Halftime Pt 1: Is 200-Day A Brick Wall For S&P?
It might seem like stocks are stuck in neutral but behind the scenes bulls and bears are doing fierce battle.
The stock market’s next move will likely be determined soon and whichever way it goes - the Fast Money traders think it's going to be big.
Bears argue they have the advantage if only because every time the S&P reaches the 200-day -- about 1113 -- it acts as if it’s hit a brick wall.
Fundamentals, may also favor the bears - an unexpected decline in durable goods orders weighed on market sentiment as did a weaker than expected full year forecast from Boeing .
However the bulls aren’t without ammunition. The spate of strong reports from Corporate America continued Wednesday with better-than-expected results from General Dynamics and ConocoPhillips .
How should you be positioned now?
Instant Insights with the Fast Money traders
At these key technical levels, the market can go one way or the other very quickly, explains Brian Kelly. Considering the market has come very far very fast it makes sense to be neutral or even to take some short positions.
Doug Kass says almost the same thing, adds host Melissa Lee. He sent a message out today saying he's market neutral.
I’m still watching 23.38, the 200-day on the Vix says Jon Najarian.
If the Vix can close below 23.38 I’d take it as confirmation that the market is heading to the upside. And if it doesn’t we’re looking at a triple bottom on the Vix and I’d take it as a signal we go back into a corrective trade.
POLL OF THE DAY
The Fast Money traders are keeping a close eye on Exxon Mobil after Legg Mason fund manager, and famed stock picker, Bill Miller said U.S. large-cap stocks are dramatically undervalued and offered Exxon as an example.
"U.S. large capitalization stocks represent a once in a lifetime opportunity in my opinion to buy the best quality companies in the world at bargain prices," Miller wrote in a note. "The last time they were this cheap relative to bonds was 1951. I was 1 year old then, but did not have then sufficient sentience or capital to invest."
What do you think? We want to know!
As we mentioned above, shares of Boeing traded lower on Wednesday largely due to a weaker than expected full year forecast.
Also, Boeing delivered 114 planes in the second quarter, down from 125 a year earlier and fewer than some analysts had expected, and defense revenue fell 8 percent.
However the results weren't all negative; the aviation giant did report a higher-than-expected quarterly net profit.
What’s the trade?
I like the stock as a weak dollar play, says Steve Cortes, however I’m a little cautious. Typically Boeing and Delta move in tandem but right now they’re not. I take that to mean either Boeing is overvalued or Delta is undervalued.
I think the Street has been underestimatingBoeing, adds Joe Terranova. Beoing raised operating margin guidance. As far as I can see the story is in tact. I’m playing it downstream with a long position in Precision Castparts.
CONFUSING COMMODITY TRADE
The commodity trade on Wednesday was confusing at best after copper rose to an 11-month high while oil fell below 76 and gold bounced higher.
What should you make of it?
Looking at gold, I think the rebound is tepid at best, says Joe Terranova. I’m short and expect gold to challenge 1144.
The move in copper is defying the market, says Brian Kelly. It’s a confusing trade.
BIG MOVER OF THE DAY: RIMM
RIM was a big winner in Wednesday’s session afterpublished reports suggested the Blackberry maker is set to unveil a long-awaited touch-screen handset designed to battle with Apple's popular iPhone as soon as next week.
Called the Slider 9800, reports say the handset will be carried exclusively by AT&T and should go on sale in time for the holiday season and perhaps in time for back-to-school, the report said.
"The timing makes sense (for this to be the 9800 launch)," says Avian Securities analyst Matt Thornton. "The earlier they are going to say it is going to be available on the shelves the better. They don't want to miss one of the key seasons," he adds.
What’s the takeaway?
RIM misstepped by lagging Apple but a year ago RIM started working to narrow that gap, explains Mike Abramsky of RBC Capital Markets. The question becomes will the new gadget be considered ‘cool’? If so it could eat into Apple's piece of the pie.
This is the kind of innovation may be just the kind of thing investors are looking for, adds Jon Najarian.
I like RIM but because the technicals look good to me, says Steve Cortes.
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Trader disclosure: On July 27, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kelly owns (BP) puts; Jon Najarian owns (GLD) puts; Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (MSFT) and short calls; Jon Najarian owns (IACI) and short calls; Jon Najarian owns (LVS) and short calls; Jon Najarian owns (MGM) and short calls; Cortes owns (RSX), (GS), (MS); Cortes is short the S&P 500; Cortes is short the Yen; Cortes is short US Treasuries; Terranova owns (AMZN), (EMC), (CREE), (BRCM), (LRCX), (COP), (AXP), (BMO), (CSX), (PEP), (CVS), (GS), (PCP), (C), (APA), (FCX), (JOYG), (MMM), (MOS), (UAUA), (WYNN), (GOOG), (BBY), (SU), (KOL), (XBI), (SWN), (BAX), (JNPR); Terranova is short (GLD)
For Brian Kelly
Accounts managed by Kanundrum Capital own (ELX)
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For Joe Terranova
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Terranova is chief market strategist of Virtus Investment Partners, LTD.
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