Halftime: This a Hidden Signal of Bigger Market Woes?
With the S&P rising modestly on Wednesday after days of selling, investors were looking for any and all types of signals to determine whether the market may have found support or if more selling was to come.
Looking at momentum, “The constant selling just got exhausted," says Rick Meckler, president of investment firm LibertyView Capital Management, in New York.
"You've had an awful lot of consecutive days of hard selling. It seems like, at least temporarily, that has come to an end."
In fact, Bespoke Investment Group said breadth in the S&P 500 was very close to extremely oversold levels, noting the last time those levels were reached on March 16, it "turned out to be an attractive buying opportunity."
However if the signals uncovered by the Fast Money traders play out – you might want to hold-off before you establish new long positions.
After poring over the latest results from Polo Ralph Lauren as well as Costco earnings, the Fast traders may have uncovered some hidden clues. Patty Edwards thinks weakness in both names is a bigger sign that the high-end consumer is starting to come under pressure.
That might seem like a logical conclusion for disappointing results from Ralph Lauren, but Costco?
Edwards explains that although Costco is a warehouse store, its customers are affluent, making between $85K and $100K a year. “Oftentimes a small business owner will shop at Costco,” she says. In demographic terms its customer is similar to luxury retailer, Nordstrom, she adds. That’s why it’s also a very good gauge of affluent shoppers.
And that could impact your trades because, “A lot of people had thought the high end would be immune to inflationary pressure,” she says. "I think (these results) show the high-end is not immune.”
Trader Steve Cortes agrees. ”I don’t like the high-end anymore,” he says. “The high end is sensitive to the stock market and with the end of QE, I expect to see the high end suffer.”
Brian Kelly draws a similar conclusion. “I think inflation is here to stay.” He says retailers are a tough buy.
It says high-end shopper are "not buying as many of those gotta' have it items," says Edwards.
The Fast traders are also keeping a close eye on Cisco and Applied Materials after both companies issued muted guidance.
What's the trade?
JJ Kinahan tells the desk he's spotted unusual options action; " "a big buyer of June and July 16 calls." He suggsets it could be a sign of confidence in John Chambers.
In the space Brian Kelly suggests going 'down the ladder' and looking at a cloud company like Emmulex.
The traders are also watching AIG, which fell on Wednesday after a secondary offering.
What's the trade?
Steve Cortes doesn't see any value in AIG. "If you want to play the space do it with GS or MS," he says.
Trader JJ Kinahan has also spotted unusual activity in the Dollar ETF .
A big buyer of June 22 calls suggests that someone believes dollar strength will continue over the next 2-3 weeks, he says.
SILVER BACK TO $50
Silver futures surged again this week, though they're still down about 25% from the 31-year intra-day high hit last month.
Dave Hightower, founder of commodity research firm The Hightower Report thinks the white metal could again hit $50 before year’s end.
Find out why. Watch the video now!
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Trader disclosure: On May 25, 2001, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by "Fast Money" traders; Cortes owns (SO); Cortes owns (EXC);Cortes owns (KFT);Cortes owns (K);Cortes owns (WMT); Cortes is short Nikkei; Cortes is short EEM vs. S&P long; Cortes is short AUD; Cortes is short GBP; Cortes is short EUR/JPY currency cross; Cortes is short (CAT); Cortes is short (DE)
For Patty Edwards
Patty Edwards owns (AAPL) For Clients
Patty Edwards owns (COST) For Clients
Patty Edwards owns (AMZN) For Clients
Patty Edwards owns (GLD) For Clients
Patty Edwards owns (QCOMM) For Clients
Patty Edwards owns (MSFT) For Clients
Patty Edwards owns S&P 500 For Clients
Patty Edwards owns Nasdaq 100 For Clients
Patty Edwards owns Gold For Clients
Patty Edwards owns Silver For Clients
For Brian Kelly
Accounts Managed By Brian Kelly Capital own (FCX)
Accounts Managed By Brian Kelly Capital own (IPI)
Accounts Managed By Brian Kelly Capital own (SLW)
Accounts Managed By Brian Kelly Capital own (SLV) calls
Accounts Managed By Brian Kelly Capital own (NEM)
Accounts Managed By Brian Kelly Capital own Aussie dollar
Accounts Managed By Brian Kelly Capital own (TLT) calls
Accounts Managed By Brian Kelly Capital are short yen
Wedbush Securities is a Market Maker in (AAPL)
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