Stocks End Black October On High Note

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STOCKS END BLACK OCTOBER ON HIGH NOTE

Stocks ended one of their worst months ever on a high note as signs of further thawing in credit markets lifted battered shares.

For the week, the Dow rose about 11%, its best one-week percentage gain since October 1974, while the S&P 500 climbed about 10%, its best one-week percentage gain since at least January 1980.

However, few traders are shedding tears over October. It goes down in history as one of the worst months ever. The Dow hasn’t performed this badly since August 1998 while the S&P 500 hasn’t performed this badly since the October 1987 market crash.

Strategy Session with the Fast Money Traders

I think October has been all about fear over fundamentals, says Joe Terranova. We now move into November and I think it will give us better performance. However I think volume will be light.

The re-balancing story is still very much in play, adds Tim Seymour. I expect to see money go to work in November. However, I still have a lot of worries. (To learn more about re-balancing and the mandated allocation between bonds and stocks click here.)

The issue for November is how does the market stack up to the recession we’re facing, muses Guy Adami. Is it priced in or not?

The sell-off in the equity market has not been commensurate with the fundamentals, adds Zach Karabell. In other words the move to the downside is overdone. However, the market is not the economy, he adds. Don’t trade it as if it is.

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WALL ST. SURVIVORS END ON HIGH NOTE

The banks that survived the credit crisis could be emerging stronger for their trials. Shares of JP Morgan jumped on Friday as did Citigroup and Morgan Stanley.

Meanwhile, JPMorgan said Friday it is expanding its program to modify mortgages in an effort to avoid foreclosures on up to $70 billion in loans.

The enhanced program will include the opening of 24 regional counseling centers, the hiring of 300 additional loan counselors, new financing alternatives, reaching out to borrowers with pre-qualified modification terms and a new process to independently review each loan before it is moved into foreclosure.

The changes are expected to be implemented in the next 90 days, and until those changes can be made, the bank will not put any loans into foreclosure. The program is expected to assist about 400,000 families.

I think other banks will have to follow this lead, says Joe Terranova.

JP Morgan is a best of breed bank, adds Guy Adami. That’s where you want to be going forward. US Bancorp and Wells Fargo are worth a look, too.

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OIL'S WORST MONTH EVER

Oilfell nearly $2 on Friday as weak demand and the global economic crisis put crude on track for the biggest monthly drop ever.

It is down by around 35 percent for October, its steepest monthly decline to date as demand in the United States and other big consumer nations slows.

Most hedge funds in the commodities business are closing up business this month. That’s because there’s been a massive liquidation in commodities since July, explains Joe Terranova. They will stay on the sidelines until the new year.

If you want to play the space I think you’d want to be in the equities such as ExxonMobil and not the commodity itself, counsels Guy Adami.

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GM/CHRYSLER DEAL HITS SNAG

A deal to merge General Motors and Chrysler LLC has hit an impasse after the Bush administration ruled out funding for it, three people with direct knowledge of the talks said.

This puts any merger of the struggling automakers on hold until after the U.S. presidential election, the sources said.

If you lose jobs and ruin people’s live it’s politically unpopular for certain, adds Tim Seymour.

The Treasury can’t finance this deal when it’s going to cost something like 40,000 jobs, exclaims Guy Adami. And if Cerberus made a mistake by buying Chrysler they’ve got another thing coming.





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Trader disclosure: On Oct. 31, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (AAPL), (F), (MER), (EEV); Seygem Asset Management Owns (PBR), (VIP), (CX), (EEM); Karabell Owns (AAPL), (CAT), (CSCO), (GOOG), (JPM), (MS), (VIP), (UTF), (AGU); Terranova Owns (AAPL), (EXM), (FCX), (VLO), (X), (POT), (NOV), (MA), (FTO)

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

Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (CNW), (OFC), (DLM), (DRH), (DLR), (EPR), (EXR), (FL), (SLB), (LNET), (MAC), (DBC), (DBV), (SKT), (UA), (BLV), (VV), (CLB), (GWX), (IGE), (FSMXX); Virtus Investment Partners Owns Seagate Tax Refund Rights; Virtus Investment Partners Owns Seagate Technology Tax Refund Rights; Virtus Investment Partners Owns More Than 1% Of Shares Of Incitec Pivot Ltd.; Virtus Investment Partners Owns More Than 1% Of Shares Of Essex Property Trust Inc.

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