STOCKS CLING TO GAINS
The news: Once again, oil was the story of the day. With oil prices closing lower for a 6th day, the Dowand broader stock market closed higher on Monday. Investors believe the trend in oil improves prospects for consumer and business spending.
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VOLATILE OIL TRADE DICTATES DAY
The news: Oil prices fell on Monday as a drop in crude imports by No. 2 consumer China outweighed concerns over supply disruptions stemming from the conflict between Russia and Georgia.
The plays: The oil trade is probably being driven by the strong dollar, explains Joe Terranova. But it's natural gas that's got my attention. I think gas is probably finding a bottom. Look at Apacheand Chesapeake , he says. And if oil moderates and stops going down the integrated names should trade higher.
I'd look at ExxonMobil on a valuation basis, Guy Adami suggests.
The fall in oil comes from weakness in the economy, says Karen Finerman. I’m short the British poundbecause I think the economic slowdown will creep across the globe.
I bought the PowerShares DB US Dollar Index Bullish on Monday, says Jeff Macke, as a dollar trade. In ag I’d wait for panic selling before getting long.
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RETAILERS RIPPING
The news: The Retail HOLDRs ETF jumped significantly on Monday with Wal-Mart , Kohl’s and the Gap all leading the way. As we said above, investors are betting that the recent decline in oil prices lows will help boost consumer spending.
The plays: I think the play is to sell into this strength, says Karen Finerman. Also, keep in mind Kohl’s is up something like 40% over the last few weeks. That’s too much too fast.
I’m a seller too, says Jeff Macke. The RTH rallying 10% in 2 trading days is nothing more than an opportunity to sell.
If you don’t mind a little more volatility look at the Consumer Discretionary SPDR , counsels Pete Najarian. It should trade inversely to oil.
And if you're in Home Depot I'd take profits, adds Guy Adami.
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AIRLINES TAKE OFF ON OIL DROP
The news: Nothing helps the airlines take flight like the plunging price of oil. In fact both the alirlines and the automakers traded higher as oil retreated.
The play: A Morgan Stanley analyst is forecasting profits for the airlines in 2009, explains Pete Najarian. The analyst thinks all the recent cost cutting measures should bode well provided oil averages about $115 next year.
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BANKS JUMP 2%
The news: Bank shares also rose, with the KBW index for the sector rising nearly 4 percent, as the drop in oil prices reversed the popular trade of going long energy stocks, short the financial sector.
The play: On a forward basis I’d dump the financials, says Jeff Macke. The only buy in this group is Goldman Sachs as a best of breed trade.
I also think Goldman is going higher, Guy Adami says.
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AFTER HOURS ACTION: MORGAN STANLEY
The news: Shares of Morgan Stanley trader lower after hours as Moody's downgraded the investment banks debt rating to 'A1' citing 'Risk Management Miscues'
The play: The performance out of Morgan Stanley has been stellar, says Pete Najarian. But I wouldn’t chase it. At $40 I think it’s a buy.
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OPTIONS ACTION: BANKS
The news: Pete Najarian is seeing unusual bearish options activity in Hudson City Bancorp.
The play: Put buying in the stock suggests to me this stock could go significantly lower, Najarian says.
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AFTER HOURS ACTION: LDK SOLAR
