GO
Loading...

Market Pro: Add to Bank Strength, Don’t Sell News

Friday, 18 Mar 2011 | 1:51 PM ET

The S&P climbed on Friday with jittery investors growing somewhat calmer after the Group of Seven nations moved to restrain the soaring yen.

Meanwhile, the Fast Money traders were closely watching the action in financials after the Fed cleared the way for some banks to resume dividend payments.

Since February 2009, the nation’s 19 largest banks had been under a mandate to suspend or sharply reduce their dividends; instead banks were required to build larger cash cushions.

However, after a series of stress tests, the Fed has freed some of the 19 banks from that restriction. Although the Fed will not disclose individual stress test results, JPMorgan, Wells Fargo, USB and BB&T all restored or increased their dividends on the news.

Is now the time to buy financials? Or is this a sell the news event?

Instant Insights with the Fast Money traders

If you're instinct is to sell the news, Fast Money trader Joe Terranova thinks you've got it all wrong. "Don’t sell the news, add to strength," he says. He thinks these restored dividends are a sign that management has a great deal of confidence in their business going forward.

"Now that they've hiked, they’re never going to be able to pull them back," he says. "And as normalized earnings grow I think we see dividends increase even more.”

Jon Najarian shares Terranova’s bullish outlook. With JPMorgan, Wells and other banks down sharply over the last month, he thinks the sector plays a game of catch-up. Also Najarian has spotted strong call buying in the XLF which he interprets as a sign that banks have more room to run.

Steve Grasso thinks a bullish outlook makes sense. He explains that investors had avoided bank because "nobody was sure what future reform and regulation would look like. But with the dividends restored, now investors are paid to wait,” he says.

Patty Edwards isn’t as enthusiastic. If you must play the space she suggests looking at banks that have issued buybacks. (In addition to the dividend, JPMorgan announced a $15 billion share buyback.) However she still thinks the better trade is Canada-based banks that don’t have the same exposure to the US mortagage mess. “I’d look at Bank of Montreal,” she says.

"And keep in mind," says host Melissa Lee, "Bank of America has said it won't pay a dividend until the second half of 2011 and Citi says not until 2012."

--------

CRITICAL LEVELS

As we mentioned above, the S&P traded higher on Friday after Libya announced a ceasefire and agreed to halt military action against rebels after a U.N. resolution.

Also, a rare intervention by the world's biggest economies slowed the rapid rise in the yen, something considered damaging to Japan’s economy.

What levels should you be watching now?

Steve Grasso thinks the range to watch is 1281 – 1300 with 1288 a key mid-range level. “I think we go lower and test 1249 but not on Friday ahead of the week-end with shorts covering,” he says.

--------

TICK BY TICK: OIL

Crude moved ower Friday after Libya declared a ceasefire and Bahrain arrested opposition leaders.

What's the energy trade?

Joe Terranova remains bullish energy equities. If you're looking for a name, "Consol Energy gets you both nat gas and coal," he says.

Jon Najarian is focussed on coal stocks such JRCC, BTU . Considering the strong run he says, "it never hurts to take profits but don’t fade the moves." And he reminds a derivative play is the rails.

--------

TICK BY TICK: GOLD

Gold landed on the trader radar after Goldman Sachs reiterated a bullish call; the firm expects the precious metal; to rise more than $60 per ounce in the next three months to $1480.

Goldman has a six-month gold view of $1,565 an ounce, and a 12-month forecast at $1,690 an ounce

What’s the trade?

Joe Terranova is squarely on board: “I’d stay with gold as well as silver,” he says.

Patty Edwards is skeptical. With currencies in flux she admits she’s holding gold but “ I don’t know that I’d buy at current levels.”

--------

YEN FALLS AFTER G-7 COORDINATED INTERVENTION

As we mentioned above, The yen dropped broadly on Friday after G7 finance ministers joined Japan's efforts to weaken the currency.

How should you position, now?

Money in Motion trader Todd Gordon’s got the trade. Get all the details. 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 Mar. 18, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova Owns (VRTS), (C), (GS), (PNC), (USB), (JPM), (UPL), (CREE), (MS), (PBR), (BAX), (TEVA), (IBM), (BTU), (CNX), (POT), (FCX), (XOM), (DIS), (MCD), (CVE), (CVI), (CNQ), (RSX) and (SU). Steve Grasso Owns (ASTM), (BA), (BAC), (C), (CSCO), (D), (JPM), (LIT), (LPX), (MHY), (NDAQ), (PFE), (PRST) and (S). Jon Najarian Owns (AAPL), Is Short (AAPL) Calls. Jon Najarian Owns (BRK.B), Is Short (BRK.B) Calls. Jon Najarian Owns (CBOE), Is Short (CBOE) Calls. Jon Najarian Owns (CNW), Is Short (CNW) Calls. Jon Najarian Owns (CNX), Is Short (CNX) Calls. Jon Najarian Owns (BTU), Is Short (BTU) Calls. Jon Najarian Owns (JRCC), Is Short (JRCC) Calls. Jon Najarian Owns (CME), Is Short (CME) Calls. Jon Najarian Owns (NYX), Is Short (NYX) Calls. Jon Najarian Owns (FCX), Is Short (FCX) Calls. Jon Najarian Owns (HPQ), Is Short (HPQ) Calls. Jon Najarian Owns (KWK), Is Short (KWK) Calls. Jon Najarian Owns (NKE), Is Short (NKE) Calls. Jon Najarian Owns (CHS), Is Short (CHS) Calls. Jon Najarian Owns (MTW), Is Short (MTW) Calls. Jon Najarian Owns (WNR), Is Short (WNR) Calls. Jon Najarian Owns (PAAS), Is Short (PAAS) Calls. Jon Najarian Owns (SLV), Is Short (SLV) Calls. Jon Najarian Owns (HK), Is Short (HK) Calls. Jon Najarian Owns (CSTR), Is Short (CSTR) Calls. Jon Najarian Owns (CRM), Is Short (CRM) Calls.

Comcast Is The Parent Company Of CNBC
Comcast Is The Parent Company Of NBCUniversal
GE Owns 49% Of NBCUniversal
GE Owns 49% Of CNBC

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 (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 (XLF)
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 (DOM)

STEVE GRASSO
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 (GE)
Stuart Frankel & Co. And Its Partners Own (GERN)
Stuart Frankel & Co. And Its Partners Own (HPQ)
Stuart Frankel & Co. And Its Partners Own (HSPO)
Stuart Frankel & Co. And Its Partners Own (MSFT)
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 Own (UAL)
Stuart Frankel & Co. And Its Partners Own (XRX)
Stuart Frankel & Co. And Its Partners Are Short (QQQQ)
Stuart Frankel & Co. And Its Partners Are Short (AAPL)

PATTY EDWARDS
Edwards Owns (SPY) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (GLD) For Clients
Edwards Owns (BMO) For Clients
Edwards Owns (NKE) For Clients
Edwards Owns (ES) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (MSFT) For Clients

CNBC.com with wires.

  Price   Change %Change
S&P 500
---
BAC
---
BBT
---
BMO
---
BTU
---
C
---
CNX
---
JPM MLP ETN
---
JRCC
---
USB
---
WFC
---
SPDR FIN SEL
---

Featured

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET
  • Scott Wapner is host of the "Fast Money Halftime Report," which airs weekdays from 12 p.m. to 1 p.m. ET.