On the first day of the second quarter, stocks were up marginally after strong manufacturing numbers came out from the US, China, Japan and the United Kingdom, which demonstrated global growth. With the US markets going into a long weekend, what should you be watching and how can you make money in this environment?
Fast Money Strategy Session
The driving factor today was commodities, says Pete Najarian, pointing out copper, steel and iron ore specifically. This strength pushed into the commodity names, he says, which manifested themselves in an increased volume of upside options calls for companies like Dupont and Seabridge, indicating that there is further room for these stocks to go.
Guy Adami sees this as one of the many reasons to believe in the market's momentum, saying that if you trade against it you're likely to get run over. He suggests names like Walter Energy (WLT), which has continued to hit new 52-week highs and has been experiencing sustained upward momentum.
Tim Seymour agrees about the market's momentum, and adds that this was intensified by optimistic data and the first new day of a new quarter, which he sees as a "big reason" why new funds are being put into the market. Although he's been skeptical of the momentum over the past few days, Seymour is hot on developed markets, which he sees as a sign that the global economy is picking up steam and will lead to growth in the emerging markets. He points out that numbers from the UK, China and Japan bode well for commodity stocks. In this environment he sees opportunity in underperforming energy names like Petrobras, Gazprom , PetroChina and ExxonMobil . "These are some of the biggest companies in the world, and they have lagged this rally," he said.
Chemical names are also worth a look, they are on fire, adds Pete Najarian, who suggests companies like Norfolk Southern.
Looking ahead, Karen Finerman notes that the bar has been raised for Friday's employment number to be a good one, but sees this number as being less important than it used to be. She says she's more interested in the upcoming earnings season, because for individual companies this is the single most important number you can get. Secondary to earnings is the macro environment, she says.
Brian Kelly, President of Kanundrum Capital, sees the unemployment number as a tricky situation, because if the number comes out near the higher end of estimates, it could suggest that the Fed may be set to raise rates. If the number is on the low end, he thinks the market will interpret this as an underperforming hand-off from the public sector to the private sector. In order for the number to be good for the market, it has to land in a "very narrow range," he says.
Playing the Jobs Report
Pete Najarian has seen protective put option buying going into the weekend in expectation of the jobs numbers, which can be sold on Monday if the employment data doesn't roil markets, which he thinks is a "good strategy." He also points out that volatility crept higher near the end of the day, which might signal that "mutual fund monday" trades were occurring ahead of the jobs number.
Patti Edwards of Storehouse partners sees some specific and profitable trades brewing around this jobs number. If the American consumer lacks jobs in a time when prices are going up, this will not look good for the consumer, she says. After retail names have gone for a run of recent, she thinks the move now is to short one of the big indexes, like the XRT or the RTH while picking up individual equity names like JCrew or Nordstrom that may outperform the broader sector. "I wouldn't want to be long the entire sector at this point," she says.
Edwards sees rising oil prices and unemployment fueling a dip in retail, as cash-strapped consumers look to avoid paying higher prices for gas.
Karen Finerman thinks there could be short potential in retail, but also highlights names like TJ Maxx who is trading at good valuations, noting that retail has been back from the brink and says that there are still good opportunities in the sector. Guy Adami says that a company like Gap is a strong name like the ones Finerman is referring to.
Take Your Position: iPad Predictions
If Apple follows its past trading patterns, the stock should sell off on Monday, but Tavis Mccourt, analyst from Morgan Keegan says it may be different this time, as the company hasn't outperformed the market by a wide margin since the iPad announcement, and there hasn't been the incredible hype of the product pushing the stock price higher like what happened when its sister device, the iPhone, was released.
Will Apple continue to hit new highs after the iPad release? With shares up 14% since the device's announcement in January, should investors fear for their profits? Not at all, says Mccourt. He thinks that sales of the iPad "will not disappoint" but also sees the core of Apple's revenue coming from this Mac products and the iPhone, with the iPad simply being the "icing on the cake." He sees the expectations being "very realistic" from institutional investors, who are not as bullish on the iPad as they were on the iPhone.
So besides Apple, what are the iPad trades?
Pete Najarian sees opportunity for Broadcom as providers bolster their data services, as well as JDS Uniphase , a stock "which has been on fire," he says.
Karen Finerman sees opportunity in Best Buy, which she thinks is a cheap stock, and will be a retailer of iPads.
Guy Adami wonders whether Dell is positioned to be a loser in this trade, as they simultaneously try to reposition themselves as an information solutions company. He thinks there may be short opportunity in the company as a result.
Pete Najarian also sees the biggest losers being the netbooks, as the iPad will likely "blow out" that price range of the market.
Patti Edwards expects Electronic Arts and THQ Inc. to both be beneficiaries of the iPad's release after the device opens a new market for games.
Topping the Tape: Borders Group
The bookseller Borders repaid a loan and locked in key financing for a major percentage pop, a move that was predicted by Bill Ackman in early February as an "attractive risk-reward" play. Despite this strength, Patti Edwards thinks that it's time investors step away from bookstores, as digital competition is heating up.
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Trader disclosure: On April 1st, 2010, 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)
Adami Owns (C)
Adami Owns (GS)
Adami Owns (INTC)
Adami Owns (MSFT)
Adami Owns (NUE)
Adami Owns (BTU)
Seymour Owns (AAPL)
Seymour Owns (FXI)
Seymour Owns (VALE)
Seygem Asset Management Owns (PBR)
Najarian Owns (BPOP) Calls
Najarian Owns (CENX) Calls
Najarian Owns (JDSU), Is Short (JDSU) Calls
Najarian Owns (WFR) Calls
Najarian Owns (YHOO) Calls
Finerman's Firm Is Short (IYR)
Finerman's Firm Is Short (IJR)
Finerman's Firm Is Short (MDY)
Finerman's Firm Is Short (SPY)
Finerman's Firm Is Long S&P Puts
Finerman Owns (AAPL)
Finerman's Firm And Finerman Own (GGP)
Finemran's Firm And Finerman Own (RIG)
***NO DISCLOSURES ON STOCKS TO BE DISCUSSED
Finerman/PLCE 2/25, PLCE 3/3
Kanundrum Capital Is Long U.S. Dollars
Kanundrum Capital Owns (AWI)
Kanundrum Capital Owns (FNM)
Kanundrum Capital Owns (FRE)
Kanundrum Capital Is Short Treasuries
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Swiss Franc
Kelly Owns (FXE) Puts
Edwards Owns (AAPL) For Clients
Edwards Owns (AMZN) For Clients
Edwards Owns (DELL) For Clients
Edwards Owns (ERF) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (HPQ) For Clients
Edwards Owns (MOT) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (NKE) For Clients
Edwards Owns (NOK) For Clients
Edwards Owns (ORA) For Clients
Edwards Owns (RIMM) For Clients
Edwards Owns (GLD) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (UUP)