Halftime Report: Bulls Out On Banks and Movement On Earnings



Brave Bulls Out Again On The Banks
In intraday trading, stocks are rebounding off yesterday’s losses, and the brave bulls are out again on the banks. The comeback is led by Morgan Stanley, which reports earnings tomorrow morning. Banks are trying to shake off the bad earnings news, with the Bank of New York Mellon down about 10% after its report, after the S&P 500 was off 4% yesterday, the markets are looking to rebound today.

Pete Najarian the concern about government involvement and uncertainty surrounding the stress tests. In the first quarter it was all about transparency, in the second quarter is all about the extent of government involvement and getting the real substance of the government stress tests.

Banks also sold off because there was the rumor that the government would take more equity stakes in the sector, says Zachary Karabell, urging caution, because if the government enters into a large-scale common equity stake, this move would significantly dilute existing shares. He says it’s a concern for investing in any of these stocks in the coming months.

Dennis Gartman is more bullish on regional banks, and would like to see them increase reserves in this market, which poses little risk and would be the safe play in the long term, with the ability to drain the reserves when times get better. He sees them in a better position, along with Canadian banks, than the national banks in the US.

However, Pete Najarian is a buyer of bigger national banks like JPMorgan and Goldman Sachs , who are the best of breed and will require less, if any government investment. He also points out Morgan Stanley , who seems paused right now and offers a huge amount of potential on the up side.


Chart of The Day
In the Chart of the day, the Broker/Dealer index displays some interesting data. Dan Fitzpatrick points out a double bottom in the index, in November and March, which has now moved above the mid-term resistance in those two levels and is above the 50 day moving average. He points out that firms like Ameritrade, Charles Schwab and Morgan Stanley are moving up with the index.


Yahoo Higher Before Earnings Announcement
Some top analysts covering Yahoo! are of the opinion that the bar is extremely low for the company that there is considerable room on the upside, an opinion which is factoring into Yahoo’s 5% rise in intraday trading. Pete Najarian also points out that the case for the stock becomes more compelling when you factor in the potential that CEO Bartz will have something to say about an advertising deal with Microsoft. He likes Yahoo and thinks it’s got upward movement left in the long term.


Fast and The Furious Trades:
With Morgan Stanley reporting before the bell tomorrow, are you buying today? Dan Fitzpatrick gives this stock a buy.
Pete Najarian also recommends a buy before earnings, on Yahoo! , who reports after the bell today.

For Freeport McMoran , Dennis Gartman says it’s been a good, strong stock for a long period of time, and supports a long position on the stock.

Up 20% in the last month alone, Zachary Karabell sees Apple as a long-term buy, but urges caution as far as the price goes.

For more plays including the fast & furious trades please watch the video above.

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