6-YEAR LOW AND COUNTING FOR DOW
Stocks tumbled on Friday, with the Dow closing at a 6-1/2-year low, on fears the government may be forced to nationalize some big banks even as the White House said it supports a privately held banking system.
Late word that the Treasury could provide some details on the Obama administration's bank rescue plan next week, helped financial shares cut losses.
But even though the comments erased a sharp sell-off, investors were still aggravated by the lack of clarity and took out their frustrations on shares of Bank of America and Citigroup the banks believed to be at the top of the list – if and when the government decides to nationalize.
Meanwhile, support for a government control of troubled banks seems to be growing. Republican Sen. Lindsey Graham, considered one of the more conservative members of the Senate, said nationalization could be an option as did Senator Christopher Dodd.
Strategy Session with the Fast Money Traders
Whatever happens to the banks, it doesn’t look like investors think it bodes well for their common stock, muses Dylan Ratigan.
I own preferred shares in Bank of America, reminds Karen Finerman. I’m not 100% confident that preferred shares will be protected -- but the comments out of the White House were encouragaing. I own Wells Fargo preferred as well.
I wish the government would allow private equity to come in and buy those toxic assets, even if it means they own the bank and obliterate the common equity, muses Tim Seymour.
And I’m also concerned about what’s happening in Europe, adds Seymour. My view is that Allianz is Germany’s AIG. I think they get taken over.
Turning attention to the broad market, you never get the bottom you want, says Guy Adami. We got close to the technically important 741 level on the S&P and then reversed. It’s not text book but it could be an early sign of a bottom.
If you’re looking for a trade look at biotech, adds Adami. Celgene looks good to me on a valuation basis.
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GOLD TRADES ABOVE $1,000
Gold rose above $1,000 an ounce on Friday for the first time since March of last year, as nervous investors piled into the yellow metal to preserve wealth amid a tumbling stock market. Gold is perceived as the most likely asset to hold its value against economic head winds.
I don’t see any reason to get out of gold, counsels Joe Terranova. I’d stay long.
I agree, echoes Tim Seymour. There’s a limited amount of gold in the world and people want to own it.
What do you think? Tell us now!
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OIL'S 'HEAD FAKE'
Oil prices fell on Friday as the deteriorating global economic outlook continued to weigh on the market. The modest slide comes one day after the price of oil jumped 14%.
I put on a long position in oil today, explains Joe Terranova. But I’m long the 2nd through 7th month contracts and not the spot price of oil.
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TECH STORY CRUNCHED
The Nasdaq fell again Friday – marking it’s 5th consecutive close lower. BlackBerry maker Research In Motion and software designer Adobe were two of the indexed top drags.
Chips performed well on Friday, reminds Tim Seymour.
I like Hewlett-Packard , adds Guy Adami. It’s pretty interesting on a valuation basis.
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FAST MONEY WORLD: GLOBE CRACKING
It’s not just the S&P 500, other stock markets are cracking as well. Asian stocks slumped on Friday to their lowest since early December, led by big losses in South Korea. And Japan's Nikkei is down to ’03 levels while the broad-based Topix index booked its lowest close in 25 years on Friday.
The Topix is broken, muses Tim Seymour. Japan is the second largest economy in the world and I don’t think this is getting enough attention. If you’re looking for a trade forget Japan. I think investors can short the DAX and buy the S&P, he says.
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Trader disclosure: On Feb. 20th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (EEM), (FXI), (PBR); Seymour's Firm Owns (VIP); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Terranova Owns (KCE), (XBI), (AMGN), (FXC), (DIS); Terranova Owns Nymex MACI; Terranova Owns (IBM) Calls; Terranova Owns (AMGN) Puts; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (BAC), (BBT); Finerman's Firm Owns (RIG), (MSFT), (FL); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (DNA) & (DNA) Call Spreads; Finerman's Firm Owns (WFC) Preferred
CNBC.com with wires