BEST DAY IN 6 WEEKS
Stocks rallied sharply higher on Monday after bullish comments on the financials from widely followed analyst Meredith Whitney lifted hopes that banks' quarterly results may be stronger than expected.
Whitney, who had been extremely bearish until now, upgraded Goldman Sachs to a "buy" this morning, one day ahead of earnings saying the company would be a key competitor in the government, corporate and municipal debt markets. Then the entire sector surged higher after Whitney appeared on CNBC and said many banks could be in for a short-term gain of 15 percent.
Her comments offset concerns that CIT Group , a lender to many small- and mid-sized businesses, was struggling to stay afloat.
The Goldman Sachs upgrade "kind of turned sentiment around short-term. It was enough to send the market up," says Fred Dickson of D.A. Davidson. "Basically, people are putting a little bit of money on the table ahead of earnings this week."
That little bit of money gave both the S&P 500 and Dow their best gains since June 1st
How should you be positioned?
Strategy Session with the Fast Money Traders
The market has been looking for a leader and now there could be a leader, explains Jon Najarian. If earnings can give bank stocks a boost it could be the catalyst the market needs.
But it was a light volume day, reminds Karen Finerman. Monday’s move seems more like a bounce than anything else. But it was nice that Meredith Whitney upgraded Goldman.
I’m not sure I agree with Whitney’s price target of $186, adds Guy Adami. And Meredith Whitney also said she’s bearish on consumers. If you’re looking for a bank trade I’d short JPMorgan and stop out at $35.25
I think the stock to buy when you heard all this chatter about Goldman was Morgan Stanley , adds Tim Seymour.
MORE MEREDITH WHITNEY
Whitney had a lot to say about the economy as well. "Unemployment continues to drive higher and the banks are not prepared for double digit unemplyoment so that's going to be an issue for them that doesn't go away for the next, you know, year and a half," she said on CNBC.
Is there a trade here?
When you talk about headwinds facing the consumer it makes me concerned about Bank of America , muses Karen Finerman. Although I’m long.
AFTER HOURS ACTION: DELL
After hours Dell tumbled 3 percent to $12.61 after the PC maker forecast a modest decline in gross margins due in part to higher component costs and an unfavorable mix of products.
“We continue to believe that customers are deferring IT purchases, and that we will see demand return to more typical levels at some point," Chief Financial Officer Brian Gladden said in the statement.
How should you trade?
That is not good news, says Karen Finerman. And what they're sauing doesn't bod well for other names such as Hewlett Packard and Intel . It says to me the green shoots might not be so green, after all.
In the space I would not look to Dell as the bellwether, adds Pete Najarian. I think a lot of their issues are unique to them.
Although the comments are not encouraging I’m still bullish Dell for the longer term, adds Guy Adami.
TAKE YOUR POSITION: INTEL
The U.S. technology sector kicks off a closely watched earnings season this week with Intel offering a pivotal mid-year progress report. Investors are eager to find out if the chip maker's results show that Corporate America is starting to invest more in IT in anticipation of a recovery.
I think Intel will have a fairly good report, says Craig Berger of FBR Capital Markets. And I think demand is forming for 2010.
Average analyst estimates for the world’ largest semiconductor company, are .08/share for EPS and $7.27 billion in revenue.
See our entire interview with Berger. And find out which two stocks he likes more than Intel. Watch the video above.
OPTIONS ACTION: MCAFEE
Pete Najarian has spotted unusual options activity in McAfee . The volume of August 45 calls that traded today suggests to him the stock could make a significant move higher.
J&J LEADS PHARMA
Johnson & Johnson , a Dow component and the world's biggest healthcare company, reports earnings Tuesday morning. Analysts polled by Thomson Reuters expect, on average, earnings per share of $1.11 and revenue of $15 billion. In the year-earlier period earnings per share were $1.17 per share and revenue was $16.45 billion.
How should you game healthcare?
JNJ has been running into their numbers, reminds Pete Najarian. I like the stock but it may not have a lot more room on the upside.
In the space I’d look at Abbott Labs, adds Guy Adami. I see this stock going to $49.
Don’t forget there’s sweeping reform looming over this sector, warns Karen Finerman. You might not want to buy and hold in this space.
TOP STORY: CIT STRUGGLES FOR SURVIVAL
Shares of CIT Group tumbled Friday on word the lender to is scrambling to get help from the federal government.
The ailing company's stock fell toward $1 as investors fearing a bankruptcy court filing unloaded the shares. A collapse of CIT, whose 1 million clients include big names from the franchisee of Dunkin' Donuts to retailer Dillard's Inc., could deal a devastating blow to the economy by cutting off financing just as businesses need it most, analysts warned.
That in turn could force thousands of small and medium-sized companies to drastically cut costs or shut down — driving up unemployment and dashing hopes for a swift economic recovery.
For more on this developing store including insights from To hear more from analyst Moshe Orenbuch of Credit Suisse please watch the video.
> Crisis Flares Anew AS CIT Seeks Federal Aid
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Trader disclosure: On July 13th, 2009, 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 (GE) Calls; Najarian Owns (GS) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (JPM) And Is Short (JPM) Calls; Najarian Owns (MFE) Calls; Najarian Owns (MS) Call Spread; Najarian Owns (NVLS) And Is Short (NVLS) Calls; Najarian Owns (XLF) Call Spread; Najarian Owns (YHOO) Call Spread; Finerman's Firm Owns (MSFT); Finerman's Firm Owns (BAC) Preferred Shares, Finerman Owns (BAC) Preferred Shares And Is Short (BAC), Finerman Owns (BAC) Preferred Shares And Owns (BAC); Finerman's Firm Owns (WFC) Preferred Shares And Is Short (WFC), Finerman Owns (WFC) Preferred Shares; Finerman's Firm Owns (YUM); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (IYR), (USO); Seymour Owns (AAPL), (BAC), (EEM), (FXI); Adami Owns (AGU), (C), (GS), (MSFT), (INTC), (NUE), (BTU); Finerman's Firm Owns (HPQ); Najarian Owns (JNJ) Calls; Finerman's Firm And Finerman Own (PDE); Najarian Owns (V) And Is Short (V) Calls
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For Craig Berger
FBR Capital Markets Is A Market Maker Or Liquidity Providor For (ONNN), (INTC), (BRCM), (NVDA), (MRVL), (LLTC), (MXIM), (ATML), (LSI), (SLAB), (MSCC), (QCOM)
For Moshe Orenbuch
(CIT), (JPM), (WFC), (C), (BAC) Are Or Were In Past 12 Months Clients Of Credit Suisse
Credit Suisse Provided Investment Banking- And Non-Investment Banking Services To (CIT), (JPM), (WFC), (C), (BAC) Within Past 12 Months
Credit Suisse Has Managed Or Co-Managed A Public Offering Of Securities For (CIT), (JPM), (WFC), (C), (BAC) Within Past 12 Months
Credit Suisse Has Received Inv. Banking Compensation From (CIT), (JPM), (WFC), (C), (BAC) Within Past 12 Months
Credit Suisse Expects To Receive/Seek Investment Banking Compensation From (CIT), (JPM), (WFC), (C), (BAC) Within Next 3 Months
Credit Suisse Has Received Non-Investment Banking Compensation From (CIT), (JPM), (WFC), (C), (BAC) Within Past 12 Months
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