Stocks Fall On Brutal Housing News



The Dow fell in thin volume on Tuesday as housing data showed a steep drop in home values and continued concerns about the U.S. economy weighed on retailers, undermining the market's earlier gains.

With just six trading days remaining in the year, there is little hope the markets will avoid having their worst yearly performance since the 1930s. The S&P 500 is down about 40 percent for the year.

Strategy Session with the Fast Money Traders

The National Association of Realtors says existing home sales dropped in November, declining 8.6 percent, the worst decline in nearly a generation. And the median existing-home price slid to $181,300 in November, down 13.2% from November 2007, when the median was $208,800.

Housing is weak, says Jeff Macke. There’s a surprise.

I don’t find the data shocking either, adds Karen Finerman. It wouldn’t surprise me that by the second half of next year we see some stability in the housing market.

I like the XHB right here, adds Pete Najarian. It’s so beaten down that at some point it should move higher.

Housing is a real catch-22, adds Macke. Because the lower home prices go the longer people wait to buy new homes. The only way out is to deal with homeowners – not banks.

The dramatic decline in home prices destroys personal wealth, adds Joe Terranova. It creates massive retrenchment in the economy.

I’d like to know how many loans are underwater and how many of those loans have already taken a hit, adds Finerman.

If you take a look at commercial real estate – some of the REITs have been performing better, adds Dylan Ratigan.

I don’t think commercial real estate is an industry that law makers find sympathetic so I don’t expect a bailout, says Karen Finerman. The one thing that makes me hesitant to be super short is that they’ve been able to lobby for favorable tax treatment.

If they rally 20% I'd want to short commercial real estate so badly it makes me sick, adds Jeff Macke.



Investors have roughed up Apple over the last 5 days on concerns about weak holiday sales and no new products. Will consumers continue to pay a premium for Apple products?


I think there’s an opportunity from a trading perspective, says Jeff Macke. I like it right here with the discipline to stop yourself at $80. But if it breaks lower it could go to $50.

They have $27 bucks a share in cash, counters Karen Finerman. It’s getting interesting from a value perspective.

Their earnings multiple makes me think the stock is fairly cheap, adds Pete Najarian.

But Apple is kind of like Toyota, adds Macke. Toyota went from looking very cheap on Friday to looking kind of expensive on Tuesday.

Apple is probably one of the names to buy if you believe the market is going to recover, adds Joe Terranova.

Taking a look at other tech stocks -- options action in Microsoft suggests that institutional investors expect upside in this stock by April, explains Pete Najarian.



Just 38.7 percent of Americans went shopping during the final weekend before Christmas, the lowest turnout in at least six years, according to a survey released on Tuesday.

The traffic was especially weak in the Northeast and Midwest, which were hit by winter storms from Friday through Sunday. People who did shop flocked to stores offering deep discounts, led by Wal-Mart Stores .

There was, however, some good news from the Reuters/University of Michigan Surveys of Consumers, which rose to 60.1 in December from November's reading of 55.3 due to lower energy and retail prices after stores made radical markdowns to tempt shoppers.

American Eagle is worth a look as a value play, adds Karen Finerman. I own a little.

Retail rallies are made to be shorted, counters Jeff Macke. Come February or March I expect to see retailers in trouble due to solvency.

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Trader disclosure: On Dec. 23rd, 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 (SDS), (DIS), (MSFT), (MCD), (WMT); Najarian Owns (MSFT) Calls; Najarian Owns (UYG) And Is Short (UYG) Calls; Najarian Owns (XHB) Calls; Najarian Owns (HOLX) Calls; Finerman's Firm Owns (MSFT); Finerman's Firm Owns (OIH) Puts; Finerman's Firm Is Short (IYR), (IJR), (IWM), (SPY), (MDY), (BBT), (COF), (USO)

GE Is The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC

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), (OFC), (DLR), (EXR), (IGE), (MAC), (DBC), (DBV), (SKT), (UA), (CLB); Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights with wires