OIL REVERSAL KNOCKS STOCKS
Both the Dow and S&P 500 closed in negative territory on Friday, ending their five-day winning streak after the declining price of oil dragged down energy shares.
The move in oil comes despite extreme dollar weakness, typically the two trade in opposite directions, but investors appear to be more focused on the latest inventory data which reveals less demand for gasoline.
However stocks did post solid gains for the week with the Dow up 1.7%, the S&P up 2.6%t, and the Nasdaq up 3.1%.
What’s the trade?
Strategy Session with the Fast Money traders
I thought it was a great week however the oil chart broke, explains Joe Terranova. Oil failed at $72.90 and aggressive selling came in. That’s what took the market down on Friday.
With the dollar weaker oil should have climbed and it did not, adds Tim Seymour. That’s telling.
As far as I can tell resistance for oil is $75, adds Greg Troccoli. Patterns in the charts suggest oil can’t climb higher unless it closes above $75
And be careful if oil heads a lot lower, say to $60, muses Terranova. It could take down the oil services stocks and in turn that could drag down the entire S&P.
It might drag down the S&P, counters Najarian. But it also means lower prices at the pump and that could actually provide a tailwind for gains.
GOLD RUSHES PAST $1000
Gold prices rushed past $1,000 an ounce on Friday as the dollar tumbled to one-year lows, fuelling interest in gold as an alternative asset.
"The dollar seems like it could be heading for $1.50 against the euro. There are bound to be people seeking currency hedges, and gold's a good one," says Citigroup analyst David Thurtell.
With the precious metal closing above the psychologically important $1,000 level will it maintain its upward momentum?
What’s the trade?
I’m long gold, says Joe Terranova. Now I’m watching $1033 as the next important level. I see no reason technically or fundamentally to get out of this trade.
But if we don’t break above $1033 in the next few weeks trade carefully, counsels Greg Trocolli. That will be a problem.
Forget about gold, says Pete Najarian. I’d look at the miners such as Freeport-McMoRan as a winner due to broad strength in all the metals.
I’d be cautious in owning FCX until copper gets a 3-handle, counters Joe Terranova.
On the other side of this trade is the weak dollar, reminds Tim Seymour. I expect further dollar weakness and I’d play it with the FXA or FXC .
MORGAN STANLEY UP AS MACK LEAVES
It seems investors anticipate an orderly changing of the guard at Morgan Stanley next year when CEO John Mack steps down.
In the first day of trading since the announcement shares of Morgan Stanley closed modestly higher but made no major move in either direction.
51-year old Morgan Stanley co-president James Gorman won't replace Mack until early 2010 but already investors want to know how the the change will impact the company.
What's the outlook?
Bernstein analyst Brad Hintz tells Fast Money that Morgan Stanley has been underperforming on the trading side of the business. And Gorman can’t turn around the ship overnight.
However in his old job Gorman was the perfect guy to be integrating Smith Barney, adds Hintz and now he won't be doing that. (Hintz isn't thrilled)
Meanwhile, Fox-Pitt Kelton analyst David Trone wrote in a research note that Gorman's appointment shows Morgan Stanley is dedicated to increasing its focus on the wealth management business.
And Barclays Capital analyst Roger Freeman said Morgan Stanley was still in "soul-searching mode."
What's the trade?
I would not put new money to work in Morgan Stanley until this works out, counsels Greg Troccoli.
TOPPING THE TAPE: FEDEX FORECAST
The Dow Transports made gains on Friday after FedEx raised its earnings forecast, citing better-than-expected international shipments and cost-cutting. Shares leapt with investors interpreting the performance as an indicator of overall economic health.
FedEx, however, hesitated to predict when a recovery may ramp up. “Despite some encouraging signs in the global economy, it is difficult to predict the timing and pace of any economic recovery," Chief Financial Officer Alan B. Graf Jr. said in a statement.
What’s the trade?
FedEx raised a forecast that they had lowered, reminds Tim Seymour. I’m not so sure these results are a leading indictor.
The technicals suggest to me FedEx could go to $80, counters Greg Troccoli.
OPTIONS ACTION: LAS VEGAS SANDS
Options trader Scott Nations has spotted unusual options activity in Las Vegas Sands. The volume of Jan 20 calls traded suggests this stock could make a sharp move higher.
Greg Troccoli also likes the upside potential in LVS.
BREAKING NEWS: UNITED STATES NATURAL GAS FUND (UNG)
In breaking news host Melissa Lee reveals that the UNG will begin issuing new shares starting September 28th. A couple weeks back they said they would stop issuing shares and as a result the ETF had been trading at a premium to the underlying commodity.
In the after-hours, the traders noted that the premium did start to collapse.
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Trader disclosure: On Sept. 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: Najarian Is Long Apple (AAPL): Najarian Is Long Bank of America Stock, Short Calls: Najarian Is Long Citigroup Calls: Najarian Is Long Discovery Financials Calls: Najarian Is Long (ENER):Najarian Is Long (FCX), Short Calls:Najarian Is Long (JPM) Stock, And Puts; Najarian Is Long (JOYG) Stock, Short Calls; Najarian Is Long (MS) Stock, Short Calls; Najarian Is Long (MSFT) Stock, Short Calls; Najarian Is Long (PALM) Calls; Najarian Is Long (RIMM) Calls; Najarian Is Long (TEVA) Stock; Najarian Is Long (V) Stock, Short Puts & Calls; Najarian Is Long (WFC) Long Puts, Short Stock; Najarian Is Long (YHOO) Calls; Terranova Is Short (CCL); Terranova Is Long Gold Futures; Seymour Owns (AA); Seymour Owns (AAPL); Seymour Owns (BAC); Seymour Owns (BX); Seymour Owns (F); Seymour Owns (RIMM); Seymour Owns (SBUX)
For Scott Nations:
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