GO
Loading...

Did Morgan Stanley Just Breathe New Life into Financials?

Both the Dow and S&P advanced on Thursday with market pros taking a long hard look at financials – the S&P’s best performing sector.

Strength was largely due to better than expected results from Morgan Stanley . Analysts and strategists were particularly impressed with the firm’s strongtrading numbers, which came in sharp contrast to Goldman's results released earlier in the week.

"Morgan Stanley is the new Goldman Sachs," says widely followed analyst Richard Bove of Rochdale Securities. "Every one of their divisions shows an improvement, and the improvement in trading operations is especially impressive."

Considering financials have lagged the market all year, is this the catalyst bulls have been waiting for?

According to the Fast Money pros, the answer is yes – and no. More specifically, it depends on whether you’re a short-term trader or a long-term investors.

The Play For Traders

For traders Morgan results provide a point of reference, explains Fast Money trader Guy Adami.

“It’s provided a bounce you can trade around. It gives you a short term tradable low,” he explains.

Adami thinks you can trade long with a stop about 11% lower.

”And the Goldman Sachs low of $125 is also a point of reference,” he says. “These are tradable lows.”

Trader Steve Grasso agrees. “I (also) like to trade around the short bursts and daily activity in this space," he says. But rather than Morgan or Goldman, Grasso trades short term moves in Citi , JPMorgan and BofA ,” against his underlying long positions.”

The Play For Investors

If you're more of a buy and hold type investor, Guy Adami does not think Morgan Stanely results signal the all-clear.

He thinks this and other banks continue to face serious headwinds. And he reminds the desk that despite the optimism Morgan Stanely still posted a loss. (The bank reported a quarterly loss of 38 cents per share, the average Wall Street forecast was a loss of 62 cents a share, according to Thomson Reuters. (Click here to see more on Morgan Stanley earnings.)

“There’s nothing about these results that say financials are a screaming buy,” he adds. In other words, don't take these results and move broadly into financials.

Trader Patty Edwards is a little more bullish – but only a little. “If you must own a stock in this space I’d own Morgan Stanley,” she says, “but it doesn’t meet my typical criteria as a buyer.”

Ever the contrarian, trader Steve Cortes is on the other side. “I’m long Morgan Stanley against $22,” he says. “And I’m long Goldman Sachs. I think these stocks represent enormous value relative to book."

--------------

PLAYING THE REGIONALS

Regional banks also landed on the Fast Money trader radar after Huntington Banchares delivered better than expected results with 2nd quarter profits rising 15 percent.

How should you play it?

In this space, trader Guy Adami is keeping an eye on Fifth Third. “If the stock can close above $13 it will become very interesting to me.”

Trader Steve Grasso doesn’t like the space at all. “I like to trade around the marquis banks,” he says, “I never buy the regionals.”

Hear more about Huntington Bancshares from CEO Stephen Steinour. Watch the video now!

--------------

CRUDE AT $100, AGAIN

The traders are closely watching the energy sector after crude hit $100 a barrel again on Thursday. It seems $100 has been somewhat of a magnet for crude over the past three months.

What’s the trade?

Despite the recent gains Patty Edwards thinks oil remains range bound suggesting the next leg is probably lower. However, she doesn’t think a sell-off will be terribly deep. “China is still growing and that should put a floor under oil.”

Guy Adami suggests gaming the space long oil services companies such as Halliburton . “Yes, the stock made an all time high recently but it still looks interesting,” he says.

Steve Cortes isn’t a fan of crude. “I’d look to short it,” he says. “I think China’s PMI is profound. It’s the lowest number in a year and it shows significant slowing. They have a terrible trend of rising inflation and slowing growth. That is bad news for the crude market.”


______________________________________________________
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 July 21, 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 is short Copper; Cortes is short (LULU); Cortes is short (LVS); Cortes is short (IYT); Cortes is short Wheat; Cortes is short Corn; Cortes owns (GS); Cortes owns (MS); Cortes owns (EXC); Cortes owns (SVU); Cortes owns (PM); Cortes owns (NWS); Steve Grasso owns (AKS); Steve Grasso owns (AMD); Steve Grasso owns (ASTM); Steve Grasso owns (BA); Steve Grasso owns (BAC); Steve Grasso owns (C); Steve Grasso owns (D); Steve Grasso owns (JPM); Steve Grasso owns (LIT); Steve Grasso owns (LPX); Steve Grasso owns (MAR); Steve Grasso owns (MHY); Steve Grasso owns (NDAQ); Steve Grasso owns (PFE); Steve Grasso owns (PRST); Steve Grasso owns (XHB); Steve Grasso owns (XLB); Steve Grasso owns (XLI)

For Patty Edwards
Edwards Owns (AMZN) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (KO) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (PM) For Clients
Edwards Owns (SYT) For Clients
Edwards Owns (PEP) For Clients
Edwards Owns (QCOM) For Clients
Edwards Owns (LECO) For Clients
Edwards Owns (BMO) For Clients
Edwards is long Gold For Clients
Edwards is long Silver For Clients
Edwards is long Platinum For Clients
Edwards is owns (PM)
Edwards is owns (XLK)
Edwards is owns (FXC)

For Steve Grasso
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MU)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (UAL)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (QQQQ)

For Romit Shah
Nomura Securities International Inc. makes a market in securities of (INTC)

For Brent Thill
1. The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in Microsoft Corp.
2. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: Microsoft
3. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided.: Microsoft
4. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.: Microsoft
5. Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: Microsoft




CNBC.com with wires.

Symbol
Price
 
Change
%Change
DJIA
---
S&P 500
---
BAC
---
C
---
FITB
---
GS
---
HAL
---
HBAN
---
JPM MLP ETN
---
KRE
---
MS
---
SPDR NRG SEL
---
SPDR FIN SEL
---

Featured

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET