On Monday, Street chatter had everything to do with the market’s next big move and whether investors would remain cautious into the earnings season, which doesn’t start for another week.
The biggest catalyst this week will likely be comments made by Fed Chief Ben Bernanke at a scheduled conference in Atlanta on Monday night.
From the floor of the NYSE trader Steve Grasso says, "The market is loaded with Fed-speak. Guys are looking toward the Chairman." Fed hawks have grabbed the spotlight lately, giving rise to speculation that Bernanke may soon change his dovish tone.
With the market already nervous ahead of earnings, will comments from Ben Bernanke drag down the rally?
Instant Insights with the Fast Money traders
According to top hedge fund Anthony Scaramucci, Ben Bernanke's comments will probably be market positive. "If you look at the macro-economic factors, the macro-landscape is improving," he says, "and I think the Chairman is going to say that tonight."
Scaramucci also think Bernanke will quell market fears about inflation. "My guess is that this will be bullish jaw-boning by the Chairman."
But even if Bernanke's comments are bullish, will they be bullish enough.
Looking at the technicals, the S&P 500 met tough resistance near 1,333, a level it has been unable to close above since mid-February. That level is double the 12-year low hit in March 2009 and is not far from 1,344, the S&P's 2011 high and its highest since June 2008.
Oppenheimer’s Carter Worth suggests a positive catalyst (such as bullish comments from Bernanke) could drive stocks above resistance. He explains that, “when a big steep advance gives way to a sharp sell-off, the reference point is the top from which we sold off.”
And he goes on to explain that the Russell, the S&P mid-cap index and the S&P small cap index have all recovered the ground lost in the sell off. “The presumption is that the S&P 500 will do the same. The Feb 18th high was 1344 and I think we recapture that level and go as high as 1360,” he says.
But that doesn’t mean it's all smooth sailing. Scaramucci concedes that the market feels a little toppy and he's expecting a modest pullback. “We’re probably going to see a 1-3 point correction in the near-term.” However, he adds the macro-economic landscape appears to be improving. In other words he expects the market to go higher, but not in a straight line.
If we get a pullback it may have everything to do with the recent gains in energy . Trader Steve Grasso tells the desk his clients are inclined to go short energy. However they’re not putting those trades on yet because there's still too much geo-political risk. And technicals don’t favor a move lower either. “There’s no technical resistance in the XLE until 91,” he says.
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UNSUAL ACTIVITY: WEATHERFORD
Looking at the energy trade more closely, trader Pete Najarian has spotted unusual options action in Weatherford .
Despite strong gains in the oil services names already, Najarian says the large volume of Weatherford Apr. 24 calls and National-Oilwell Varco 90 calls suggests the sector could go even higher.
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MARKET BUZZKILL: SOUTHWEST
Both Southwest and Boeing traded lower on Monday after the airline canceled 70 flights as it continued to inspect Boeing 737 planes following the emergency landing on Friday of a jet with a hole in its fuselage.
What’s the trade?
Although recent events are troublesome, Pete Najarian thinks the airlines are probably facing a bigger threat from oil’s march higher.
Steve Grasso adds that his clients are not active in this sector. “There’s too much unknown. Not only oil prices but also union issues,” he says.
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TOPPING THE TAPE: PFIZER
The traders are watching the action in Pfizer, after drugmaker said it agreed to sell its Capsugel business to Kohlberg Kravis Roberts & Co. for $2.38 billion in cash.
What’s the trade?
I still like Pfizer here, says Anthony Scaramucci. If you watch Fast Money regularly you may remember that Pfizer was featured as a Hedge Fund Trade Of The Week. Click here to get all the details.
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TECH FALLS DESPITE GOOD NEWS
The traders are keeping a close eye on tech which was among the worst performing sectors despite a report in Barron’s which suggested that Apple’s market cap could conceivably exceed that of ExxonMobil.
What’s the trade?
Zach Karabell thinks the weakness is largely due to uncertainty in the chip stocks as investors digest the latest news from Japan. Although he calls the nervousness legitimate he also says “pull backs are opportunities.”
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Trader disclosure: On April 4, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian owns (PFE); Najarian owns (TCK); Najarian owns (AAPL); Najarian owns (AKAM); Najarian owns (C); Najarian owns (HK); Najarian owns (HPQ); Najarian owns (TEVA); Najarian owns (MS); Najarian owns (RSX); Najarian is long (F) bonds; Najarian is long (RIMM) calls; Najarian is long (AVL) calls; Najarian is long (CNX) calls; Najarian is long (DLTR) calls; Najarian is long (EWZ) calls; Najarian is long (HUN) calls; Najarian is long (ICO) calls; Najarian is long (MYL) calls; Najarian is long (NTAP) calls; Najarian is long (XLF) calls; Najarian is long (PMCS) calls; Najarian is long (BIG) calls; Grasso owns (AMD); Grasso owns (ASTM); Grasso owns (BA); Grasso owns (BAC); Grasso owns (C); Grasso owns (CPX); Grasso owns (CSCO); Grasso owns (D); Grasso owns (JPM); Grasso owns (LIT); Grasso owns (LPX); Grasso owns (MHY); Grasso owns (NDAQ); Grasso owns (PFE); Grasso owns (PRST); Karabell owns (RIMM); Karabell owns (GOOG); Karabell owns (MON); Karabell owns (GS); Karabell owns (AAPL); Najarian owns (TCK)
Karabell and River Twice Capital own (BRCM); Karabell owns (BIDU)
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Stuart Frankel & Co. and its partners own (CUBA)
Stuart Frankel & Co. and its partners own (CSCO)
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 (UAL)
Stuart Frankel & Co. and its partners own (XRX)
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River Twice Capital is short (RIMM) puts
River Twice Capital owns (SBUX)
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River Twice Capital is short (CLC)
River Twice Capital is short (QQQQ)
River Twice Capital is short (SPY)
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