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Fast Money Now – Mid-Day Trades  for Monday

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A one-two punch of gloomy financial news undermined market sentiment on Monday and reminded investors that the credit crisis and housing slump were far from over.

FANNIE DRAGGING DOWN MARKET

The news: Shares of Fannie and Freddie traded lower on Monday and dragged down the Dow mid-day after the U.S Treasury once again stated it has no plans to backstop the GSE’s.

I think we’ve been down this road before, says Joe Terranova. I’d move away from Fannie and Freddie.

Fannie and Freddie are not things you should be investing in, echoes Zach Karabell.

Meanwhile, more analysts downgraded their views on Goldman Sachs Monday sending shares lower. Fox Pitt cited “weaker-than-expected results across the board and bigger write-downs than we had projected.”

I think Goldman at $160 looks attractive, counters Joe Terranova.

Goldman is a leader, adds Pete Najarian. Sooner or later the bad news ends for Goldman but it could break lower than $160.

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DOLLAR PULLS BACK FROM 6-MONTH HIGH

The news: Despite recent strength, the dollar is falling on Monday ahead of housing and inflation data to be released on Tuesday.

Sector Performance Since Dollar’s Lows
(Biggest Movers from April 22nd – Aug. 18th

Financials -19%
Energy -15%
Gold -14%
Materials -11%
Dollar +8%
Health Care +8%

Source: Bespoke Investment Group

I’d follow the bigger picture data and not the dollar, says Zach Karabell. The dollar commodity trade has been a good trade, but it’s just a trade. There’s real commodity strength in the world and the pullback is a sucker’s pullback.

I'm long the dollar , exclaims Jeff Macke and it’s doing just fine. It was due for a pull back but I think the dollar seems to have formed a nice big round bottom.


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OIL THREATENING TO GO HIGHER

The news:Oil has been trading higher, then lower, then higher on Monday as concerns over Tropical Storm Fay grow. The weather has already prompted precautionary evacuations at four rigs in the Gulf Of Mexico.

I think OPEC is looking at a production cut, says Joe Terranova. With the slowdown in the global economy they have to be worried about a glut.

The OIH is a stuffed pig, exclaims Jeff Macke.


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LOWE'S GIVES UP EARNINGS

The news: Home improvement retailer Lowe’s beat on earnings but disappointed the Street with the Q3 forecast. The stock was trading about even mid-day.

Retailers have issued “not great news” across the board, says Jeff Macke. Don’t buy bad fundamentals on the belief that “it’s already in the stock.”

I think the play is to sell Lowe’s and Home Depot and wait for a pull back, counsels Pete Najarian.


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CHART OF THE MOMENT: SMALL & MIGHTY

The news: iShares Russell 2000 is up 9% in the last month versus a 2% gain for S&P 500

I think small caps are rallying because they’ve been so beaten up, says Zach Kartabell, more than because the wind is shifting. It fails to get me excited.


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WHAT'S WRONG WITH H-P?

The news: On Monday Hewlett-Packard unveiled a new line of lightweight business laptops. Ahead of their earnings Tuesday after bell the company is trading lower?

I think it’s a dollar trade, says Pete Najarian. HP was a great trade when the dollar was weak. But now it’s stronger and that’s why the stock is down.


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CME-NYMEX APPROVAL LIKELY

The news: NYMEX shareholders vote on Monday whether to approve the merger with CME Group and an approval seems likely.

I think it’s a great trade, says Joe Terranova. I own CME .

Run away from all the exchanges, counters Jeff Macke. The regulators are getting in their business and that’s never a good thing.

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IN THE ZONE -BABY BOOMER PLAY BOUNCING

The news: Jon Najarian is seeing unusual options activity in Zimmer Holdings and Broadcom

Options action suggests Zimmer could trade higher, reveals Jon Najarian. There’s speculation that Johnson and Johnson is looking at buying Zimmer, but it’s only market rumor, he emphasizes.

Options action in Broadcom also suggests this stock could go higher. They make the touch screen for the iPhone and I think the stock is climbing on that iPhone strength, Najarian says.




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Trader disclosure: On Aug 18, 2008, 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 (UUP), (MSFT), (WMT), (COST); Karabell Owns (AAPL), (BHP), (GLD), (GOOG), (SLB); Pete Najarian Owns (AAPL) And Is Short (AAPL) Calls; Pete Najarian Owns (CSCO) Calls; Pete Najarian Has A Long Call Spread In (ZMH); Terranova Owns (AAPL), (RIMM), (IYT), (BNI), (XLF), (YHOO), (KOL), (SA), (INTC), (FCX), (CME), (GOOG), (VLO), (GS), (SU), (NOV), (POT), (EOG): Terranova Is Short Crude Oil Time Spread (Short Dec. 2008, Long Dec. 2012), Terranova Is Long Crude Oil Dec. 2012 Futures

Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.: Phoenix Investment Partners Owns More Than 1% Of (ABD), (ARE), (BRE), (CNTY), (CLB), (OFC), (DLR), (ESS), (EXR), (FL), (IAT), (IGE), (LNET), (MAC), (OIIM), (PSPT), (DBC), (DBV), (SLB), (SKT), (BLV)

Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO: Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)

Jon Najarian Is Long (ZMH) Call Spread; Jon Najarian Owns (AAPL) Call Spreads; Jon Najarian Owns (BRCM) Call Spreads; Jon Najarian Owns (NVDA) Calls

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