Fast Money: Halftime Report
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Pro Traders: Cotton Surge Is Short Squeeze; Reversal Likely
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The S&P [.SPX
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] traded in positive territory Thursday with bulls driving the market despite a slew of new signs that suggest the price of almost everything would be creeping higher.
From copper and oil to the sky high softs, inflation fears have thrust all commodities into the spotlight with investors wondering what can be passed along; what can't; and which gains are not sustainable?
What must you know? How should you position now?
Instant Insights with the Fast Money traders
Rich Ilczyszyn, Lind-Waldock Senior Market Strategist is looking at cotton [CTCV1
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()] which hit limit up and topped $2 for the first time ever in New York trading. But unlike the stock market, he thinks this rally is out of gas.
"The scuttlebutt on the floor is that the move in cotton is a big short squeeze. A big short position has to get out,” he says. “If you’re long cotton it’s time to get out. When it turns around it will be wicked to the down side.”
And he adds that chatter on the floor suggests that the next short squeeze could be in silver [SICV1
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()]. However if you’re a trader it’s not too late to play it. “At $30 silver may get a short squeeze into the expiration of the market contract. If silver breaks out I’d go long up to $35,” he says.
If trading the next move in cotton or silver is a little too treacherous for your tastes, Guy Adami still thinks there's opportunity for you. He suggests stepping back and looking at the theme. And that theme is “commodities across the board are on fire,” he says. "Every pullback has been an opportunity. My favorite way to play the space is with Deere [DE
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()].
Jon Najarian agrees. ”Deere is in the center of all of it,” he says. "Even if farmers convert from one crop to another, Deere still wins."
Stephen Weiss of Short Hills Capital is also on board. “Populations around the world are growing and more people are eating better.” But rather than going long Deere he likes to play the theme with fertilizer names.
“DuPont [DD
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()] is my way to play ag,” says trader Steve Grasso. “It’s a diversified play. With so much volatility in the space, you can’t get too beat up there.” He also thinks you can play it long Abercrombie [ANF
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()], a premium brand that can just scale back on the amount of cotton in their shirts.
Jon Najarian is also bullish on retailers, despite the rising cost of cotton. The latest 13F filings show “the smart money is buying into retailers on the belief they can pass along price increases. I wouldn’t run for the hills. Also there’s not as much cotton in some apparel as you might think,” he says.
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UNUSUAL ACTIVITY – NABORS
Jon Najarian has spotted unusual options action in Nabors [NBR
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()].
He says strong call activity suggests this stock could make a sharp move higher.
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Trader disclosure: On Feb. 17, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Guy Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE) and (BTU). Stephen Weiss Owns (AAPL), (CSCO), (MSFT), (HBAN), (JPM), (FAS), (DVN), (COP), (HK), (TXN), (QCOM), (SMCI), (SWC), (BTU), (MEE), (CNX), (AGU) and (IPI). Jon Najarian Owns (AKAM), Is Short (AKAM) Calls. Jon Najarian Owns (AMD), Is Short (AMD) Calls. Jon Najarian Owns (ANF), Is Short (ANF) Calls. Jon Najarian Owns (CSTR), Is Short (CSTR) Calls. Jon Najarian Owns (JNPR), Is Short (JNPR) Calls. Jon Najarian Owns (JOYG), Is Short (JOYG) Calls. Jon Najarian Owns (RAX), Is Short (RAX) Calls. Jon Najarian Owns (X), Is Short (X) Calls. Jon Najarian Owns (WMB), Is Short (WMT) Calls. Jon Najarian Owns (APA), Is Short (APA) Calls. Jon Najarian Owns (CLF), Is Short (CLF) Calls. Jon Najarian Owns (NBR), Is Short (NBR) Calls. Jon Najarian Owns (NVDA), Is Short (NVDA) Calls. Steve Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MT), (MHY), (NDAQ), (PFE), (PRST) and (S).
Comcast is the parent company of CNBC
Comcast is the parent company of NBCUniversal
GE owns 49% of NBCUniversal
GE owns 49% of CNBC
GUY ADAMI
Adami's wife works for (MRK)
STEVE GRASSO
Stuart Frankel & Co. And Its Partners Own (ABX)
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 (MSFT)
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)
RICH ILCZYSZYN
***NO DISCLOSURES
TONI SACCONAGHI
Sacconaghi Owns (STX)
An Employee Of bernstein Owns (AAPL)
Accounts Over Which Bernstein And/Or Affiliates Exercise Investment Discretion Own More Than 1% Of (AAPL)
Bernstein Is Market Maker In (AAPL)
Bernstein Or Affiliate Expects To Recieve/Seek Investment Banking Compensation From (AAPL) In Next 3 Months
CNBC.com with wires.
Data is a real-time snapshot *Data is delayed at least 15 minutes
