The worst housing market since 1970 can’t seem to stop this market. Bigger forces such as global growth and the digital revolution are at work here. The Dow is within 100 points of another record. Will we get there?
OIL SURGES 3%:
The headline: Tropical Storm Lorenzo Expected To Hit Gulf Coast as Hurricane; Crude Climbs 3.2% to $82.88, Best Gain Since May 17
Oil will continue to move higher, Pete Najarian says. The best way to get long oil is to get behind the service sector, he says, in names like Baker-Hughes (BHI), Schlumberger (SLB) and Halliburton (HAL).
Guy Adami, generally negative on the refiners, calls Tesoro (TSO) “compelling” at $45.
WHO NEEDS BUFFETT?
The headline: Financials Lead Market Higher, Even as Skepticism Mounts About NYT Report of Buffett-Bear Buy
On the trading side, there are a lot of people betting against the financials, Jeff Macke says. But the Fed is keeping them afloat even if their earnings are trainwrecks.
The financials are still strong, period, says Pete Najarian. Goldman Sachs (GS) and Morgan (MS) especially,and Lehman Bros. (LEH) are turning out to be stronger than people expected, he says.
Don’t get suckered into buying Bear Stearns (BSC) as a value play, Guy Adami says. He thinks the other financials are far better on a valuation basis.
WORST SINCE 1970:
The headline: Housing Market Looking Bleaker Than Ever as Home Prices Plunge Most Since 1970
KB Home (KBH) is worth considering for a trade, Guy Adami says. But he would stop out below $23.50. “All bets are off” below that level.
KBH had “awful” numbers but the company took a big write-down and it seems like the Street gave it a pass because of that, Karen Finerman says. That piques her interest in considering buying into the homebuilders.
BUYOUT BUZZ PICKING UP:
The headline:EchoStar (DISH) Surges After Oppenheimer Analyst Says AT&T (T) Will Make Bid; Buzz Surrounding Wendy’s (WEN), Sallie Mae (SLM) as well.
The AT&T bid is unlikely, Jeff Make says. But DISH, along with DirecTV (DTV) are underowned. The cable names aren’t killing them like they used to be, and the aggressive options trading in the satellite stocks seems to support that, Pete Najarian adds.
SMART PHONE, STUPID COMPANY?
The headline:Palm’s (PALM) New $99 Centro Smart Phone May Mean Company Getting Back on Track
Jeff Macke is reversing his position and he’s officially ready to get long Palm. The company hasn’t come up with anything relevant in years and has been nothing but a gift to the shorts, he says. But since it dumped its ill-conceived Folio product and introduced the Centro, “going where the other guy isn’t,” Jeff thinks it might be time for Palm to turn around. “This stock is going higher,” he says.
FAST MONEY WORLD: EMERGING MARKETS BOOMING:
The headline:Shenhua Energy, Largest Chinese Coal Producer, Raises $8.9B in Shanghai Listing; PetroChina (PTR) May Raise $5B in Shanghai Share Sale; Chinese Government to Formally Establish Sovereign Wealth Fund
“China is not over,” Pete Najarian says. The iShares FTSE/Xinhua China 25 Index (FXI), is on fire but be careful, he stresses. The index is heavily weighted in financials and telecom – which happen to also be hot – but that is a heavy lack of diversification.
Guy Adami would take some profits in a name like China Mobil (CHL), which is up a staggering 68% just since last month.
WHEN THE BOEING GETS TOUGH:
The headline:Boeing (BA), Defense Stocks Working as Pentagon Seeking $190B For Wars in 2008
The Pentagon is spending one-third more than its initial request and there’s room or these names to go even higher, Guy Adami says. He’s a buyer of Boeing, Lockheed Martin (LMT) and General Dynamics (GD).
AFTER HOURS ACTION: FOCUS MEDIA:
The headline: Chinese Ad Company Focus Media (FMCN) Soars After Hours on Earnings
“Buy the news, sell the story,” as they say. Pete notes that FMCN has run $12 since Monday. Its earnings may be huge, but this is the kind of news investors should sell into, he said.
WAL-MART EXPANDING DRUG PROGRAM:
The headline: Wal-Mart (WMT) Expands $4 Generic Drug program in Bid to Grow Its Pharmacy Sales
A smart idea, perhaps, Jeff Macke says, but Walgreen (WAG) is a better play.
Karen Finerman, a Wal-Mart shareholder, doesn’t think this news will matter much to the stock.
The headline: GameStop (GME) Shares Tumble After UBS Issues Downgrade, Saying GameStop’s Upside Limited Because Expectations Too High
You never lose money by taking profits. That being said, there’s not much evidence to suggest GameStop won’t go even higher and have a blow-out Christmas, Jeff Macke says. Don’t wait until GME is higher and buy it on a pullback, he advises.
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Trader disclosure: On Sept. 27, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Najarian Owns (DISH), (NAT), (UA); Finerman's Firm Owns (BEAS), (NYX), (NMX), (PSS), (WMT), (TXI); Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns (MSFT) Options