PAST $135 AND BACK AGAIN
The headline: Crude Oil Falls 1.8% to $130.81 After Climbing as High as $135.09 in Overnight Trading
Jeff Macke isn’t rushing to call a top in oil. It can have down days, he said, but the trend is still higher. “Nothing has changed,” he said.
It’d be unusual for people to put in short positions on commodities over a long weekend, Guy Adami said, but he wouldn’t be surprised if we saw some of that with oil this weekend. Expect some short-term profit taking, he said.
To add to that school of thought, Tim Seymour noted that the Department of Energy said Thursday that U.S. consumption was actually down slightly year over year. That could rain on the long oil parade, he said.
SIGN OF TOP? OPTIONS ACTION
The headline: Jon Najarian Seeing Unusual Options Activity in PowerShares DB Commodity ETF
The way to spot a top is always to watch for when something starts to react negatively to good news, Jon Najarian advised. That could be happening for oil, which traded down Thursday despite a media consensus that it’s only going higher.
Najarian also noticed “aggressive” put buying in the DBC, a commodity index that’s 60% made up of crude and heating oil.
That being said, he thinks the oil trend is still rooted in supply and demand. As long as that demand is there outside of the U.S., it’d be hard to get short.
The headline: With Oil Prices Surging, Ford No Longer Expects to Be Profitable by 2009
Guy Adami, who has long sung the praises of Ford, is backing away from his bullish position. Ford’s still a turnaround story, he said, but the energy run is suffocating for the automaker.
Don’t forget about other commodities, Tim Seymour said. Ford is also struggling under the weight of sky-high steel prices.
Unfortunately for Ford, it sells the wrong product at the wrong time, Jeff Macke said.
CARRY ON OR IT’LL COST YA
The headline: Will Other Airlines Follow AMR in Charging $15 For First Checked Bag?
Think of the airlines as trading vehicles and nothing more. That advice came from Guy Adami and Jeff Macke. Adami recommended trading the swings in AMR with a tight stop below any close under $6. Macke wants to short the airlines on rallies.
The headline:NRG Energy Makes $9.1B Offer for Calpine in Bid to Become Largest U.S. Power Producer
Tim Seymour thinks this likely won’t be the only bid for Calpine or the last of energy M&A activity.
Jon Najarian would be buying both stocks as Jeff Macke reminded that NRG is still a great play if you’re a nuclear power bull, as it’s one of the only companies to actively try and get a new nuclear plant online in the U.S.
The headline:GameStop Tops Profit, Sales Estimates, But Shares Tumble on Disappointing Outlook
The video game complex can’t grow at a 25% clip forever. We’re entering a period of maturation in the gaming cycle, Jeff Macke said. It’s best to take a break from these stocks and buy them back lower.
Guy Adami added that the video game companies can’t sustain the expectations because there isn’t anything exciting in the short-term pipelines other than the Wii Fit.
These stocks are best bought right before the Consumer Electronics Show in January, Jon Najarian added.
BRIGHT SPOTS IN RETAIL
The headline: Limited Brands Shares Jump After Profit Tops Expectations; Children’s Place Surges 16% on Better-Than-Expected Profit
There are retailers worth bottom picking, Jeff Macke said, but most retail stocks are still generally best thought of as trading vehicles.
CONSUMER NOT IN SPORTING MOOD
The headline: Shares of Dick’s Sporting Goods Drop 16% as Company Lowers Forecast
CEO Ed Stack acknowledged that energy and food prices are hurting the consumer, but said DKS stays on top of it by offering exclusive products that make its stores a destination, as well as carrying brands like Under Armour and Nike that remain stable despite the downturn. And while ultra-discretionary sports like golf, fishing and camping are getting hit the worst, baseline businesses like children’s athletics are still hitting on all cylinders, Stack said.