The Dow closed at a 52-week high on Friday now less than 200 points away from the psychologically important 10,000 level. Investors are wondering if bank earnings coming out next week will provide enough tailwind to push the market across this important threshold.
What’s the play?
Instead of the Dow, I'm watching the S&P 500, explains Joe Terranova. The market is looking at 1075. If we get through that important level the question becomes -- will it run to 1120, which is the next important technical level?
The next couple days will be interesting, muses Tim Seymour. Monday is Columbus Day and the bond market is closed. Personally, I don’t see a catalyst for the market until Wednesday earnings from JPMorgan .
The Vix is flirting with the bottom of where it’s traded all years, says Karen Finerman. I think it’s time to get long volatility just because it’s cheap. It’s a good way to hedge your portfolio.
If you’re looking for a trade I’d look at Cisco , says Guy Adami. I think the stock has broken out. And my instincts tell me they’re about to make an big acquisitions.
CHIP NAMES CLIMBING HIGHER
Investors snapped up technology shares on Friday after Baird upgraded RIM to "outperform" from "neutral," saying upcoming device launches could be a positive catalyst and the current stock price was attractive.
Also, the SMH made gains after Deutsche raised it’s chip industry forecast and UBS said Intel’s Q3 sales could top outlook.
What’s the trade?
In tech, I’d look at Cree , counsels Guy Adami, and NTAP. Those are stocks that are still working.
STORY OF THE WEEK: GOLD’S RECORD BREAKING WEEK
Gold futures took a breather on Friday after a dollar bounce prompted pre-weekend profit-taking. The slight move lower follows this week's sharp rally to a record high above $1,060 an ounce.
What’s the trade?
I didn’t like the way gold reacted at $1050, says Joe Terranova. I reduced my position in gold, he adds, so I could put money to work in crude oil which I think may be the better play right now.
In the space I’d look at Freeport McMoRan, says Guy Adami. It feels like it’s breaking higher. And in energy I also like Apache as a momentum play.
Some of the copper miners look expensive to me, says Tim Seymour. I’m concerned about PCU . This stock is not cheap.
TOPPING THE TAPE: RESOURCES AND THE DOLLAR
Natural resource stocks jumped this week buoyed by a belief that recovery is underway.
However the price action stalled on Friday after Fed Chairman Ben Bernanke said that monetary policy might have to be tightened as a recovery takes hold, sending the dollar higher.
The greenback’s decline, which culminated in a 14-month low against a basket of currencies on Thursday, has been one the major underpinnings of the commodities rally.
What must you know?
I think Bernnake is sending a message telling the market that when it’s necessary he’s not afraid to pull the trigger and raise rates, says Karen Finerman.
I think that’s a total overreaction, counters Tim Seymour. I see no reason why interest rates change in the foreseeable future.
As unemployment continues to rise I see no way that the Fed can raise rates, echoes Joe Terranova.
For me the trade is shortAlcoa , says Guy Adami, with a tight stop. The P/E here just doesn't make sense to me.
YIELDS SPIKE TO END WEEK
U.S. Treasury debt prices sank on Friday after the Federal Reserve said it would not let its current easy money policy get out of hand, raising fears it was closer to hiking interest rates than previously thought.
The Fed's zero interest rate policy has helped drive the dollar to 14-month lows, and a lackluster long-bond auction on Thursday reminded officials that with a weak currency, foreign appetite for U.S. assets has limits.
Bernanke said the U.S. central bank must continue to prop up the economy for an extended period but cannot do so indefinitely for fear of triggering an inflationary surge.
His words reverberated through debt markets, sending benchmark yields to two-week highs.
What’s the play?
I’m short the TLT, reveals Karen Finerman, which is short the long-end of the Treasury curve.
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Trader disclosure: On Oct. 9th, 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), (BTU), (C), (INTC), (MSFT), (NUE); Finerman's Firm Owns (BAC), (BAC) Calls, (BAC) Preferred; Finerman's Firm Owns (UNH) Calls; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (CSCO), (M), (MSFT), (DRI); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (WLP) Calls; Finerman's Firm Is Short (TLT); Terranova Owns (JPM), (MOS), (NOV); Terranova Is Short (GRMN), (CCL); Terranova Owns December 2009 Gold Futures; Terranova Owns December 2009 Crude Oil Futures; Terranova Owns December 2010 Crude Oil Futures; Terranova Works For (VRTS); Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.; Seymour Owns (AAPL), (BAC), (EEM), (F), (INFY), (RTP)
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