S&P 500 MARCHES HIGHER
Stocks racked up gains across a wide range of sectors on Thursday, boosted by rising commodity prices, improving labor market conditions, and a pullback in Treasury yields.
Earlier in the day, the major stock indexes had gained more than 1 percent, with the Dow briefly turning positive for the year when it rose as high as 8,877.93 intraday.
The stock market has rallied since hitting 12-year lows in early March, with the S&P rising 39.7 percent. However, stocks have failed to substantially build on those gains since mid-May, while an expected correction has yet to materialize.
How should you be positioned?
Strategy Session with the Fast Money Traders
I’ve been fighting the rally for the past 25 points on the S&P, says Guy Adami, but I just don’t trust the market at these levels. It seems to me investors are being forced to put money to work but I wouldn’t play it.
I think the energy move is interesting, says Karen Finerman. It seems energy is frothy. And it seems consumer names are starting to roll over as well as the restaurant names. That suggests to me the rally could be long in the tooth. I would take money off the table.
OIL TOPS $72
U.S. crude oil futures traded above $72 a barrel on Thursday, boosted by a higher demand forecast from the International Energy Agency and a weaker dollar.
It seems that investors are piling into the energy shares, explains Joe Terranova, out of greed. And now the space is crowded. At a certain point we will run out of buying momentum. I would go flat – because there are way too many people in the sector.
Thursday's buying momentum lifted energy shares such as Chevron . Rising commodity prices also helped stocks like aluminum company and Dow component Alcoa .
If you’re buying commodities because you anticipate a spike coming in the coming weeks, I think you’ll be very sorry, adds Terranova.
I agree with Joe, echoes Guy Adami. I think the space is ahead of itself.
DOLLAR REBOUND FAILS
The dollar fell broadly on Thursday, dented by concerns about rising levels of U.S. debt and the possibility central banks may diversify away from U.S. dollar assets.
Ongoing hopes the global economy is showing signs of recovery also boosted perceived higher risk currencies.
I think the dollar continue lower, speculates Jeff Macke. But not due to a recovery; I don’t expect a recovery anytime soon.
As for gold personally I would not touch it unless it closes above $1000, counsels Guy Adami. At these levels being long scares me.
TOPPING THE TAPE: BANK OF AMER
It appears an upgrade trumps a blast from lawmakers. Bank of America closed higher after a Keefe, Bruyette & Woods analyst upgraded the firm to "Outperform" from "Market Perform," noting that it is among the cheapest of its big bank peers. Analyst Jefferson Harralson also raised his target price on the stock by $4.50 to $16.50.
The move higher comes despite accusations in Congress that Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson effectively put "a gun to the head" of Bank of America Chief Ken Lewis to quickly purchase Merrill Lynch in late 2008 amid the worsening U.S. banking crisis. Lewis denies the allegations.
How should you play banks?
Lewis was impervious to the questioning, notes Jeff Macke. That makes me bullish on the stock – for a trade.
But refinancing is falling, and I think that trend hurts Bank of America going forward, counters Karen Finerman.
To me the trade is JP Morgan, adds Guy Adami. Below $35.25 the stock is a sell. I’d short the stock with a tight stop.
TOPPING THE TAPE: TECH
Shares of Palm led the tech sector higher Thursday after the Pre maker named Jon Rubinstein as its new CEO, hoping the former Apple executive will usher in a new era for a company seeking to revive its fortunes.
Rubinstein, 52, takes the helm on Friday, succeeding Ed Colligan, a 16-year Palm veteran who will take some time off and then join Elevation, Palm said in a statement.
How should you trade tech?
I think the tech trade that works is longIBM , counsels Guy Adami.
In the space I like Nokia , adds Karen Finerman, for their valuations and their strong presence in emerging markets.
TREASURY YIELDS RECEDE
U.S. Treasury prices rose on Thursday, pulling benchmark yields back from eight-month highs above 4 percent, as a solid auction of 30-year debt assuaged worries of higher interest rates.
A sloppy 10-year auction on Wednesday raised concerns over appetite for the $2 trillion in new bonds, but the 30-year sale followed up strongly and left a positive spin on the week's $65 billion in issuance.
"It tells me that given the right price there will continue to be demand for Treasuries," says Bulent Baygun, head of U.S. interest rate strategy at BNP Paribas. "The fact that the 30-year went well allayed any fears driven by the 10-year auction."
However, if you're taking cues about interest rates from the bond market be careful, cautions CNBC's Steve Liesman. From what I'm hearing, the Fed isn't going to raise rates anytime soon.
THE NEW NORMAL, PT. 3
All this week Steve Cortes of Veracruz has been explaining what he thinks will be the new normal for investors. So, what will the new normal look like?
According to Cortes it’s all about slow growth, low employment and inflation. And if you're a trader he says it will be all about volatility in a tight range.
So, how should you trade the new normal?
According to Cortes on dips he suggests buying agriculture, energy and other names that are helped by inflation.
To see our entire interview with Steve Cortes please watch the video above.
>The New Normal Pt. 1
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Trader disclosure: On June 11th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (BTU), (MSFT), (NUE); Macke Owns (BAC), (AGU), (USO), (SDS); Finerman Owns (RIG), (TBT); Finerman's Firm Own (NOK), (PBR), (RIG), (TBT); Finerman's Firm Is Short (BAC); Finerman's Firm Owns (BAC) Preferred; Finerman Owns (BAC) Preferred; FInerman's Firm Owns (WFC) Preferred; Finerman Owns (WFC) Preferred; Terranova Owns (TER), (SDS), (XBI), (ABT), (RIMM), (GENZ); Terranova Is Short (RIG), (OIH), (FCX); Terranova Is Short (XOM) Call Spread; Terranova Owns (BRCM) & (BRCM) Calls; Terranova Owns (MS) & (MS) Calls; Terranova Owns (HES) & (HES) Calls; Terranova Owns (DIS) Call Spread; Terranova Owns (X) & (X) Calls; Terranova Owns (JPM) & (JPM) Calls; Terranova Owns (POT) & (POT) Calls; Terranova Owns (IBM) & (IBM) Calls
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