GO
Loading...

Market Pros: Best September In A Generation?

Investors were chattering about the sharp move higher in stocks this September and what to make of weakness on Monday. Should you position for further gains?

As of September 27th, the S&P 500 was up more than 9 percent since the start of the month. The benchmark has posted monthly gains of more than 9 percent only twice since the start of 1992.

However, on Monday both the Dow and S&P traded lower despite a flurry of M&A valued at $10.5 billion.

How should you position now?

Instant Insights with the Fast Money traders

I think Monday's close lower is just the market making a much needed correction, says Joe Terranova. Considering the significant appreciation we’ve seen this month that should be expected. I'm remain bullish.

As long as the S&P stays above 1135 I also think the rally remains in tact, says Guy Adami. However banks aren't performing well - that’s a cause for concern.

It’s really quite surprising all the M&A on Monday didn’t lift the market, muses Pete Najarian on the Halftime Report. But that may be because of the explosive move higher we had on Friday.

Of course, there's no denying that gold is higher on Monday and that might be a concern. If you’re establishing long positions here, I’d also buy puts for protection.

Other than the tremendous amount of M&A, there’s really nothing going on in the market, adds Steve Grasso. And it seems the market is getting immune to M&A. My clients are saying they don’t see any real reason for the S&P to break above 1150.

Perhaps the headwinds are due to the move out of Moody’s which cut its rating on Anglo Irish Bank Corp.’s debt to one level above junk, adds host Melissa Lee.

“Anglo Irish.. took the wind out of European market sales,” adds Peter Boockvar, equity strategist at Miller Tabak and Fast Money friend in a Bloomberg interview. "That’s one of the catalysts. European bond markets, particularly Ireland and Portugal, are not trading that great.”

--------

Looking at some of the largest deals Monday – how should you trade?

--------

UNILEVER BIDS FOR ALBERTO CULVER

On Monday Unilever announced plans to buy U.S. hair care group Alberto Culver for $3.7 billion or $37.50 a share, a19% premium to Friday close.

What’s the trade?

This deal is interesting because it boosts Unilever’s presence in North America, says Zach Karabell of RiverTwice on the Halftime Report. We’re seeing a retail staple company going after global growth. It’s an inherently low margin business in a world where margins are under pressure and they have to make it up with volume. That’s indicative of where growth and where activity is.

I find it interesting because this is a European company believing in the US, muses Anthony Scaramucci.
I’d go downstream and play the space longChurch & Dwight, says Guy Adami.

I like Estee Lauder, adds Brian Kelly.

--------

WALMART BIDS FOR MASSMART

Walmart made a bid to buy Massmart, South Africa's third-largest retailer for more than $4 billion.

What must you know?

Sub-Saharan Africa is growing at 5.6% while the industrialized world is growing at 2.5%, says Anthony Scarmaucci.

I like the move long-term but in the near term I don’t expect it to do anything for the share price, says Joe Terranova. Seems like a smart use of money.

If the deal goes through it makes me more positive on Walmart for the long-term, says Brian Kelly. That’s a foot in the door in Africa. But it’s a longer term play, he adds. I’m thinking 5 years.

I’m seeing clients buy Walmart right now, counters Steve Grasso. They’re looking for the stock to go to $55 - $56.


----------

SOUTHWEST BIDS FOR AIRTRAN

Southwest Airlines said it inked a deal to acquire AirTran for $1.04 billion in cash and stock a 69% premium over AirTran’s Friday's closing price.

What’s the trade?

I think this acquisition is very bullish, says Anthony Scaramucci. It’s a bet on commerce, travel and growth.

It may force consolidation, explains host Melissa Lee. Delta traded lower on the news perhaps because investors believe they have to make a move, now.

The deal lifted shares of low-cost rivals JetBlue , Alaska Airlines and Republic Airways adds Pete Najarian. It’s a sign that investors are betting on more consolidation in the space.

I’m seeing some unusual options action but in other names, he reveals, specifically AMR and US Airways. However I think these are investors that already long selling upside calls in an attempt to create some kind of dividend stream.

----------

RIM INTRODUCES NEW TABLET

Shares of RIM popped in extended trade after the BlackBerry maker introduced its new 7-inch tablet called the Playbook at its annual developer conference. According to CNBC’s John Fortt, the device won’t go on sale until early next year, missing the important holiday season.

What’s the trade?

