Don't Follow Goldman into High-End Homebuilders: Trader
Even as the stock market sell-off entered its 5th day, the Fast Money pros were still searching for opportunity. Here's what was on their radar.
High end homebuilders landed front and center after analysts at Goldman Sachs recommended buying Toll Brothers and PulteGroup.
The firm made the call due to results from their first quarter housing survey, which showed that the high-end consumer is more confident versus six months ago about the economy and prefers new homes by a wide margin.
Toll Brothers and PulteGroup are best positioned to monetize these trends the firm said.
Trader Brian Kelly finds the call interesting. However he says “I still skew toward construction. USG is one my favorite plays. I’m long. With the market being down, I think people are going to put money into their house, rather than move."
The traders were again looking at coal stocks wondering how much further they might decline. Alpha Natural was down 30% year to date and Peabody was trading at lows not seen since 2009.
Meanwhile, JPM Morgan forecast another rough quarter ahead for the space.
“The coal space is a bet on whether prices have bottomed,” explains trader Steve Grasso. “I think it’s hard to say they have – with global demand slowing. I think it’s early in the cycle to try and bottom pick.”
Options trader Pete Najarian was focussed on volatility coming back into the market. “The Vix is pushing toward 21.25, that’s the 100-day moving average,” he explains. “You’ve got to go back to late November to see the Vix above the 100-day.
And "yesterday the Vix closed above the 50-day moving average,” another bearish development. “It says to me the sentiment in the market is shifting.”
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Trader disclosure: On April 10, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian is long AAPL CALLS; Pete Najarian is long AAPL; Pete Najarian is long BAC; Pete Najarian is long C; Pete Najarian is long JPM CALLS; Pete Najarian is long MS; Pete Najarian is long INTC; Pete Najarian is long YHOO; Pete Najarian is long SBUX CALLS; Pete Najarian is long COP; Pete Najarian is long PEP; Pete Najarian is long PFE; Pete Najarian is long BTU CALLS ; Pete Najarian is long HPQ; Brian Kelly is long USG; Brian Kelly is long SPY PUTS; Brian Kelly is long GERMAN BUNDS; Brian Kelly is short SWEDISH KRONE; Brian Kelly is short EUROSTOXX FUTURES
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