The Dow closed above 11,000 for the first time in almost 19 months on Monday as expectations of solid first-quarter earnings spurred buying in financial, energy and industrial sectors.
What must you know?
I'm watching the Vix, says Pete Najarian I’m concerned about the low levels of volatility. It suggests to me complacency. And the volume of retail investors pouring into the market concerns me as well. If you’re thinking about establishing new positions make sure to protect yourself with puts.
I’m still bearish on the market, reminds Guy Adami. But with that said I wouldn’t fight the tape.
A lot of investors feared that this earnings season would be similar to January earnings when Alcoa started some kind of market correction; as you remember we saw good earnings and bad stock action, says Gary Kamninsky.
But I don't see that happening this time, he adds. The difference is that the capital markets are functioning well. It means the markets are healthier.
PALM ON THE AUCTION BLOCK
The Fast Money traders are keeping a close eye on the action in Palm . According to published reports, Palm has hired bankers including Goldman Sachs to explore several options, including a sale of the company.
According to Reuters, Suitors would likely pay more than $1 billion for Palm, given its market value of $870 million as of Friday's close, and the average deal premium of 30 percent for a technology company, bankers said. The buyer would face additional integration costs.
What’s the trade?
I want no part of this trade, says Joe Terranova. There are much better places to put money to work.
I think the only people who win in this scenario are the bankers, muses Gary Kaminsky.
ENERGY DEALS HAPPENING
It appears that M&A is alive and well in energy space too.
- RRI Energy and Mirant agreed to merge forming one of the largest independent power producers in the US.
- Halliburton agreed to buy Boots & Coots in a cash-and-stock deal valued at about $232 million.
What’s the trade?
Independent power producers have lagged, muses Karen Finerman. It’s a space that I’m watching.
I’m very bullish on M&A in the energy space, adds Joe Terranova. I really like long Suncor in this space.
If you’re in this space, I’d think about buying puts, counsels Pete Najarian.
FAST FOOD DEALS TOO
There’s even more M&A news to tell you about. California Pizza Kitchen Inc confirmed on Monday that it was exploring a sale of the company.
What’s the trade?
I’d play the M&A trend with a long position in Blackstone, says Guy Adami.
BREAKING NEWS: WASHINGTON MUTUAL
In breaking news Mary Thompson reveals new information about Washington Mutual’s lending practices to build it’s subprime business. Here’s her report.
For years Washington Mutual engaged in fraudulent lending practices to build its subprime securitization business.
Those are the findings of the Senate permanent subcommittee on investigations. It is probing subprime lending's role in the financial crisis.
In its report it alleges through high risk lending, lax controls and destructive pay practices Washington Mutual infected the secondary mortgage market with billions of defective loans. It did so in pursuit of profits generated by selling these loans to Wall Street firms that in turn repackaged them and sold them to investors through a process called securitization.
Among the allegations, Washington Mutual’s subprime lender Long Beach, consistently bought and then resold mortgages that did not meet Wamu's standards, though Wamu's senior management did little to improve these practices.
Within its own prime lending operations employees went so far as to cut and paste bank statements from current clients to create files for new borrowers so they'd be approved for loans more quickly.
While loans generated by one office in California were so defective, AIG stopped writing insurance on them, subsequently alerting the FDIC and California insurance regulators of these problems.
The subcommittee's holding a hearing Tuesday. The key witness, the firm's former CEO Kerry Killinger. He was fired in September of 2008, right before the FDIC took over the thrift in the country's biggest ever bank failure
UNDER THE RADAR: CHEMICAL NAMES
A 10 point gain on the Dow not doing it for you? Take a look at the gains in some "under the radar" chemical names! Dupont broke out – it’s up 10% in the last month.
Is there still time to get in on the trade?
In this space, I think we could see Dupont as well as Dow and Eastman Chemical all explode to the upside, muses Pete Najarian. Right now demand is high enough that I’m not worried about the high price of oil dragging down any of these names.
I’m also a buyer of Eastman, adds Guy Adami, but on a pullback.
CONSUMER DISCRETIONARY ON FIRE?
Not everybody is enthusiastic about the resilience of the American consumer.
In fact Peter Boockvar of Miller Tabak is downright grouchy. He thinks consumers are about to stop spending – not start.
Is he onto something?
Check out our interview with Peter Boockvar. Watch the video now!
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Trader disclosure: On Apr 12, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Grasso Owns (AAPL), (C), (BAC), (WMT), (T), (LPX); Karabell Owns (FCX); Karabell Owns (AAPL) ; Jon Najarian Owns (PALM) options; Jon Najarian Owns (CAR) options; Adami Owns (INTC), (GS), (AGU), (MSFT), (NUE), (BTU), (C); Terranova Owns (HES), (TER), (AXP), (MOS), (APA), (YHOO); Terranova Is Short (LCC); Pete Najarian Owns (AA) Call Spread ; Pete Najarian Owns (BAC) Calls; Pete Najarian Owns (C) Calls; Najarian Owns (DD) Call Spread ; Najarian Owns (DOW) Call Spread; Najarian Owns (LVS) Call Spread; Najarian Owns (MRVL); Najarian Owns (PCX) & Short (PCX) Calls; Najarian Owns (STX) Call Spread; Najarian Owns (TSO) Calls; Najarian Owns (YUM) Call Spread; Najarian Owns (YHOO) Call Spread; 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), (JPM); Finerman's Firm Owns (TJX), (BBY), (JPM), (AEO), (IBB)
Other Relevant Disclosure:
Credit Suisse Does and seek to do business with companies covered in its research reports (JPM)
Stuart Frankel & It's Partners Own (LPX)
Stuart Frankel & It's Partners Own (SDS)
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