Pro: Don't Be Fooled By Gains in Conoco
On Thursday the Street was again parsing through comments from Ben Bernanke, who, in a second day of Q&A, renewed his promise for more stimulus if needed but also said the Fed is "not prepared at this point to take action."
With the somewhat contradictory statement confoudning invsetors, CNBC's Fast Money traders preferred to focus on other areas of the market - particularly energy - after ConocoPhillipsannounced plans to split itself into two companies – a refining company and an 'E&P' or exploration and production company.
Although shares moved substantially, we’re hearing that the gains are not necessarily a vote of confidence in the company’s split. “I’m not sure the market loved this move," says top Deutsche analyst Paul Sankey on the Halftime Report. "I think it’s short covering.”
”Earnings estimates were coming down and they had an issue in China with an oil leak,” he says. “And this was a total surprise announcement.”
Hence the short covering.
Sankey believes the Street is somewhat mixed about the Conoco split, liking the refining part of the business but not the exploration and production unit. In fact, Sankey questions whether it’s smart for the ‘upstream part of the business’ – that is the E&P part – to trade alone. “The upstream is what investors worry about. It may struggle to grow. It doesn’t have a great reputation as an asset base.”
However, he concedes it may be a necessary evil. He thinks the integrated model is dying. Actually, "the market is trying to kill it," he says.
And that leads to the one and only question that you want answered – How do you trade energy now?
Sankey tells us he likes refiners. “HollyFrontier is a great company,” he says. “And MPC , the spin-out from Marathon is a high conviction buy. Sankey calls all these stocks, plays on the diamond age of refining. “This is a great time for refining.”
In the space Fast trader Guy Adami likes Valero as a refiner but also Halliburton for exploration.
Trader Patty Edwards feels differently about Conoco. She's long, but says "it's for the dividend." And she also owns Chevron . And as a downstream idea, she likes Chicago Bridge & Iron which just won a big energy contract.
Trader Steve Cortes says if you must be involved look at Chevron which has outperformed its peers.
However he’s bearish broadly. “I’m short crude,” he reminds, “I do not like the space in general.” The main reason he’s short is a belief that China is slowing down and as a result he thinks, "the future for energy is poor."
BERNANKE BACK PEDALS
As we mentioned above, the Street sold off Thursday as investors took another hard look at comments made by the Fed chief as he answered questions before Congress.
Although he renewed his promise for more stimulus if the economic recovery stumbles he also said the Fed is "not prepared at this point to take action."
What should you make of it?
"There continues to be conflicting beliefs coming out from his comments. As of right now, with what the chairman said within the last two minutes ... there is going to be no further
accommodation policy," says Ryan Larson, head of equity trading at RBC Global Asset Management in a Reuters.
Trader Guy Adami doesn't find the latest comments wishy-washy. In fact he likes them. "It's time for the market to stand on its own," he says. "That's encouraging."
Brian Kelly says, "I think the Bernank put is still there but it’s just a little more out of the money!"
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Trader disclosure: On July 11, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Cortes owns (GS); Cortes owns (EXC); Cortes owns (SVU); Cortes owns (PM); Cortes is short (AAPL); Cortes is short (IYT); Cortes is short (LULU); Cortes is short the S&P; Cortes is short Crude; Cortes is short Copper; Weiss owns (JPM); Weiss owns (HBAN); Weiss owns (CMA); Weiss owns (KEY); Weiss owns (COP); Weiss owns (DVN); Weiss owns (HK)
For Patty Edwards
Edwards Owns (AAPL) For Clients
Edwards Owns (AMZN) For Clients
Edwards Owns (CVX) For Clients
Edwards Owns (COP) For Clients
Edwards Owns (VLO) For Clients
Edwards Owns (NOV) For Clients
Edwards Owns (OIH) For Clients
Edwards Owns (XLB) For Clients
Edwards Owns (CBI) For Clients
Edwards Owns GOLD For Clients
Edwards Owns SILVER For Clients
Edwards is long (XLK)
For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (WFC)
Accounts Managed By Brian Kelly Capital Own (SLV)
Accounts Managed By Brian Kelly Capital Own (GDXJ)
Accounts Managed By Brian Kelly Capital Own (TBT)
Accounts Managed By Brian Kelly Capital Own (INTC)
Accounts Managed By Brian Kelly Capital Own (NLY)
Accounts Managed By Brian Kelly Capital Own (UGA)
Accounts Managed By Brian Kelly Capital Own (ESV)
Accounts Managed By Brian Kelly Capital Own (SDS)
Accounts Managed By Brian Kelly Capital Own (KRE
Accounts Managed By Brian Kelly Capital Are Short the Australian Dollar
For Ben Schacter
CNBC.com with wires.