (BA)
Accounts managed by Kanundrum Capital are short (USO)
Accounts managed by Kanundrum Capital are short (GLD)
Accounts managed by Kanundrum Capital are short Aussie Dollar
Accounts managed by Kanundrum Capital are short (AMZN)
Accounts managed by Kanundrum Capital are short (KMX)
Accounts managed by Kanundrum Capital are short (FXI)
Accounts managed by Kanundrum Capital are short (EWO)
Accounts managed by Kanundrum Capital are short (EWI)
Accounts managed by Kanundrum Capital are short (JOE)
Accounts managed by Kanundrum Capital are short (RSX)
Accounts managed by Kanundrum Capital are short (SLX)
Accounts managed by Kanundrum Capital are short (CSX)
Accounts managed by Kanundrum Capital are short (FCX)

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (BAX)
Stuart Frankel & Co and it’s partners own (COG)
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 (IP)
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 (TBT)
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 are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (AAPL)

Dennis Gartman
Funds managed by Gartman are short the Euro
Funds managed by Gartman own the Canadian Dollar
Funds managed by Gartman own Gold
Funds managed by Gartman own (AAPL)


Jim Whitehurst
***No Disclosures***

Whitney Tilson
Funds Managed By Whitney Tilson Owned (BP) On 7/16/10

CNBC.com with wires

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