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Halftime: The ‘Other’ Big Drag On The Market

Tuesday, 18 Jan 2011 | 1:25 PM ET

Chances are you’re watching Apple stock Tuesday, which dragged down the market after the company said Steve Jobs is taking his third medical leave since 2004.

But the Fast gang suggests also watching another area of the market entirely - the financials.

Bank stocks were the other big drag on markets after Citidisappointed the Street with earning that were far weaker than expected. The results triggered worries that the problems vexing banks were far from over.

Perhaps most troublesome, Citi's fixed-income revenue alone dropped 58 percent from the third quarter.

Meanwhile, in what some would consider a contrarian move, widely followed bank analyst Meredith Whitney upgraded JPMorgan to ‘Buy' according to published reports, reminds trader Brian Kelly.

As you may know, weakness in banks has turned out to be a buying opportunity over the past several weeks.

Should you hold your nose and buy? Or are troubles about to surface as more banks report their earnings?

Instant Insights with the Fast Money traders

Brian Kelly does not think Citi results are a ‘market tell.’ “I’m positive on banks,” he says. “I’m not sure there’s a read thru from Citi to the other banks. I don’t think Goldman and Morgan did as poorly as Citi.”

Stocks Slip on Steve Jobs
Discussing whether you should buy or sell Apple on news that Steve Jobs is taking a medical leave of absence, with Shaw Wu, Kaufman Brothers.

Joe Terranova thinks the price action in Citi presents a material change. “The upside momentum has come to a halt,” he says. If you’ve been ‘Overweight’ Terranova thinks its time to trim back but adds “I would hold a core long position.”

Jon Najarian thinks there are better places to put money to work than Citi. If you want to play the space, like Meredith Whitney, he’s bullish JPMorgan. “That’s where I’d be looking right now,” he says. And he cautions investors to not extrapolate Citi results as a 'tell' for Bank of America.”

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APPLE DRAGD DOWN MARKET

As mentioned above, on Tuesday investors were closely watching the action in Apple stock after the company said Steve Jobs is taking his third medical leave since 2004, reviving concerns about the future of the company.

To make matters all the more precarious, Apple, has about a 21 percent weighting on the Nasdaq 100.

Ontop of that, the company reports earnings after the bell.

Are investors willing to overlock the rock star status of Steve Jobs and his importance to the company?

What must you know? What's the trade?


Patty Edwards is a buyer. "The last time Steve Jobs announced a 6 month medical leave and that was in January 2009; since that time Apple stock saw about a 50% gain, reminds Edwards. What strikes me is that there was no information about when Steve Jobs was coming back, she adds, but I still think weakness is a buying opportunity." (When exactly does Patty think you should get in? (Click here to go to "Pay Close Attention For Apple's Next Entry Point")

Brian Kelly also sounds bullish. "Because the tablet computer is just starting it’s cycle, I think we’re looking at a huge growth cycle in the iPad, says Brian Kelly. It’s something Steve Jobs started but it’s also something the company can complete without him."

Kaufman analyst Shaw Wu has a $415 price target on the stock. "Steve Jobs has created a way of thinking and a philosophy," he says. "We believe they have the core ingredients in place to continue the success that they’ve enjoyed. In case you're wondering Shaw has a $415 price target on the stock."

Check out our entire conversation with Shaw Wu in the video above!

Joe Terranova is much more focussed on earnings. "I think the catalyst that moves Apple in the short-term is earnings," he says. "And they have the potential of being phenomenal. But I wouldn’t chase strength. However, I do think Apple is a buy on a pullback."



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Trader disclosure: On Jan. 18, 2011, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova Owns (GLD) Puts. Joe Terranova Owns (FCX) Puts. Joe Terranova Owns (UPL). Joe Terranova Owns (VRTS). Joe Terranova Owns (PVH). Joe Terranova Owns (GM). Joe Terranova Owns (CVI). Joe Terranova Owns (CNQ). Joe Terranova Owns (LTD). Joe Terranova Owns (C). Joe Terranova Owns (PEP). Jon Najarian owns (BA), is short (BA) calls. Jon Najarian owns (DE), is short (DE) calls. Jon Najarian owns (GM), is short (GM) calls. Jon Najarian owns (F), is short (F) calls. Jon Najarian owns (CBOE), is short (CBOE) calls. Jon Najarian owns (CME), is short (CME) calls. Jon Najarian owns (GS), is short (GS) calls. Jon Najarian owns (JPM), is short (JPM) calls. Jon Najarian owns (MCD), is short (MCD) calls. Jon Najarian owns (WMT), is short (WMT) calls. Jon Najarian owns (RIMM), is short (RIMM) calls.

JOE TERRANOVA
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)

PATTY EDWARDS
Edwards owns (SPY) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (PGM) for clients
Edwards owns (BA) for clients
Edwards owns (AMZN) for clients
Edwards owns (F) for clients
Edwards owns (V) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (GOOG) for clients
Edwards owns (VZ) for clients
Edwards owns (MSFT) for clients
Edwards owns (RIMM) for clients
Edwards owns (GS) for clients
Edwards owns (C) for clients
Edwards owns (GE) for clients
Edwards owns (MCD) for clients
Edwards owns (ALK) for clients
Edwards owns (TGT) for clients

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (TAN)
Accounts Managed By Kanundrum Capital Own (IPI)
Accounts Managed By Kanundrum Capital Own (ANDE)
Accounts Managed By Kanundrum Capital Own (RKH)
Accounts Managed By Kanundrum Capital Own (YGE)
Accounts Managed By Kanundrum Capital Own (XLE)
Accounts Managed By Kanundrum Capital Own (MS)
Accounts Managed By Kanundrum Capital Own (LVS)
Accounts Managed By Kanundrum Capital Own (MON)
Accounts Managed By Kanundrum Capital Own (QLGC)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Are Long USD
Accounts Managed By Kanundrum Capital Are Short The Euro
Accounts Managed By Kanundrum Capital Are Short The Yen

SHAW WU
Kaufman Brothers is a market maker in (AAPL)
Kaufman Brothers is a market maker in (GOOG)

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CNBC.com with wires.

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