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Halftime Pt. 2: The Better Way to Play Tech's Weakness?


The technology sector showed extreme weakness in midday trading Wednesday, as the Philadelphia Semiconductor Index dropped dangerously close to a 52-week low. But don't look for opportunities in the semis just yet, says one Fast Money Trader.

Shares of two semiconductors, Applied Materials and NVIDIA , hit a 52-week low Wednesday. Some brokerage firms have become bearish on Intel , citing inventory build at several chip makers, which is bad for gross margins.

Rotate out of the semis and into software names, says Joe Terranova of Vitrus Investment Partners.

But if the semis, which provide chips to operating systems aren't selling because computers aren't being sold, wouldn't that hurt software names too, asked host Melissa Lee. Terranova says that could be the case, but from a technical standpoint, he likes this mean reversion trade. He adds that the software names have "significantly" underperformed relative to the semiconductors throughout the earlier part of the year.

Elsewhere in the tech space, Cisco Systems is scheduled to report earnings after the closing bell Wednesday.

Jon Najarian, co-founder of optionMONSTER.com, likes the stock at $23 a share because it's one of the big moving averages. Najarian says he's seeing a lot of calls being bought. He recommends buying shares of CSCO on this dip.

Lee asked Patty Edwards of Storehouse Partners if she would consider buying Cisco, granted the company is expected to start paying a dividend in the near future. Edwards says she isn't interested in a company's dividend, so much as what it's doing. She prefers IBM right now.


Despite soft domestic demand and sharp import growth, renown economist says there is opportunity in China's housing boom.

The China Slowdown Trade

Over the next several years, the People's Republic will need to build 10 million houses a year and that's a "very important, long-term positive," says Donald Straszheim, senior managing director and head of China Research at International Strategy & Investment.

"The real problem in China is a fundamental long-run shortage of housing, not this near term kind of speculative run-up in housing prices," says Straszheim.

US investors have overreacted to China's latest economic data, argues Straszheim. China's growth rate was at 12% and that was "too hot," so they're slowing it down. He thinks investors shouldn't worry.

Straszheim says there is long-term opportunity in Chinese housing by making the right development play, if you can pick the right developer.

Watch the video for the full conversation with Straszheim.


After "strong, unusual" call buying in Northern Trust Tuesday, optionMONSTER.com co-founder Jon Najarian says HSBC Holdings is now rumored to be "taking a look at them."

On Wednesday, JPMorgan Chase said it's unlikely HSBC would acquire Nortnern Trust. Najarian says insiders own a considerable amount of Northern shares, so the financial name would only sell if they really wanted to.

Either way, Najarian notes that shares of Northern pushed higher Wednesday against a "very weak" tape.


If we go through support at the 1088 level in the Stanard & Poor's 500 Index , Patty Edwards of Storehouse Partners thinks the downside is 1060. She recommends staying hedged.

Call to the Close

If the 10-year option goes well and you're long iShares Barclays 20+ Year Bond , Brian Kelly of Kanundrum Capital recommends taking off some.

"The ag trade got ahead of a lot of people last week and I think this is the correction that you've been looking for," says Joe Terranova of Vitrus Investment Partners, adding that recommend buying Potash or Archer Daniels Midland at current levels.

Jon Najarian of optionMONSTER.com thinks the market could "drift" a little higher.

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