Strategy Session with the Fast Money Traders
Unfortunately this earnings season comes at the end of a huge run in stocks, explains Tim Seymour. Typically the S&P falls during earnings so there's profit taking. And I don't think it's going to be any surprise to people that the first-quarter earnings are going to be lousy.
It seems that with only 12 minutes left in the session, investors ran out of reasons to buy, adds Jeff Macke. I also think the very end of the day was all about profit taking. But, when the S&P hits 800 I’d expect buyers to come back in.
It looks to me like stocks are taking a pause, adds Joe Terranova.
I don’t know how much first quarter earnings really matter to this market, muses Karen Finerman. I think it’s all about what firms say going forward.
Meanwhile the Vix isn’t moving a lot on down days or up days, she adds. I don’t know what to make of that, other than there’s still a lot of uncertainty in the market.
I think the Vix is elevated because there’s concern about how much capital banks may need after the bank stress test results come in, adds Terranova.
AFTER HOURS ACTION: ALCOA
After hours Alcoa kicked off earnings season by reporting a loss that was marginally worse than expected.
The aluminum fabricator cited a drop in demand for the loss—especially in the auto industry—and sharply lower prices.
However, on a brighter note the company's sales came in slightly above expectations.
Aluminum prices are down 50% reminds Tim Seymour and the stock is down 80%. I think the stock might have found a bottom.
AFTER HOURS ACTION: BED BATH AND BEYOND
Bed Bath & Beyond reported a better-than-expected quarterly profit on Tuesday on a slight decrease in quarterly sales, and shares of the home furnishings retailer rose 10.9 percent in after hours trading.
These guys didn’t have to do much other than show up, bristles Jeff Macke. But it’s not going to carry them through Christmas.
OIL SELLOFF CONTINUES
Oil prices fell nearly $2 a barrel to below $50 a barrel as the market eyed another rise in crude inventories, taking energy stocks lower. Chevron and Exxon Mobil were among the top drags on the Dow.
Meanwhile in commodities, Mosaic fiscal third-quarter net income fell 88% as the fertilizer company was squeezed by rising materials costs and falling sales volumes. The company also warned potash sales would continue to be weak in the fourth quarter, though it did seem more optimistic on phosphates.
I sold Mosaic into the close, adds Jeff Macke.
I watch the price action of corn and wheat and use it as a signal to buy into the fertilizer names, explains Joe Terranova. Right now the price tells me that the demand isn’t there.
When I look at the resource space I like gold, says Tim Seymour. I’d get long the GLD through $90.
TRANSPORTS SLAM ON BRAKES
The transports sector closed lower despite weakness in oil with the iShares Dow Jones Transport. ETF down substantially. (Conventional wisdom suggests lower oil is bullish for transports.)
I’m not that concerned, says Tim Seymour. Not at these levels.
It seems to me that money is trying to find a home, adds Joe Terranova. I think that’s what lifted the airlines over the past few days. It’s an issue of where can you go to get any kind of return.
TECH FALLS AS JAVA DEAL IN JEOPARDY
Big cap tech companies led the Nasdaq lower with investors frustrated over a decision by Sun Microsystems to reject a $7 billion buyout bid from IBM .
The move leaves the smaller server and software maker vulnerable to lawsuits from shareholders nervous about its viability as a stand-alone company. (The board turned down a 110% premium.)
According to published reports Sun’s board of directors will meet on Wednesday to determine the way forward.
I think they turned it down for two reasons says Toni Sacconaghi, Sanford Bernstein Sr. Research Analyst on Fast Money. 1) It seems there's fundamental dissention within Sun and 2) they think longer term they can create more value.
Sacconaghi also says it leaves Sun in a very tenuous position. Their customers don’t like not knowing who is going to own the company down the line.
TOPPING THE TAPE: MANAGED CARE ON THE MOVE
Although it was a day of broad-based declines HMO providers including Humana and UnitedHealth jumped on Tuesday.
Humana is up on persistent market rumors that Aetna is looking to take them over, explains Karen Finerman. But I don’t know.
I also think it’s the unwind of the 'Obama is going to kill healthcare' trade, adds Jeff Macke. In other words investors are starting to think the administrations health care initiatives will have less of a negative impact than previously believed.
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Trader disclosure: On Apr 7th, 2009, 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 (WFC), (AAPL), (WMT), (SDS), (GS), (GE); Terranova Owns (X), (KCE), (AMGN), (DELL), (DIS), (BP), (BRCM); Terranova Owns (COP) Calls, (HES) Calls, (IBM) Calls; Terranova Owns (JPM) & (JPM) Calls; Terranova Owns (INTC) & (INTC) Calls; Finerman Owns (AXP), (RIG); Finerman's Firm Owns (RIG), (UNH), (MSFT), (PBR); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (BBT), (WFC); Seymour Owns (AAPL), (BAC), (EEM), (FCX), (FXI), (F), (GLD); Seymour Is Short (USO)
For Toni Sacconaghi
Sanford Bernstein Makes A Market In Shares Of (JAVA)
Sanford Bernstein Has Provided Non-Investment Banking Services To (IBM)
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