With stocks rising for the third day in a row, how should you trade this market? Following are some of the developments that our pros suggest watching.
FINANCIALS RALLY ON GEITHNER COMMENTS
Financials picked up steam on Thursday with Bank of America and Morgan Stanley both posting sharp gains after Treasury Secretary Tim Geithner said major U.S. banks and money market funds have little direct exposure to European debt and that a Lehman-like implosion isn’t likely to happen. Also, the ECB launched fresh liquidity measures to help banks weather the euro zone's debt crisis.
What’s the bank trade?
Guy Adami is skeptical of banks. “I don’t think Geithner knows any more than I know. How could he say anything else but what he said?”
Pete Najarian is a little more optimistic. ”At the time of Lehman we saw big out of the money put buying and we’re not seeing that now,” Najarian says. “In fact I’m seeing big interest in the 13 and 14 strike in the XLF – those are upside calls.”
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CITI CUTS GOOG, AOL, DEMAND MEDIA TARGETS
On Thursday Citigroup analyst Mark Mahaney lowered his price targets on a handful of Internet stocks including Google, Akamai and AOL ; however, he says the reduction reflects lower multiples, not lower earnings.
Target Price Old New
Akami $27 $24
AOL $18 $15
Google $690 $575
Demand Media $10 $8
Source: Citi Investment Research
What’s the trade?
In this space, I think Google is so cheap it’s attractive, says Karen Finerman.
Google has trouble around $600, adds Guy Adami. But I think it could trade up to $550 from here.
If you’re looking for a trade, Intel may be vulnerable, adds Tim Seymour. It’s currently near a level of past resistance.
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OIL STOCKS ON FIRE
If you’re in the market for fast money hopefully you’ve been playing energy. Over the past few days some refiners have shot higher.
Just take a look at the action in Marathon and HollyFrontier . Both are around 20% higher in only 3 days.
How should you trade it?
Paul Sankey of Deutsche Bank tells us that these stocks have been taken to the woodshed and that recent gains are “ really just a relief bounce but one that’s underpinned.”
So, what does he have to say about the refiners long term? Watch the video and find out now!
