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Halftime Pt. 1: Bulls Off To The Races?

Monday, 2 Aug 2010 | 1:12 PM ET

The Street had wanted to see strong earnings confirmed by strong economic data - and it may be coming now.

The Dow surged by triple digits and the S&P powered above its 200-day moving average – a level of past resistance -- after new economic data confirmed what earnings had suggested over the last few weeks.

That the recovery remains in tact.

Topping the Tape
Commodities, fertilizer, financials and tech are seeing a lift, with the Fast Money crew.

Specifically, the Institute for Supply Management said the U.S. manufacturing sector grew in July for the 12th straight month, while the government reported construction spending unexpectedly rose in June.

Adding to the tailwinds, both two overseas banks -- BNP Paribas and HSBC– posted strong results.

Is it time to turn decidedly bullish? What should you be watching now?

Instant Insights with the Fast Money traders

I’m watching 1114, the 200-day on the S&P, says Steve Grasso. We have to close above that level for confirmation that the move higher in the S&P is sustainable.

The data out of Europe and the US says to me that Wall Street got it wrong, adds Tim Seymour. I think we’re seeing that the macro-environment is better than investors expected. That suggests the global growth trade is on - and we're seeing commodities such as oil move higher as a result.

The market is also looking at PMI data out of China, reminds Zach Karabell, which showed their economy is slowing but that outlook remains bright. I think resource names are taking the results as confirmation that the recovery is on track.

If there's a way to be bearish and bullish at the same time that's what I'd be, reveals Brian Kelly. But I'm incrementally more bullish because moves in the fixed income market and currencies market suggest to me that investors are unwinding trades based on a weaker economy and putting on trades that suggest the economy is getting better.

The change in sentiment is likely due from commentary from the Fed, Kelly adds, which has suggested if anything bad happens they will pump more money into the economy. That’s bad for the dollar and good for equities.

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CHART OF THE DAY: DOLLAR

The traders are closely watching action in the dollar which is near its 200 day moving average.

What should you make of it?

It wouldn't surprise me to see the dollar break lower, says Tim Seymour.

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WHERE’S GOLD GOING?

Gold rallied for a fourth day on Monday as the euro firmed to a three-month high against the dollar and as prices of other commodities such as crude oil jumped.

What’s the trade?

I coverd my gold short and went long gold, says Brian Kelly. If there's any hint that the dollar goes weaker long gold is my trade.

Gold has lagged and I think it's time to get back into the trade, says Tim Seymour. If resources start to rally I think gold becomes attractive as a hedge against inflation.

That may be true but I'm seeing clients sell out of their gold position and put that capital into higher beta plays, counters Steve Grasso.

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POLL OF THE DAY

In a recent letter to investors, widely followed billionaire investor David Einhorn talked about Pfizer , one of the worst performing stocks in his portfolio.

Despite sharp losses over the last 3 month Einhorn still likes the name. "As investors gain confidence in Pfizer's future... investors may pay a higher multiple," he writes.

What do you think? We want to know!











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UNDER THE RADAR: FERTILIZER

With wheat sitting at 23 month highs, is the fertilizer trade the best under the radar commodities play?

Potash and Mosaic have both exploded through the 200-day, says Tim Seymour. These are both charts that I think are now buys.

One cautionary note, is that Potash has gone from $84 to $103 in a matter of weeks, counters Zach Karabell. There could be more upside but I’d be careful of the momentum trade turning.

The weak dollar should benefit any commodity denominated in dollars, muses Brian Kelly. A lot of the other grains are doing well, too.

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MARKET BUZZKILL: RIM

Monday’s market buzz kill was RIM after the UAE said they'll likely join Saudi Arabia in suspending blackberry messaging services.

Specifically, over the weekend The UAE said it would suspend BlackBerry Messenger, email and Web browser services from Oct. 11 until the government can get access to encrypted messages. Industry sources said Saudi Arabia had ordered local telecom companies to freeze Messenger this month.

What’s the trade?

I would bet that this doesn’t happen, says Zach Karabell. It would not surprise me to hear that some other developments surfaced and it doesn’t happen.

I think the sell-off in the stock on Monday is much more about profit taking. Typically RIM runs into a new gadget launch and then sells-off, says Steve Grasso. And they've got something coming on Tuesday.



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Trader disclosure: On Aug 2, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Karabell owns (MON), (POT), (RIMM), (AAPL), (BP); Grasso owns (ASTM), (ABK), (BAC), (BA), (BGP), (C), (CSCO), (DYN), (JPM), (LPX), (MO), (NDAQ), (PFE), (PRST); Seymour owns (AAPL), (F), (GOOG), (POT), (BAC), (C)

For Brian Kelly
Accounts managed by Kanundrum Capital own (CM)
Accounts managed by Kanundrum Capital own (BMO
Accounts managed by Kanundrum Capital own Swiss Franc
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (BAK)
Accounts managed by Kanundrum Capital own (ORI)
Accounts managed by Kanundrum Capital own (UNG)
Accounts managed by Kanundrum Capital own (PFE)
Accounts managed by Kanundrum Capital are long (JPM)
Accounts managed by Kanundrum Capital are long (GLD)
Accounts managed by Kanundrum Capital are long (OIH)
Accounts managed by Kanundrum Capital are long (RIMM) call spread
Accounts managed by Kanundrum Capital are short the US Dollar

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 (ESV)
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 (LEN)
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 (KEG)

For Zach Karabell
River Twice Capital owns (CSCO)
River Twice Capital owns (POT)
River Twice Capital owns (MON)
River Twice Capital owns (MA)

For Moshe Orenbuch
(MA) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse
Credit Suisse provided investment banking services to the subject company (MA, AXP) within the past 12 months.
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (V, MA, AXP, DFS) within the next 3 months.
As of the date of this report, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company (MA).
As of the end of the preceding month, Credit Suisse beneficially owned 1% or more of a class of common equity securities of (V)

CNBC.com with wires.

  Price   Change %Change
DJIA
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S&P 500
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BNP
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HSBA
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MOS
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PFE
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POT
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BB
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