’Tis the season for steel.
“If you look at the seasonality, you’re hard pressed to find a December that doesn’t work for steel stocks,” trader Steve Grasso said Monday.
The “Fast Money” pro pointed to positive average returns for December within the sector over the past four years:
“There’s one big if: You have to believe — because they’re high beta in nature — that the market is going to continue to move higher going into year-end.”
Grasso added that this was a 30-day trade.
“This is a real quick, fast-money trade,” he said.
Stephen Weiss agreed — with a caveat.
“We’re separating the fundamentals from the stocks,” the investment pro said. “As high-beta stocks, if the market does move, Steve’s going to be right. My issue is I’m not so sure we’re going to get the Santa Claus rally.”
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Weiss said the fundamentals are continuing to worsen for steel, and the market is seeing slowing numbers in China, which could also affect copper stocks.
“I would sell the pop in copper,” he said. “I wouldn’t stay there.”
Jon Najarian noted Dec. 15 call-buying on Friday outperformed the market and that in Monday’s early trading, Dec. 16 calls were also up.
“They are not looking further down the road at anything other than to the end of this year,” he said. “They’re all focusing right now on December.”
On the news that billionaire investor Carl Icahn — through Icahn Enterprises — offered to buy Commercial Metals at $15 a share, which is 31 percent more than the stock’s Friday closing price, Najarian weighed in cautiously. The deal is valued at $1.73 billion.
The stock traded for $13.99 at midday.
“This is a great opportunity on this spike,” he said. “If you were lucky enough to be in this stock, you want to take some off right now.”
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Trader disclosure: On Nov. 28, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Najarian is long AAPL stock; Najarian is long AKS calls; Najarian is long C stock; Najarian is long JPM calls; Najarian is long WFC calls; Najarian is long INTC stock; Najarian is long YHOO stock; Grasso is long retailers in retail based hedge fund; Grasso has positions in AA, AKS, AMR, ASTM, BA, BAC, D, LIT, MHY, PFE, PRST, S, XLU; Weiss is long EUO; Weiss is long QCOM; Weiss is long NFLX puts; Weiss is long HPQ stock; Weiss is long DE stock; Weiss is long MDRX stock;
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