The blue chip rally continued Monday; around lunchtime the Dow was beginning to flirt with psychologically important 11,000 level for the first time since autumn 2008.
Action in the broad market appeared equally bullish; in fact Birinyi increased its 2010 target for the S&P 500 to 1325. The firm cited moves within the market that could indicate the economy is better than expected.
A host of stocks in different key sectors of the economy are up by triple digits since the March lows. It's our chart of the day.
Performance Since 3/9/09
US Steel 264%
Ralph Lauren 165%
But there may be more to these gains, than meets the eye. Where do we go from here?
Strategy Session with the Fast Money traders
Across the board, many stocks in the Dow 30 are touching the 52-week highs but they’re not breaking above, explains Jeff Tomasulo of SMB. Whether they break out or not will be telling. I think the trend is higher but I am cautious.
I’m bullish on the market but I’m also cautious, says Pete Najarian. With the Vix trading at the lower end, if you want to participate on the long side I’d also buy put protection, he says.
I’m watching the volume in the market, adds Scott Nations, and lately it's been tepid. Without big volume it's hard to believe we’re really headed higher.
What we're seeing is some quarter-end rebalancing by institutional portfolio managers, says Fred Dickson, chief market strategist at D.A. Davidson in a Reuters interview. Portfolio managers typically scout out recent best performers as the quarter end approaches in a practice known as "window dressing."
The real story on Monday may be in the commodities sector with oil up sharply. Is it sector rotation or is crude finally ready to break out?
Broadly, I think we’re seeing investors rotate into laggards, says Carter Worth of Oppenheimer. Energy shares are down on the year as a sector and they’re attracting a bid because of it.
Also, historically we’re moving into a season when oil and energy performs well, explains Jeff Tomasulo. It’s not surprising to see investors rotate into these names just to make that trade.
I can’t help but wonder just how much of the pop has to do with the unfortunate events in Russia, says Scott Nations. (On Monday Moscow was rocked by two suicide bombings in its subway system.)
TOPPING THE TAPE: BOEING
The traders are watching Boeing after the company received three upgrades last week – from Macquaire, Cowen & Co and Oppenheimer. Meanwhile JPMorgan raised earnings estimates on the aviation giant to $80 on Monday.
What’s the trade?
In the space I’m watching RTI and TIE as second derivative trades, says Pete Najarian. These names could participate over the next couple of years based on strength at Boeing. But Boeing itself makes me nervous at these levels.
If I was long BA, I’d trim my position, counsels Carter Worth.
TOPPING TAPE: FAST FOOD NAMES
The traders also have fast food names on the radar after Citi analyst Greg Badishkanian raised his price target on Burger King to $22 from $19, predicting that investor pessimism has left room for upside .
He said investors weren't expecting much sales improvement for Burger King in March because they predicted double cheeseburger sales would continue to slow down. He also said investors were expecting the new Steakhouse XT sandwich not to do well because it carries a higher price point.
Badishkanian said his checks show that March sales at Burger King stores open at least a year actually increased. Additionally, overall traffic at fast-food restaurants open at least a year improved in March, he said, for the first time in over a year. He largely credited consumers' pent-up demand following bad weather in the previous two months.
TRADE TO GO: FINANCIALS
The U.S. Treasury on Monday pledged to sell its 7.7 billion Citigroup shares this year, a step that further reduces the government's influence on the banking giant.
What's the bank trade?
If you’re long financials take profits, counsels Scott Nations.
CALL THE CLOSE
Pete Najarian; I’d see into the close.
Carter Worth: I think the market fades at the close.
Scott Nations: I’m long but I have an itchy trigger finger.
Jeff Tomasulo: I think the trend is higher but I’m cautious.
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Trader disclosure: On March 29th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (BAC) Calls; Najarian Owns (C) Calls; Najarian Owns (YUM) Calls; Najarian Owns (CAT) Calls; Najarian Owns (WFR) Calls; Najarian Owns (TIE) Calls; Nations Owns (SPY); Scaramucci Owns (AAPL); Scaramucci And Skybridge Own (BAC); Scaramucci And Skybridge Own (C); Scaramucci Owns (MS); Scaramucci Owns (MSFT); Scaramucci Is Long U.S. Dollar; Najarian Owns (CLF) Call Spread; Najarian Owns (F) Calls; Najarian Owns (RDC) Calls; Najarian Owns (RRC) Call Spread; Najarian Owns (SWN) Call Spread; Najarian Owns (YHOO) Calls; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC); Finerman's Firm And Finemran Own (GGP); Finerman Owns (GOOG); Finerman's Firm Owns (IBM), (MCD), (PDE), (RIG); Finerman's Firm And Finerman Own (WFC) Preferred; Terranova Is Short (GS), (CAL), (UAUA); Terranova Is Long Crude Oil Futures (May 2010); Terranova Works For (VRTS)
For Joe Terranova
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (GOK)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLI)
For Brian Kelly
Kanundrum Capital Owns (SYY)
Kanundrum Capital Owns (PTV)
Kanundrum Capital Owns (PAG)
Kanundrum Capital Owns (TXN)
Kanundrum Capital Owns (IBM)
Kanundrum Capital Owns (S)
Kanundrum Capital Owns (CCI)
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Is Short (GS)
Kanundrum Capital Is Short (FCX)
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Swiss Franc
Kanundrum Capital Is Short Treasuries
Kanundrum Capital Is Short Copper
For Greg Badishkanian
Citigroup Global Markets Or Affiliates Has Managed Or Co-Managed Offering For (MCD), (YUM) In Past 12 Months
Citigroup Global Markets Or Affiliates Has Received Investment Banking Compensation From (MCD), (YUM) In Past 12 Months
Citigroup Global Markets Or Affiliate Received Non-Investment Banking Compensation From (MCD), (DPZ), (YUM), (BKC) In Past 12 Months
(MCD), (YUM) Are Or In Past 12 Months Were Investment Banking Clients Of Citigroup Global Markets
(MCD), (YUM), (BKC) Are Or In Past 12 Months Were Clients Of Citigroup Global Markets (Non-Investment Banking, Securities-Related Services)
(MCD), (DPZ), (YUM), (BKC) Are Or In Past 12 Months Were Clients Of Citigroup Global Markets (Non-Investment-Banking, Non-Securities-Related Services)
Citigroup Global Markets And/Or Affiliates Has A Significant Financial Interest In Relation To (MCD), (YUM)
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