If you’re looking for a trade Najarian suggests seeking out names that were over-punished last week. “Conoco Phillips really took a bath,” he says. “And look over at Valero and Tesoro .”
Steve Grasso largely agrees with Najarian. Looking at silver’s headline making sell-off he says, “From here, I’d be betting on higher prices in silver.” And as for the space broadly, he adds, “I don’t think the commodity play is over just yet.”
Zach Karabell thinks the sharp swings from high to low will characterize the commodity trade for quite some time. “Lows points like this are when you get in. Then after the run, get out,” he counsels.
Steve Cortes is on the other side the trade entirely. He thinks the sell-off in silver was material – a sign that we’re in the early innings of a massive down move.
“When you have the kind of violent selling like we had last week, that’s not a two or three day event,” he says. “I think it takes weeks and maybe even months to run its course,” he explains.
In fact, Cortes is expecting a sea change – a commodity bubble pop.
He believes that a bubble has been building for months since last August when the Fed telegraphed QE2 at Jackson Hole and sent the dollar lower. But now, with QE2 about done and more financial woes surfacing in Europe, he thinks the US dollar will bottom. According to his thesis a stronger dollar translates into a massive commodities unwind making, "Monday’s rally immaterial."
If you agree with Cortes and are looking for a trade, Cortes thinks retailers are a buy as a bet crude declines sharply. “Crude oil coming down should be a huge boon for middle to lower end of the market. Look at Walmart and Target ,” he says.
Also he covered his short on autos. “I think the primary culprit in this space has been crude strength. If you’re a crude bear, don’t be short autos any longer.”
LOVIN’ THE MCECONOMY
McDonalds led the Dow higher on Monday after the fast food giant reported that its global same-store sales rose 6% in April.
What's the trade?
Pete Najarian likes this stock. "McDonald's is executing on all phases. And you get a 3% dividend yield."
Zach Karabell isn't as enthusiastic. "Since November McDonald's stock has been bound between $75 - $85," he says. I don’t think it’s going to be a $100 stock in 6 months. I’d rather be in a stock like Starbucks, which has greater pricing power.
Steve Cortes is somewhere in the middle. "Not a ton of fireworks to the upside," he admits, "but also not a lot of downside in a market that I think is incredibly dangerous."
GREECE CRISIS FLARING UP AGAIN
You might call it a flare-up that just won't go away. Once again investors sold euro after concerns about Greece's debt landed front and center. This time S&P lowered the country's short and long-term credit ratings this.