GO
Loading...

Halftime: Chip Trade on Fire Despite Quiet Market

Upward momentum in the S&P appeared to be dwindling on Monday with investors reluctant to chase a rally that carried stocks to 2 1/2-year highs.

However, CNBC’s Fast Money traders are much more interested in what’s working and as far as they’re concerned that’s semiconductors.

The chip trade was on fire Monday with gains stoked by rumors of a takeout. Again, published reports suggestAMD may be ready for a takeover and HP might be interested.

Adding to the bullish tailwinds, Lazard upgraded Micron to Buy from Neutral and Morgan Stanley said shipments of tablet computers could skyrocket over the next few years.

What should you make of the action? How should you position, now?

Instant Insights with the Fast Money traders

Fast trader Steve Grasso is bullish AMD. “I still see it as a great pick,” he says, "it took some on the chin but I think it goes higher from here.”

Pete Najarian sees enthusiasm for AMD as well as Micron and MIPS in the options world. And he says it makes sense. “Morgan Stanley is talking about 100 million tablets selling in 2012.” In other words if the tablet market is going to explode chip makers should benefit. (In case you're wondering Morgan Stanley believesARM Holdings and SanDisk benefit most from the trend.)

Trader Steve Cortes tells the desk his favorite way to play the space is long Qualcomm . “It’s a great play on chips and mobile phone and a way to play Apple,” he says. “That’s the name I’d focus on.”

Although trader Zach Karabell admits that he likes both Qualcomm and Broadcom , he also thinks caution is warranted. “It seems like investors can throw a dart at any derivative of tablets and those names are going up.” Although he's bullish on the fundamental he also feels there’s a momentum trade going on that has the potential to reverse.

“I’m a little worried that everybody is getting out the pom-poms. I’m long a lot of these names but short the SMH as a hedge. Many of these names have run far and fast,” Karabell says.

----------

CALL OF THE DAY : NETFLIX GOING TO $316


With Netflix making new record highs, Caris & Co increased its price target on the company to $316 from $224, saying growing revenues will offset increasing costs of goods.

What’s the trade?

I’m not sure about the price target but I do think the analyst has the direction right, says Pete Najarian.

I agree that the stock is overhated, says Steve Cortes. But I prefer a derivative play – long Akamai. They provide the backbone of streaming. If it can get above $42 I’d go long.

In this space I’d watch Riverbed, adds Najarian. I’m seeing active interest in the June 45 calls.

----------

TOPPING THE TAPE: COMMODITIES

The desk was also watching the action in commodities with silver, copper and platinum all among the best performers of the day.

What’s the take away?

I think it shows just how robust demand is from China, says Zach Karabell.


______________________________________________________
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 Feb. 14, 2011, 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 (F) bonds and calls. Pete Najarian owns (GM). Pete Najarian owns (V) call spreads. Pete Najarian owns (YHOO) and (YHOO) calls. Pete Najarian owns (MS). Pete Najarian owns (JPM) call spreads. Pete Najarian owns (C). Pete Najarian owns (BAC) call spreads. Pete Najarian owns (GE). Pete Najarian owns (MU). Pete Najarian owns (AKAM). Pete Najarian owns (PEP). Pete Najarian owns (TCK). Pete Najarian owns (CLF). Pete Najarian owns (CNI). Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MT), (MHY), (NDAQ), (PFE), (PRST) and (S). Zachary Karabell owns (C), (RIMM), (FCX), (FXI), (GE), (AOL), (AAPL) and (GOOG). Steve Cortes owns (CLX), (SWY), (SVU), (K) and (CME). Steve Cortes owns German Bonds. Steve Cortes is short (LVS). Steve Cortes is short (CBOE). Steve Cortes is short (XLE) vs. S&P. Steve Cortes is short British Pound. Steve Cortes is short Australian Dollar.

Comcast is the parent company of NBCUniversal
GE owns 49% of NBCUniversal
GE owns 49% of CNBC

STEVE GRASSO
Stuart Frankel & Co and its partners own (ABX)
Stuart Frankel & Co and its partners own (ABT)
Stuart Frankel & Co and its partners own (AMGN)
Stuart Frankel & Co and its partners own (CSCO)
Stuart Frankel & Co and its partners own (CUBA)
Stuart Frankel & Co and its partners own (GERN)
Stuart Frankel & Co and its partners own (HSPO)
Stuart Frankel & Co and its partners own (NWS.A)
Stuart Frankel & Co and its partners own (NYX)
Stuart Frankel & Co and its partners own (PFE)
Stuart Frankel & Co and its partners own (PRST)
Stuart Frankel & Co and its partners own (SDS)
Stuart Frankel & Co and its partners own (XRX)
Stuart Frankel & Co and its partners own (SDS)
Stuart Frankel & Co and its partners are short (QQQQ)
Stuart Frankel & Co and its partners are short (AAPL)
Stuart Frankel & Co and its partners are short (TIF)

ZACHARY KARABELL
River Twice Capital and Karabell own (CSCO)
River Twice Capital and Karabell own (IBM)
River Twice Capital and Karabell own (GS)
River Twice Capital and Karabell own (BRCM)
River Twice Capital owns (MSFT)
River Twice Capital owns (QCOM)
River Twice Capital is short (SPY)
River Twice Capital is short (XLF)
River Twice Capital is short (XLI)
River Twice Capital is short (AA)
River Twice Capital is short (S)
River Twice Capital is short (SMH)
River Twice Capital is short (MA)

CHARLES GROM
J.P. Morgan Was Lead Or Co-Manager In Public Offering Of Equity And/Or Debt Securities For (WMT) In Past 12 Months
(WMT) Is Or In Past 12 Mos. Was A Client Of J.P. Morgan (Investment Banking Services, Non-Investment Banking Securities-Related Service, Non-Securities-Related Services)
J.P. Morgan Received Investment Banking Compensation From (WMT) In Past 12 Months
J.P. Morgan Expects To Receive/Seek Investment Banking Compensation From (WMT) In Next 3 Months
JPMS And Affiliate Have Received Non-Investment Banking Comepnsation From (WMT) In Past 12 Months

CNBC.com with wires.

Symbol
Price
 
Change
%Change
S&P 500
---
AKAM
---
AMD
---
ARM
---
BRCM
---
HPQ
---
MTC
---
MU
---
NFLX
---
QCOM
---
RVBD
---
SNDK
---
AAPL
---
MV SEMI
---

Contact Halftime Report

  • Showtimes

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