The fact that it’s going to be launched in 2011 may suggest the gadget is geared toward enterprise users, speculates Joe Terranova. I think the anticipation puts a floor in the stock around $40-$45, he adds. I’m a buyer. However if shares climb up to $60 I’d take profits.

Colin Gillis has a $38 price target on this stock, reminds Guy Adami. If this is the best RIM can do I’d be a seller.

Read More:

RIM Unveils 'PlayBook' Device In Challenge to Apple's iPad


----------

EAR TO THE WALL: REGIONAL BANK TAKEOVER BOOM?

Are the regional banks in for more M&A? The largest number of bank failures in almost 20 years as well as tougher capital requirements has market watchers looking at a new wave of bank mergers.

What’s the trade?

Credit Suisse put out a note suggesting Canadian banks, Spanish banks and some of the super-regionals may be looking at making acquisitions, notes Fast Money host Melissa Lee.

Basell III rules will likely make it tougher for regionals to compete, says Brian Kelly so it makes sense that we see a merger mania in this space.

There’s been weakness in the space broadly, reminds Guy Adami, That’s a cause for concern.

In the near term the outlook for banks is poor but in the long term I find it bullish, says Anthony Scarmaucci. We're back in a cycle of conservative lending, raising capital and prudent growth. I think we see big capital allocators move back into financials aggressively but it's an 18 to 24 month trade.

----------

ANALYZE THIS: SILVER AT 30-YEAR HIGH

In the commodities space, gold hit a record high at $1300 earlier Monday however the traders were also closely watching the action in silver , which surged to 30 year highs.

What’s the trade?


Find out from strategic investor Dennis Gartman. Watch the video now!






______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our Web site send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On Sept. 27th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Terranova Owns (APA), (AAPL), (ARUN), (BMO), (C), (IBM), (HES), (JOYG), (XBI), (FTO), (OXY), (ORCL), (PEP), (POT), (RSH), (SU), (RIG), (UPL), (VRTS); Weiss owns (BAC), (MOS), (CSX), (HK), (TXN), (WFR), (QCOM); Weiss is short (SF); Pete Najarian owns (NETL) call spreads; Pete Najarian owns (POT) call spreads; Pete Najarian owns (CNI); Pete Najarian owns (AMZN) call spreads; Pete Najarian owns (AKAM) call spreads; Pete Najarian owns (RAX) call spreads; Pete Najarian owns (LLNW) call spreads; Pete Najarian owns (DD); Pete Najarian owns (NOV); Pete Najarian owns (YHOO); Karabell owns (POT), (RIMM), (AAPL); Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST)

For Anthony Scaramucci
Scaramucci and Skybridge Capital own (AAPL)
Scaramucci and Skybridge Capital own (C)
Scaramucci and Skybridge Capital own (JPM)
Scaramucci and Skybridge Capital own (PG)
Scaramucci and Skybridge Capital own (WMT)

For Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (ATI)
Accounts managed by Kanundrum Capital own (TIE)
Accounts managed by Kanundrum Capital own (PCL)
Accounts managed by Kanundrum Capital own (LPX)
Accounts managed by Kanundrum Capital own (RAX)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (GPRE)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital are short (XLF)
Accounts managed by Kanundrum Capital are short (IAI)
Accounts managed by Kanundrum Capital are short (FDX)
Accounts managed by Kanundrum Capital are short (BCS)
Accounts managed by Kanundrum Capital are short (HYG)

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DLUEY)
Virtus Investment Partners own more than 1% of (DRYS)

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (AMGN)
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 (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
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 (TLM)
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)

For Zach Karabell
Funds managed by River Twice Capital own (POT)


For Dennis Gartman
Funds managed by Gartman own Gold

For Richard Volpe
***No Disclosures***

For Doug Freedman
Freedman owns (HPQ)
Freedman owns (QCOM)
Freedman owns (AAPL)

For Mike Khouw
Cantor Fitzgerald makes a market in (COCO)



CNBC.com and wires

Symbol
Price
 
Change
%Change
DJIA
---
S&P 500
---
AA
---
ALK
---
AAL
---
CHD
---
DAL
---
EL
---
JBLU
---
KRE
---
USG1
---
LUV
---
RJET
---
ULVR
---
WMT
---
DV
---
STRA
---
APOL
---
BB
---
UNA
---

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET

Halftime Report