Halftime Report: Are Stocks About To Make New High?
As investors brace for the peak weeks of earnings, both the Dow and S&P marched higher on hopes that stability had returned to the financial system. Word that beleaguered lender CIT Group had obtained $3 billion in emergency financing generated the positive sentiment, with investors optimistic that the cash infusion would stave off bankruptcy.
Although market gains after a lender barely escapes bankruptcy might seem counter-intuitive, investors interpret that development positively because “it is not a government solution (and that) means the financial markets are functioning a little better," explains Kurt Brunner of Swarthmore Group.
Adding to the upward momentum, Goldman Sachs raised their end of year target for the S&P 500 to 1060 from 940. And, in company news, shares of machinery maker Caterpillar gave the top boost to the Dow after BofA-Merrill upgraded the stock to "buy," saying the second quarter may mark a bottom for the construction market.
How should you be positioned?
60% of Caterpillar’s revenues come from sales outside North America, explains Mike Khouw of Cantor Fitzgerald. Probably 20% comes from Asia. If Asia is getting stronger, I’d expect things to go well for Caterpillar.
Turning attention to the broader market, I more think favorable earnings lie ahead, speculates Joe Terranova. I suspect tech and energy will push the S&P higher.
CISCO LEADS TECH
Investors drove technology shares higher on Monday after Credit Suisse upgraded Cisco Systems to "outperform" citing strong earnings momentum against a backdrop of low expectations. Meanwhile, both Apple and Yahoo were trading higher ahead of earnings.
What’s the trade?
Cisco as well as Google seem to be managing their bottom lines extremely well, says Joe Terranova.
I think Apple, Google, Cisco and Intel are good names to be involved with, counsels Mike Khouw.
OIL HIGHER...APPROACHING $65
Oil continued its march higher on Monday as optimism about a potential global economic recovery lifted expectations of a turnaround in fuel demand.
The support stems from a mostly bullish report from the Conference Board's index of leading economic indicators which showed prospects increased for a third straight month in June, suggesting the recession was drawing to a close.
What must you know?
The expiration of the August contract is definitely on everyone’s mind, explains Addison Armstrong of Tradition Energy, but I think the move in oil is all about crude following equities.
The dollar dropping also puts upward pressure on oil as well as gold , reminds Jared Levy of Peak 6. And if you look at the correlation over time, it’s important to note that when equity markets sell-off typically gold moves higher.
COPPER HITS HIGH
Copper prices climbed to a multi-week high on Friday, after an unexpected jump in U.S. home construction data in June boosted hopes for economic recovery.
Meanwhile, Freeport-McMoRan, the world's largest publicly traded copper company, reports second-quarter results Tuesday before the market opens
What’s the trade?
Trade cautiously, counsels Tim Seymour. I think the market has already priced in a big move in copper, he explains. Freeport McMoRan is already up 30% for the quarter.
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Trader disclosure: On July 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; Terranova Owns (RIMM), (TER), (MSFT), (SUN), (FTO); Seymour Owns (APPL), (BAC), (DRYS), (EEM), (FCX), (FXI), (INDY), (SBUX), (NOK); Grasoo Owns (V), (WMT), (XLF), (BAC), (CSCO); Grasso's Clients Owns (GS), (V), (WMT), (MA), (UNH); Najarian Owns (FCX) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (JNJ) Call Spread ; Najarian Owns (MS) Call Spread; Najarian Owns (MSFT) Stock & (MSFT) Short Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (V) & (V) Short Calls; Najarian Owns (WNR) Stock & (WNR) Short Calls; Najarian Owns (YHOO) Call Spread
CNBC.com with wires