The S&P closed lower on Tuesday as negative developments in global credit markets rekindled interest in the dollar, which in turn took down the commodities trade.
Specifically, equities faced pressure after Dubai's unresolved debt problems and Fitch Ratings' downgrade of Greece's bond rating dented risk appetite.
What must you know to trade this market?
Strategy Session with the Fast Money traders
I think investors are nervous that we might seen even more fallout in other nations, similar to what happened in Greece, says Karen Finerman.
Developments in Greece hit the euro hard, adds Tim Seymour. Investors are starting to say, if Greece has a problem maybe a lot of other nation’s do too. Right now I'd be carful of Europe based banks, especially Deutsche and HSBC, he counsels . They’re the two banks widely believed to have the most exposure to Greece.
I’m watching gold , adds Joe Terranova. The safety blanket of the entire investment world is gold and it’s the one asset trading below its pre-Dubai levels.
CHART OF THE DAY: DOLLAR INDEX
Watch the 50-day moving average in the Dollar Index, counsels Tim Seymour. The dollar broke its 50-day moving average for the first time since April, which is technically significant. If we stay above 50 the question becomes do we go to the 200-day which is around 79.50.
AFTER HOURS ACTION: TEXAS INSTRUMENTS MID-QUARTER UPDATE
After hours a sell-off surprised many investors. Shares of Texas Instruments moved lower in extended trade after the company released its mid-quarter update. What's surprising? The results appaered to be bullish. They showed fourth-quarter earnings and revenue would be at the high end of its target range.
But shares fell because some investors had higher expectations, explains CNBC’s Jim Goldman..
Elsewhere in tech, Cisco Chief Executive John Chambers reiterated the company's long-term target of 12 percent to 17 percent annual revenue growth, citing an economic recovery and expansion into new markets.
The top network equipment maker has fallen short of such growth rates in the past year as customers cut back on technology spending, but Chambers, at a financial analyst conference, said conditions had improved in recent quarters.
Looking at the sector broadly, it’s worth noting that tech preannouncements have been largely positive this year.
S&P 500 Sectors Pos. Preannouncements: Q4 2009
Information Tech 20
Consumer Disc. 8
Health Care 3
Source: Thomson Reuters
*Top 5 Sectors Shown
What’s the tech trade?
I think the Street expected TXN to raise upper guidance and we didn’t see that, explains Joe Terranova. If the stock pulls back on this news I’m a buyer around $24.
I don’t feel the need to jump into these stocks, says Tim Seymour. Although there’s still business to be had these stocks have had their run.
At a 17 P/E, I think Cisco is attractive, adds Pete Najarian.
MARKET BUZZKILL: MCDONALD'S
McDonald's led consumer stocks lower after the hamburger giant said sales at established U.S. restaurants fell for the second straight month as competitors like Burger King and Taco Bell pushed low prices to attract customers.
Weakness in Germany and China also pressured sales that analysts said were worse than expected throughout the world.
What’s the trade?
I think this was a pause that refreshed, says Karemn Finerman. I bought MCD on Tuesday’s dip.
I agree with Karen, echoes Pete Najarian. But my entry point is $58.
I’m not worried about McDonald’s overseas sales, adds Tim Seymour. I’d be more worried about Yum which may be growing at rate in Asia that they can’t support.
MARKET BUZZKILL: GOLDMAN LEADS FINANCIALS LOWER
The traders are keeping a close eye on bank stocks after shares of Goldman Sachs hit a 3 month low and reports suggested that Citigroup and Wells Fargo may be sparring with the government over TARP repayment.
What’s the bank trade?
My entry point in Goldman would be $160, says Karen Finerman. And I think $15 is an okay entry point in Bank of America.
I love JPMorgan , adds Joe Terranova.
Be careful of Deutsche and HSBC , says Tim Seymour. They’re believed to be the two European banks with the most exposure to Greece.
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Trader disclosure: On Dec. 8th, 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 (AAPL), (BAC), (GE), (INTC), (TIE); Najarian Owns (AAPL) Calls; Najarian Owns (BAC) Calls; Najarian Owns (C) Calls; Najarian Owns (GE) Calls; Najarian Owns (INTC), Is Short (INTC) Calls; Najarian Owns (TXN), (TXN) Call Spread; Finerman Owns (GOOG), (AAPL); Finerman's Firm And Finerman Own (RIG); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spreads; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Owns (CSCO), (MCD), (MSFT), (TGT), (WMT), (YUM); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Is Short (IWM), (SPY), (IJR), (MDY), (UNG), (USO)
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