BULLISH REVERSAL IN FINAL MINUTES
In the final minutes of trading the bulls foiled the bears and sent both the S&P 500 and Dowhigher as investors rotated into financials, which had lagged during the recent two-week rally.
Upbeat data on new home sales underpinned financial stocks, the session's strongest sector, and prompted investors to snap up several regional banks, with Regions Financial and Zions Bancorporation among the biggest gainers.
What must you know about this market?
I think early weakness stemmed from investors who were disappointed that there was no follow through from the home sales figures, muses Joe Terranova. Then at the end of the day too many investors were caught short and they scrambled for cover.
Although a large volume of puts traded Monday, I’m feeling more bullish, adds Pete Najarian. I think it means investors have protection and ultimately that translates to less fear in the market.
It seems to me stock prices already reflect positive data, says Karen Finerman. So positive data comes out today and everyone is surprised that stocks don’t move? They shouldn’t be. It’s baked into the market already.
HAS HOUSING BOTTOMED?
New data hinted that the housing market may be stabilizing. A report shows that that sales of new single-family homes in the United States rose more than expected in June, while the inventory of homes for sale fell to a more than 11-year low.
What’s the trade?
I think Centexis interesting, muses Karen Finerman. When Centex did a deal with Pulte it was a seminal event in housing. And quite frankly I think the Monday's data is impressive.
If you think housing is going to rally I’d be a buy of cement makers such as Cemex , says Tim Seymour. But I would not jump into housing stocks.
I’d play it with American Express, adds Joe Terranova. The inventory numbers tell me there’s stabilization and that’s good for consumers.
It’s way too early for that kind of trade, counters Pete Najarian. If you want to trade the news do it with Freeport McMoran or other commodities names that provide materials, such as copper, used to build houses.
AFTER HOURS ACTION: AMGEN
Amgen shares jumped in late trading Monday as the company reported a profit and sales that topped analysts' expectations and gave a rosier full-year outlook.
The biotechnology powerhouse earned $1.29 in its second-quarter on sales of $3.71 billion, compared with $1.14 a share on sales of $3.76 billion in the same period last year.
Analysts who follow Amgen expected the company to turn in a gain of $1.16 a share on sales of $3.58 billion, according to a consensus from Thomson Reuters.
And in a bit of a surprise, “Amgen also said Monday that it will collaborate with in Europe with GlaxoSmithKline on Denosumab, a post-menopausal osteoporosis drug,” explains CNBC’s Mike Huckman.
What’s the trade?
I was a buyer ahead of the numbers, explains Joe Terranova. Now I’d get out until August 13th, which is when an FDA panel meets to discuss Denosumab,.
> Click here for full coverage of Amgen earnings
SECTOR TRADE: HEALTH INSURERS
Investors clobbered HMOs after Aetnaslashed its full-year earnings forecast on Monday because of higher-than- projected medical costs.
Aetna, one of the largest providers of employer-based insurance, has boosted its enrollment while rivals struggle with such gains. Some analysts have worried the gains may be a sign Aetna is sacrificing profit margins to grab market share.
What’s the trade?
If healthcare reform dies the entire space is a huge buy but I’m not ready for that trade, says Karen Finerman. With all the uncertainty, I’d stay away.
TOPPING THE TAPE: COMMODITY STOCKS
Oil hovered around $68 on Monday on hopes that strong homes sales data signaled strength in the economy.
Also, a Reuters poll suggested world oil consumption would rise next year for the first time in two years on expectations of a rebound in the global economy.
What’s the trade?
It seems to me that energy will be the market leader in the second half of the year, muses Joe Terranova. However the “X” factor in the space is the CTC meeting coming up to discuss increased regulations on speculators.
Elsewhere in commodities, Alcoa and other steel names climbed higher on the promise of a more vibrant global economy.
In the space I’d keep my eye on the engineering stocks such as Foster-Wheeler, explains Pete Najarian. They seem cheap to me.
CHARTOLOGY: CAN RALLY KEEP GOING?
With a late day bullish reversal it seems you can’t keep this market down. What’s in store for the rest of the week?
Find out why technical analyst Greg Troccoli thinks the S&P will run into resistance around the 980 level. Watch the video now!
You can find out inerview with Greg Troccoli at the end of the Word On The Street video.
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Trader disclosure: On July 27th, 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 (POT), (AA), (BAC), (AAPL), (FXI), (SBUX); Seymour's Firm Is Short (PBR); Najarian Owns (UNH) Calls; Najarian Owns (BTU) Calls; Najarian Owns (BUCY) & Short (BUCY) Calls; Najarian Owns (INTC) Call Spread; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (MS) & Short (MS) Calls; Najarian Owns (MSFT) & Short (MSFT) Calls; Najarian Owns (V) & (V) Short Calls; Najarian Owns (WNR); Najarian Owns (YHOO) Call Spread; Terranova Owns (MCD), (AMZN), (MSFT); Finerman Owns (RIG); Finerman's Firm Owns (MSFT), (NOK), (PBR), (RIG), (TBT), (WMT); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (USO), (IJR), (IYR), (IWM), (MDY), (SPY)
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