Stocks drifted between gains and losses on Thursday as the bulls digested weak jobless claims data versus strong earnings from Yum! and UPS.
However it’s the financials that have captured the attention of our traders with Citi finally breaking above $5 although it struggled to hold that level.
What’s the bank trade now?
Citi is a long term hold for me, says Steve Grasso of Stuart Frankel. I’m holding it for a couple years. And I think breaking above the $5 level makes longer term investors feel safer and it could generate inflows.
Looking at the options, I see a lot of activity in the May 5 calls in Citi, says JJ Kinahan of TD Ameritrade. I interpret that as a bet that the price will remain at these levels for the next month.
Looking at the space more broadly, I’m concerned about the financials, says Guy Adami. Most of them are near their October highs and I worry we’re looking at a double top. My sense is that the rally is getting long in the tooth.
If you’re looking to play the space I’d do it with the credit card processors such as Mastercard and Visa, counsels Eugene Profit of Profit Funds.
As for the overall market, it feels to me like there’s a scramble to get back in, adds Steve Grasso. It seems to me the shorts and throwing in the towel. Money managers are afraid to miss this rally.
I think the market goes to 1225 but then I’d take a fresh look, adds Adami.
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OIL NAMES SEE A SLEW OF UPGRADES
Credit Suisse turned bullish on a slew of oil names Thursday initiating Suncor , Valero and Marathon Oil with 'Outperforms'.
The names however, did not react to the upgrades, instead they traded flat to lower.
What’s the trade?
I’m watching Apache, says Guy Adami. That stock took a hit on Thursday but I believe it has more upside. I’d use the weakness as a buying opportunity.
I like Plains Exploration but I see no need to rush into the oil exploration space right here, adds Eugene Profit.
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TAKE YOUR POSITION: GOOGLE
The traders are eager to hear from search giant Google which reports earnings after the bell on Thursday. The stock has underperformed this year, falling over 3% ytd.
What must you know ahead of earnings?
BGC analyst Colin Gillis is one of only 4 analyst with a ‘Hold’ rating on Google. He tells the desk Google earnings will probably be a sell the news event.
”Even if we get a good report shares have traded down in the June quarter for 4 years in a row,” he says. Take a look:
Jul 2006 -3%
Jul 2007 -5.2%
Jul 2008 -9.8%
July 2009 -2.8%
Source: BGC
But not everyone shares that opinion. As we told you yesterday, Jefferies analyst Youssef Squali is largely bullish Google on the fundamentals. “We love Google into earnings,” he says. Here are his two main reasons.
1) “We think the company is going to report a good quarter. We think earnings are going to be up close to 30% on 20% plus top revenue growth.”
2) “The stock has actually trailed the other large cap internets down 7% year to date. We think the stock will react positively on the print.”
What’s the trade?
> Click here for our complete Google Earnings Preview and trades from the Fast Money gang
* Watch the video for more analysis from BGC analyst Colin Gillis. In case you’re wondering Gillis tells us he has a ‘Buy’ on Yahoo!
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TAKE YOUR POSITION: GE
General Electric, the parent company of CNBC, reports earnings on Friday. The stock has seen a nice rebound in the last year rallying 30%.
What’s the trade?
GE shares have been on a run, reminds Guy Adami. I’d rather be in Honeywell , he counsels. I just think it’s a better run business. I think it could trade up to the high 60’s.
In the space I like UTX , adds Eugene Profit.
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CALL THE CLOSE:
Guy Adami: I think the market goes to 1225 then take a fresh look.
JJ Kinahan: I’m a buyer of the market up to 1220.
Steve Grasso: I’m a buyer of the market.
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Eugene Profit: I’m a buyer of the market.
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