Halftime: Take Profits In Apple: Put Money To Work In RIM?
Shares of RIM traded higher on Monday after published reports suggested Saudi Arabia was close to reversing a proposed ban on BlackBerry services.
According to AP, RIM agreed to place BlackBerry servers inside Saudi Arabia and allow the government to monitor messages. Saudi security officials claim the move is critical so the service isn't used by militant groups, however critics argue the government is only trying to further curb freedom of expression.
Meanwhile, the latest web chatter suggests that other nations which have expressed similar concerns including India, Indonesia and the United Arab Emirates may also agree to similar resolutions.
What's the trade?
Instant Insights with the Fast Money traders
I think RIM was oversold on the news, says Pete Najarian. With a 10 P/E I like this name. RIM should reach much higher levels. And I can't help but wonder if some larger company would ever have an interest in Research In Motion?
I agree that from a P/E ratio standpoint it seems like an attractive value play, adds Jared Levy but the BlackBerry just isn’t sexy. I was expecting a work of art in the new BlackBerry Torch but it wasn't there. With Android and iPhone making gains, I'm concerned about being long RIM outright. However, I see some potential so I’d buy the stock and sell calls against it.
At a 10 P/E I’d also give RIM some grace, adds Patty Edwards. There are a lot of other names they could kill - such as Nokia .
I like RIM for technical reasons, says Steve Cortes. It appears to be basing. At the same time Apple seems to be topping out.
I’d be taking profits on Apple and putting that money to work in RIM.
MYSTERIOUS DROP IN EURO
On Monday the traders were keeping a close eye on the euro which dropped sharply.
What's the trade?
I’m getting skeptical of the euro, says Steve Cortes. We were too pessimistic a few weeks back and now it looks like we’re too optimistic.
TRADING H-P IN WAKE OF HURD SCANDAL
Shares of HP plunged on Monday after CEO Mark Hurd quit in the wake of an investigation, which found he had falsified expense reports to conceal a "close personal relationship" with a female contractor.
How should you game it?
HP is probably cheap here, says Jared Levy. I’d think about selling the September 41 put which obligates you to get long the stock.
Just because Mark Hurd is leaving doesn’t mean HP won’t keep performing, says Pete Najarian. I’d bet on more upside. But perhaps the best way to play it is with calls, just in case.
I’m thinking about adding to my position, says Patty Edwards. I was thinking about pulling the trigger this morning – but I want to know more before I do that.
I think the stock is too risky to be long, says Eric Jackson of Ironfire Capital. Can you really trust the board; what if they pick another Carly Fiorina? The new CEO is going to be critical. Personally, I think the strongest internal candidate is Todd Bradley and I suspect he’s the front runner.
* In fact, Mark Hurd’s problems weren’t a surprise to Eric Jackson of Ironfire Capital. Find out what he has to say. Watch the video now!
I think the trade is long IBM, adds Steve Cortes.
TOPPING TAPE: COMMODITY TRADE
Despite dollar strength oil traded notably higher, trading above $81 a barrel. What should you make of it?
What’s the trade?
I’m a buyer of oil, says Steve Cortes, on emerging markets demand. I think crude goes to about $90.
August and September tend to be the worst hurricane months, and I think that boosts oil to at least $85, adds Jared Levy.
In the space I’d look at Exxon Mobil, says Pete Najarian. ConocoPhilips looks good to me too.
CONCERN ABOUT TRADING PROFITS
Less than perfect second-quarter trading has bank shares under pressure Monday with Goldman Sachs reporting 10-days of losses and Morgan Stanley posting eleven.
It’s a trend that Financial Times reporter Francesco Guerrera first talked about on Fast Money on Wednesday August 4th.
What’s the trade?
It shows these banks weren’t trading against their clients, muses Patty Edwards. I think it’s a good thing.
Largely it seems financials are stuck in a range, says Pete Najarian In this space, I’m watching and Visa , he adds. Around $200 MA seems to find support; near $70 Visa seems to find support. And it seems to me Goldman is stuck between $152-$157.
A hot summer for McDonald's served up a 7% rise in July same-store sales with the fast food giant citing growth in the US due in part to its new icy beverages.
What’s the trade?
Months ago I said smoothies would drive sales, says Pete Najarian. But I took profits. However around $70 I’d start nibbling again.
UNUSUAL ACTIVITY: NXY
Pete Najarian has spotted unusual action in Nexen.
An unusual volume in December 22.5 and December 25 calls suggests to Najarian this stock could pop higher.
CALL OF THE DAY: DEUTSCHE BANK UPGRADE
In the call of the day, Deutsche Bank upgraded three homebuilders generating a pop for D.R. Horton, Meritage , and Ryland.
This was the first time analyst Nishu Sood upgraded a homebuilder in four years and we spoke with him on the Halftime Report.
Housing has been falling for 5 years, he explains. It’s been an issue of tail risk; home price declines, foreclosures and excess inventory. We’re saying in our upgrade housing is ready to recover because those issues have stabilized. They’re not getting better but they’re not getting worse.
Hear more from Nishu Sood and why Steve Cortes compares the housing trade to a dog with fleas. Watch the video now.
TRADE TO GO
Goldman Sachs lowered its year-end forecast for the S&P to 1,200 from 1,250 and reduced its 2011 earnings projection, citing weakening economic forecasts.
How should you trade?
Play defense, says Patty Edwards. I think the trade is long Philip Morris.
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Trader disclosure: On Aug 9, 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 owns (HPQ) call spread; Pete Najarian owns (RIMM) call spread; Pete Najarian owns (GS) calls; Pete Najarian owns (V) call spread; Cortes owns (CIB); Cortes owns (FCX); Cortes owns (OAS); Cortes owns (QQQQ); Cortes is short US Treasuries; Cortes is short the Japanese Yen
For Patty Edwards
Edwards owns (SPY) for clients
Edwards owns (QQQQ) for clients
Edwards owns (HPQ) for clients
Edwards owns (QCOM) for clients
Edwards owns (AAPL) for clients
Edwards owns (VZ) for clients
Edwards owns (C) for clients
Edwards owns (BAC) for clients
Edwards owns (MCD) for clients
For Eric Jackson
Ironfire Capital is long (MSFT)
For Nishu Sood
(DHI), (RYL) are investment banking clients of Deutsche Bank
(DHI) has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services
Deutsche Bank has received non-investment banking related compensation from (MTH), (RYL) within the past year.
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