THE GOVERNMENT LENDS A HAND:
The headline: Stocks Gain Steam After Administration Unveils Mortgage Plan Thursday Afternoon to Freeze Certain Rates, Help Some Homeowners Refinance
Financials, led by the battered down mortgage lenders and insurers, saw a strong bounce on the government plan. Countrywide (CFC) jumped 15%, MGIC (MTG) rose 12% and Goldman Sachs (GS) and Morgan Stanley (MS) both shook off downgrades to end the day higher.
But the rally went even deeper, stretching across the agriculture complex, the metals, energy, tech and others. “Everybody seemed to be working,” Pete Najarian said. The question is if it can continue.
Indeed, past resistance is now support, Jeff Macke said. He and Guy Adami believe, with the S&P 500 breaking the crucial level of 1490, that the broader market will go higher as long as the S&P stays above that number. Especially compelling are big-cap names like Microsoft (MSFT) or Intel (INTC), Guy and Jeff said, respectively.
But the most important signifier of this rally is that it appears that volatility has been siphoned out of the market – at least for a while, according to Tim Seymour. That, of course, is great news for riskier assets.
NOVEMBER PAIN:
The headline: Target (TGT), Retailers Tumble as November Same-Store Sales Disappoint
Jeff Macke wished he was long retail going into Thursday. If only for a trade, he thinks certain parts of the retail sector will hold up for the remainder of the year. The best move is to buy “excellence” in best-of-breed stocks like Costco (COST) or weak names like Gap (GPS) where expectations are about as low as they can go.
Pete Najarian concurred with the idea of bottom-picking in the retailers for a trade. He would buy Target.
For an interesting spin on retail, Guy Adami recommended Mastercard (MA). Consumers may be spending less, but they’re putting what they do spend on their credit cards. That bodes well for MA, Guy said.
RATE-CUT BUG STRIKES OVERSEAS:
The headline: Bank of England Cuts Rate by Quarter-Point, its First Reduction in 2 Years
There is tremendous pressure across Europe to cut rates as European countries deal with similar credit contractions as the U.S. The difference is, according to Tim Seymour, that inflation is soaring in Europe.
Guy Adami sees gold continuing to melt down. Lower gold prices and a rate-cutting Europe could take the pressure off the U.S. dollar for a while, he said.
MORE APPLE INNOVATION:
The headline:Apple (AAPL) Shares Gain after CNBC Reporton New 3G Phone, Ultra-Portable Laptop
Price targets for Apple continue to get raised, even as it eyes a new 52-week high. The options calls are higher, too, Pete Najarian said. This is a name he would sell into strength.
SEMI GOOD DAY:
The headline: Rambus (RMBS), Micron (MU), Intel (INTC), Chip Stocks Post Strong Gains for Second Day
National Semiconductor (NSM), however, fell after hours Thursday after its net income slipped, perhaps indicative that the strength in semis isn’t here to stay.
Jeff Macke would buy one, and only one semi: Intel. Guy Adami agreed, saying he sees Intel going to $30 or higher.
For owners of Rambus, Pete Najarian urged selling. The stock is working since the S.E.C. terminated an options backdating investigation, but the competition is still too great for this stock to work, he said.
COAL IN YOUR STOCKING?:
The headline:Fording Canadian (FDG), Peabody Energy (BTU), Coal Stocks Surge as FDG Says It Will Weight Strategic Options
Coal is strong because it can be used to form steel – and global steel demand is through the roof. It helps that China’s demand for steam coal is off the charts, too, Pete Najarian said.
One way to play coal is the Russian mining and steel company Mechel (MTL), according to Tim Seymour. The company is spinning off its coal business.
BREAKING:Smith & Wesson (SWHC) Plunges in Extending Trading After Cutting Forecast Do not, under any circumstances, buy stocks like SWHC that warn two quarters in a row, Jeff Macke said. DAILY CHECK ON SOLARFUN: The headline: Solarfun (SOLF) Falls Another 4% After Shedding 9% Wednesday; Still Up 51% Over Last Week Pete Najarian’s favorite solar name continues to be Cypress Semi (CY) for its ownership of SunPower (SPWR). That’s the safest way to play the red-hot solar market, he said. ______________________________________________________
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Trader disclosure: On Dec. 6, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), Macke Owns (YHOO); Najarian Owns (AAPL) Options, Najarian Owns (GOOG) Options, Najarian Owns (YHOO) Options; Seymour Owns (AAPL), Seymour Owns (CFC), Seygem Asset Management Owns (CX), Seymour Owns (F), Seymour Owns (INTC), Seymour Owns (MBI), Seymour Owns (TMA), Seygem Asset Management Owns (VIP), Seymour Owns (XOM)