Alcoa led the Dow higher on Friday after new data out of Beijing showed China’s recovery looked to be solidly on track.
In fact most metal stocks rose after the world’s third largest economy said industrial growth in November accelerated at its fastest pace since June 2007, while investment expansion remained robust. Also the data showed China’s imports surged 26.7 percent, their first rise in 13 months.
Considering conditions look rather bullish for this emerging giant, how should you be positioned?
Alcoa is approaching a 52-week high but it seems to me the stock could go even higher, says Joe Terranova. I’d be careful if you’re short this name.
Meanwhile, I’m watching the steel sector, he adds. The broad market appears to be slowing down so I’m looking for companies that have been underperforming in this sideways market. To me that trade is long steel. In the space I like US Steel.
I’m watching UTX, says Guy Adami. It’s a fairly valued stock. I think it’s a slow and steady trade. I’m also watching Honeywell . It’s not sexy but it gets the job done. I’m also watching L3 and Rockwell Collins.
I like Freeport, says Pete Najarian, even though the stock is down. With copper prices where they are, the company has to be making money.
MARKET KEEPS CHUGGING ALONG
Taking a look at the broad market, the S&P 500 closed higher on Friday after stronger-than-expected retail sales data for November renewed confidence in a steady recovery.
According to the Commerce Department retail sales increased 1.3 percent last month, the largest advance since August.
Although the results initially lifted the stock market , enthusiasm began to wane as more investors speculated the results could mean the Federal Reserve will raise interest rates sooner rather than later.
How should you be positioned?
Lately it seems the market is more receptive to going lower on negative news than higher on positive news says Joe Terranova. I think consolidation is coming into the market.
For months we talked about the market consolidating around 1100 and we’re there now, adds Bill Strazzulo of Bell Curve on the Halftime Report. This is a good place to take profits. I'm a seller of this market.
OIL BELOW $70
U.S. crude oil futures fell on Friday, hitting a two-month low as a stronger dollar sparked selling.
Also, lingering effects of Wednesday's government inventory report showing distillate and gasoline stocks rose last week continued to pressure the oil market
What’s the trade?
It seems to me that oil is starting to trade on fundamentals, says Joe Terranova. It’s no longer a dollar play.
Speaking of dollars, I’m watching the Dollar ETF , says Pete Najarian. An unusual amount of calls traded on Friday leading me to believe big investors believe the dollar could make a significant move higher.
TOPPING THE TAPE: CONSUMER SHARES CHARGE HIGHER
The S&P Retail Index closed higher Friday after the Commerce Department said retail sales increased 1.3 percent last month, which we noted above.
A recovery in consumer spending, a major component of U.S. economic activity, is seen as one of the key elements to sustained growth.
What’s the trade?
I’m not sure what to make of today’s data, says Karen Finerman. It may be too soon to say the consumer is better than expected.
In the space I like Home Depot, says Guy Adami. Resistance had been 28 but it closed above that level. I think it’s interesting.
In this space I like Ralph Lauren, Nordstrom and Tiffany , says Joe Terranova, as plays on the affluent consumer.
IS THE YEAR’S BEST TRADE BREAKING DOWN?
Of all the major indexes only the Nasdaq closed lower largely weighed down by National Semiconductor, which posted results that prompted concerns about its ability to regain market share.
What’s the tech trade?
I still like chip makers and the tech space broadly, says Pete Najarian. I just don’t see the pullback that everyone is talking about. We’re seeing a little consolidation, that's all.
In the space I like Teradyne and Marvell Technologies on a pullback, says Joe Terranova.
IS WELL FARGO NEXT?
Wells Fargo has joined a growing list of banks that are exploring options to return government bailout money, CNBC has learned.
The San Francisco-based bank has put out inquiries to institutional funds to see who would be interested in buying chunks of Wells Fargo stock in $250 million to $500 million increments.
Wells received $25 billion in funds under the Troubled Asset Relief Program. Other large institutions are looking to shed their TARP debts in an effort to escape government limits on executive pay.
What’s the trade?
Wells had been a short trade, but if you’re getting short now you’re trading wrong, says Guy Adami. The short trade is done. I’d be taking my short position off on this news.
OUTSIDE THE STOCKS: HIGHER RATES AHEAD?
The Fast Money traders are keeping a close eye on the bond market after debt prices fell earlier in the week, sending 30-year yields to four-month highs.
What’s the trade?
Steep yield curves are good for banks, says Karen Finerman.
BULL MARKET OR B/S:
If you watch Fast Money regularly you know that Peter Schiff is bearish on the US market. In fact bearish is putting it mildly.
But what about China? As we mentioned above new data out of Beijing suggests China’s recovery is strong and getting stronger.
What does Pete Schiff, president of Euro Pacific Capital have to say about that? Watch the video and find out.
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Trader disclosure: On Dec. 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; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (AAPL) Calls; Najarian Owns (BAC); Najarian Owns (DELL) Calls; Najarian Owns (FCX) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (GCI) Call Spread; Najarian Owns (INTC), Is Short (INTC) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (UUP) Calls; Najarian Owns (TXN), (TXN) Call Spread; Najarian Owns (CLF); Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (UNG), (KFT), (TLT); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spreads; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Owns (CBY), (MSFT), (TGT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (WMT); Finerman Owns (AAPL); Finerman Owns (GOOG); Finerman's Firm Owns (BSX)
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