After a rough and tumble day of trading, which included over a half dozen intra-day reversals, both the S&P and Dow closed higher for the session on Monday.
Ultimately investors were cheered by strong economic data that showed better than expected manufacturing activity and a surge of pending home sales.
However the indexes pared gains after a Federal Reserve official suggested banks might still face massive loan losses.
What must you know to trade this market?
The ISM data is substantial, muses Karen Finerman. If we get a good employment number then I think it’s hard to make any case other than the economy is recovering.
But we’re through earnings season and now the market need momentum, adds Tim Seymour. And I’m not sure we have it. We closed right at resistance. I think the big news of the week will be the Fed.
The way the market traded on Monday afternoon gives me some encouragement, adds Joe Terranova. We didn’t break below any important technical levels. That suggests instead of a deep sell-off, the correction may be mild.
The market had every reason so soar 300 points on Monday and it didn’t, adds Guy Adami. It’s a stormy situation.
FINANCIALS END ROLLER COASTER DAY HIGHER
Financials managed to close higher on Monday despite comments from Jon Greenlee, the associate director of the Fed's Division of Banking Supervision and Regulation, who said banks are at risk for sizable new loan losses, particularly on commercial property, and some banks may not have enough capital to fully cushion against setbacks
Meanwhile patterns in the chart of Goldman show it hitting resistance time and again at its 40-day moving average.
What’s the bank trade?
In the space the only stock I like is Goldman, says Joe Terranova. It’s clearly under pressure but I’m bullish as a best of breed play.
I expect to see Gldman to head down to the low 160’s, counters Guy Adami. And in terms of banks overall, in this environment I’d be a seller of rallies. Or if you want to be aggressive I think you can short some of these names such as Wells Fargo.
ANALYZE THIS: BOLD CALL OF THE DAY
Shares of BlackBerry maker Research In Motion fell sharply on Monday after Citi analyst Jim Suva downgraded the stock to ‘sell’ from ‘buy’ due to mounting competition from other smartphone makers.
He cited the launch of a Motorola smartphone running on Google's Android operating system as being among the key competitive threats that RIM faces.
"Simply put, there is an invasion of new phones, applications, and competition," he said. "The revolution of product and application service offerings is going to start to crack open the enterprise door and pose a risk for Blackberry."
"Much of RIM's growth recently has been driven by the consumer, who will soon have more choices with more compelling software and hardware features," Suva said.
What’s the trade?
I don’t thinkMotorola hits a home run with the Droid, muses Tim Seymour.
To me Motorola is not the same story as Palm , at least in terms of what may happen to the stock, says Joe Terranova. If you’re looking for a trade in the space, I’d rather look at Apple.
In the tech space I’m watching Intel, muses Guy Adami, I think it still trades lower.
The Fast Money gang spoke with Suva on Monday’s show during the Word on the Street segment. Find out what else he said about the smartphone trade. Watch the video now.
TOPPING THE TAPE: FORD
Ford stunned the Street and posted a quarterly profit on Monday, defying Wall Street forecasts for a loss.
Cost cutting and an increased market share led the automaker to raise its 2011 outlook to "solidly profitable" from break-even.
Investors took the results to mean Ford has distanced itself from rivals GM and Chrysler, which have struggled to complete restructurings after emerging from government-funded bankruptcies earlier in 2009.
Though optimistic, CEO Alan Mulally emphasized that he’s cautiously optimistic.
"The only reason that we are saying cautiously optimistic is that we want to see a couple of months, see how the consumer gets back into the market and we will give our assesment and our outlook for 2010 in January."
What’s the trade?
In three years this could be a $20 stock, says Guy Adami. But it’s a trade for the long-term.
WAL-MART LEADS CONSUMER SHARES HIGHER
Strength in Walmart led consumer shares higher after the company offered100 more $10 toys for the holidays. Also positive economic data suggested that the consumer might not be as bad as previously feared.
BULL MARKET OR BS?
The schizophrenic stock market changed direction 9 times on Monday. But that didn’t rattle Doug Kass, Seabreeze Partners president and widely followed strategist.
That’s because ultimately he thinks its only headed in one direction. And which way would that be? Watch the video and find out!
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Trader disclosure: On November 2nd, 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), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (AA), (AAPL), (BAC), (EEM), (SBUX), (F); Seymour Is Short (FXI); Terranova Is Long (GS); Finerman Owns (RIG); Finerman's Firm Owns (CLX) ; Finerman Is Long (BAC) Calls; Finerman's Firm Is Long (BAC) Call Spreads; Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (FLS); Finerman's Firm Is Short (FLS)Calls; Finerman's Firm Owns (MSFT); Finerman's Firm Owns(NOK); Finerman's Firm Owns (PBR); Finerman's Firm Owns (PDE); Finerman Owns (PDE); Finerman's Firm Owns (RIG); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Is Long (TGT); Finerman's Firm Is Long (WMT); Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (UNG); Finerman's Firm Is Short (USO)
For Jim Suva
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