On the last day of November, a late day turnaround led stocks to close higher with both the Dow and S&P posting their largest monthly percentage advances since July.
Shortly before the end of trade, the bulls took control of the market on a growing belief that the fall out from Dubai’s debt woes will be contained - and 'not a big deal'.
What must you know to trade this market?
Strategy Session with the Fast Money traders
I think the same people who were glib enough to say Dubai isn’t a big deal are the same people who said the collapse of the Bear Stearns hedge fund wasn’t a big deal. One day we’ll look back on these events as an important piece of the puzzle.
There are just too many unknowns right now, adds Pete Najarian. But some of the late day turn could stem from the mutual fund Monday phenomenon.
I think we’re being reminded of the fundamental challenges we’re facing all around the globe, says Joe Terranova. But the action today suggests to me the market digested the news and then shook it off.
Dubai is holding a massive amount of debt, adds Karen Finerman. I don’t know what to make of the relatively positive market action. Stocks weren't down enough for me to say – okay it’s all priced in. With that said, I do think there’s money on the sidelines that will get put to work through the end of the year, she adds. I think we have a floor.
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YEAR END RALLY?
For the month of November, the blue-chip Dow average rose 6.5 percent, while the S&P 500 gained 5.7 percent and the Nasdasq added 4.9 percent.
Looking ahead to December, over the past 100 years the Dow has averaged gains of 1.32% in the final month of the year. Will this year follow the same pattern?
What do you think? We want to know!
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TOPPING THE TAPE: FINANCIALS LEAD THE WAY
The KBW Bank ETF closed higher on Monday with investors betting that bank exposure to Dubai's debt problems will be limited.
The positive tailwind was at least partly generated by Goldman Sachs, which said Citigroup , Bank of America, JP Morgan and others will avoid a major hit stemming from Dubai’s debt problems, because they have a lot less direct exposure than European banks.
What’s the bank trade?
If you’re looking for a trade in this space I’d look at Jefferies , says Guy Adami. Think about a long position in that one. US Bancorpmight also be worth a look, he adds. It could go to 29.
However, I wouldn’t pile into JPMorgan or the other stocks mentioned above. By and large the opportunities in this space are on the short side, Adami says.
In the space I’m watching options action in AIG , adds Pete Najarian. Big out of the money put buying suggests to me that options investors think trouble could lie ahead. Pay attention to this.
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BLACK FRIDAY WRAP-UP
The S&P Retail index traded lower on Monday after the National Retail Federation said that total Black Friday holiday spending was down from last year, suggesting that consumers were still reluctant to open their wallets.
However, there were some bright spots in the space. Online retailers' shares rose after analytics firm comScore said that online spending was the highest it had ever been on Black Friday, with Cyber Monday spending expected to be even stronger.
On the news the grand-daddy of all e-tailers-- Amazon -- hit an all-time high of $135.25 in intraday trading.
What’s the trade?
The number 1 trafficked website was Walmart, says Pete Najarian. That says to me people are spending but they’re spending carefully.
I think the trade is how people are buying, adds Joe Terranova. And that’s Visa , Mastercard for credit and debit card sales and FedEx for shipping this online purchases.
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TIME TO BUY STEEL?
Shares of US Steel traded higher on Monday after Goldman Sachs placed the company on its conviction buy list and upgraded the steel sector to “Attractive” from “Neutral” saying that rising scrap prices combined with underperformance of the group signals opportunity.
What’s the trade?
I’d look at US Steel as weel as Steel Dynamics, says Pete Najarian. I think Goldman is right. Also, I’m watching copper, he adds. Everyday copper is above $3 I’m bullish Freeport McMoRan.
I think FCX could correct into the mid-70’s, adds Guy Adami.
If you think Goldman Sachs is right, then I’d look at Nucor, adds Joe Terranova.
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BARRONS BOUNCE: MONSANTO
Monsanto led the ag names higher on Monday after Barron’s turned bullish on the company citing long-term prospects for the firm's seed business as the world's population rises.
What’s the trade?
In the space I’m watching Deere , says Pete Najarian, which JPMorgan upgraded recently.
If you’re holding Monstanto, I think it’s hitting a point where you want to get out, counsels Joe Terranova. And I’d be a buyer of of Potash against 105 and Interpid Potash at 29.
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Trader disclosure: On November 30th, 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), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (PLCE), (MSFT), (WMT), (PDE), (RIG), (TGT); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Calls; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (USO), (UNG); Najarian Owns (AAPL) Call Spread; Najarian Owns (BRCD) & (BRCD) Calls; Najarian Owns (INTC) & Short (INTC) Calls; Najarian Owns (DELL) Calls; Najarian Owns (DE) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (INTC) & (INTC) Calls; Najarian Owns (UAUA) Call Spread; Terranova Owns (SU), (GOOG), (AAPL)
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