BEST JULY SINCE ’89
The bulls nudged the Dow slightly higher on Friday, but the move was enough for the blue chip index to record its best gain for July since 1989!
The advance was largely triggered by a report that showed that the economy had contracted at a slower-than-expected pace in the second quarter. Investors took the data as a sign the recession is easing.
For July the Dow gained 8.6%, the S&P added 7.4% and Nasdaq rose 7.8%.
Will a red hot July lead to an even hotter August?
STRATEGY SESSION WITH THE FAST MONEY TRADERS
I’m not that excited by the market move, says Guy Adami. I thought we’d see more money put to work. And don't forget that the S&P rallied 100 points over the past two weeks and that’s too much.
You know how bullish I’ve been, reminds Joe Terranova. But, with stocks at their 10-month high I think it’s time to move to the sidelines. The market has rallied substantially. And next Friday we have employment numbers. A bad number could send the market tumbling.
I would not be short going into next week, counters Tim Seymour. However, I am worried about the last two weeks of August. I think we’ll lose liquidity.
I don’t see the smart money getting short either, adds Mike Khouw.
And on Fast Money's Halftime Report, Bill Strazzullo of Bell Curve said the charts suggest the March rally is still in tact. I expect more upside with the S&P climbing another 10% to 1100, he explained. But don’t rush in. Wait for the S&P to pullback to 950 and then dive in.
Best Performing Stocks In July
Gannett Up 91%
Tenet Healthcare Up 50%
Goodyear Tire Up 48%
Wynn Resorts Up 45%
Hartford Financials Up 32%
Worst Performing Stocks In July
AIG Down 43%
Allegheny Down 21%
Sprint Down 16%
ICE Down 13%
Akamai Down 14%
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CASH FOR CLUNKERS LIVES ON
Lawmakers on Friday raced to pass legislation that would pour an additional $2 billion into the popular — but financially strapped — "cash for clunkers" program. The car-buying incentive burned through $1 billion in a matter of days due to an unexpected avalanche of car purchases.
What’s the trade?
Look at the stock action in Ford, says Guy Adami. With Ford near $8 I think you’re late to the trade. And put BorgWarner on your radar, but it’s not a buy at current levels, he adds.
I sold short Toyota, adds Joe Terranova. If the yen gets stronger against the dollar, that’s not good for Toyota.
I think the trade is to look at companies selling cars in emerging markets such as Brazil, counsels Tim Seymour. There’s real recovery going on in other parts of the world.
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DOLLAR INDEX HITS NEW 2009 LOW
The dollar fell across the board on Friday, pressured by month-end flows and after data showed business activity in the U.S. Midwest in July improved more than expected.
"Overall, sentiment for the buck is negative," says Jacob Oubina, currency strategist at Forex.com. The dollar tends to fall on improving economic data as its safe-haven appeal is dulled by an increase in risk appetite.
What’s the trade?
It seems to me that the moves in commodities are almost entirely tied to the weak dollar, muses Joe Terranova, and not really the fundamentals. If we’re going to have a GDP economic recovery the massive contango that commodities are under should come out. We should get a shift into backwardation. If that happens aluminum and oil should move higher. That's the trade!
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THE WEEK: GE, CATERPILLAR TOP PERFORMER
Shares of General Electric, the parent company of CNBC, climbed this week, after Rep. Barney Frank said he saw "no great need" for the largest U.S. conglomerate to spin off its finance arm.
Since the Obama administration introduced its proposed revamp of the U.S. financial regulatory system, investors and analysts have been concerned that a passage in the proposal might compel the conglomerate to spin off GE Capital.
Goldman Sachs raised its rating on the shares to "buy" on the news.
What’s the trade?
If you like GE you’ve got to love Honeywell , counsels Guy Adami.
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TRADING THE GLOBE: CHINA
China stocks traded all over the map this week, first dragged down by speculation that China may restrict lending and then buoyed by word that earlier reports were overblown.
What’s the trade?
I don’t think China pulls in liquidity, counsels Tim Seymour. I still like it.
CAN RALLY KEEP GOING?
The S&P 500 ended its best five-month streak since 1938 with a slight gain on Friday. So what’s in store for August.
For insights we turned to Greg Troccoli of Opalesque. Find out what he sees in the charts. Watch the video now!
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Trader disclosure: On July 31st, 2009, 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), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (AMZN), (MSFT), (MCD); Terranova Is Short (TM)
For Joe Terranova:
Terranova Works For (VRTS)
Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO
Virtus Diversifier PHOLIO Owns (IGE)
Virtus Diversifier PHOLIO Owns (DBC)
Virtus Diversifier PHOLIO Owns (DBV)
Virtus Investment Partners Owns More Than 1% Of (ABD)
Virtus Investment Partners Owns More Than 1% Of (CBL)
Virtus Investment Partners Owns More Than 1% Of (CAL)
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (MEE)
Virtus Investment Partners Owns More Than 1% Of (DBC)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (DBA)
Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co
Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights
Virtus Investment Partners Owns More Than 1% Of (SKT)
Virtus Investment Partners Owns More Than 1% Of (TNB)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (WBMD)
For Mike Khouw:
Cantor Fitzgerald & Co. Is A Market Maker In (AAPL)
Cantor Fitzgerald & Co. Is A Market Maker In (AMSC)
Cantor Fitzgerald & Co. Is A Market Maker In (EXPE)
Cantor Fitzgerald & Co. Is A Market Maker In (GOOG)
Cantor Fitzgerald & Co. Is A Market Maker In (INTC)
Cantor Fitzgerald & Co. Is A Market Maker In (MSFT)
Cantor Fitzgerald & Co. Is A Market Maker In (NKE)
Cantor Fitzgerald & Co. Is A Market Maker In (SYMC)
Cantor Fitzgerald & Co. Is A Market Maker In (YHOO)
GE Is The Parent Company Of CNBC
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CNBC.com with wires
