Strategy Session with the Fast Money Traders
I don’t see a lot of sellers in this market, explains Tim Seymour. That may be an obvious point but it's why pullbacks have been very shallow. And it's important to note that volume is very light.
I expect volatility to come back with a vengeance in the fall, adds Guy Adami. There’s an adage that says you can’t short a dull market and I think that’s what you’re seeing right now. Personally, I think the Vix is too low and the S&P is too high but I’ve been proven wrong time and again. Right now, I’m in wait and see mode because I think bad things are on the way.
My strategy is to just step aside, reveals Karen Finerman. If you see a stock that seems extremely overbought or oversold, I think it’s okay to step in and make a move, but otherwise I wouldn’t do much.
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TOPPING THE TAPE: AIG LEADS FINANCIALS HIGHER
Bank stocks led the market's charge higher on Thursday after newly appointed AIG Chief Executive Robert Benmosche said he expects the bailed-out insurer to be able to repay its federal debts and boost value for shareholders.
Also investors are betting new money could be coming into the bank sector after the Wall Street Journal reported, "the Federal Deposit Insurance Corp. is expected next week to soften its proposed restrictions on private-equity firms buying collapsed lenders."
What’s the trade?
It’s hard to think that the move in AIG is anything but a short squeeze, muses Karen Finerman.
In the space I’d look at UBS, says Tim Seymour. I think events surrounding this name are very bullish. Switzerland sold its stake in the bank for 5.5 billion Swiss francs (about $5.1 billion) making a solid profit from last year's rescue.
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GOLDMAN GETS ON GOOGLE BANDWAGON
Google shares climbed on Thursday after Goldman Sachs predicted accelerating sales growth for the Web search leader. Analyst James Mitchell added the stock to Goldman's "Conviction Buy" list saying he expects growth to return to the high teens or better over the next year, a trend that should boost the company's share price. As a result, he raised his target to $560 from $510.
What’s the trade?
One day before Goldman’s call, Citi analyst Mark Mahaney told Fast Money that he has a buy on Google with a $580 price target, says host Melissa Lee.
What do you think? We want to know!
> Click here to see our full interview with Mark Mahaney.
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TRADING THE GLOBE: CHINA'S SWEET & SOUR SHANGHAI INDEX
Shares that trade in China reversed course and closed higher on Thursday, ending a monster a two-week sell-off. The benchmark Shanghai Composite Index jumped more than 4 percent giving a boost to commodities.
While some investors have seen the Shanghai slide as a troublesome sign about the outlook for the Chinese economy – other pundits including the Fast Money traders have argued that investors should not read too much into daily swings.
It’s not uncommon to see big swings in China’s market, explains host Melissa Lee. It’s kind of par for the course. Take a look at the following:
Shanghai Swings: Between Jan 2008 - Aug 2009
Total Trading Days: 316
Swings of 5% or More: 25 (or 8% of the time)
Richard Peterson, Capital IQ
What’s the trade?
If you’re looking to play China I’d do it with a long position in Yum! , counsels Guy Adami.
Also, the strength in China lifted miners with Freeport-McMoRan and Vale both moving higher, reminds Tim Seymour.
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AFTER HOURS ACTION: GAP
Gap posted a slightly stronger than expected quarterly profit on Thursday as more full-priced sales, inventory controls and cost cuts helped offset declining revenue at all its chains.
The company behind the Gap, Old Navy and Banana Republic chains -- whose shares are up 39 percent since January -- has improved profit margins even as slumping sales pressured results.
What’s the trade?
I like what they had to say, says Guy Adami. But I wouldn’t establish a position at these levels.
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OUTLOOK FROM FED'S BIGGEST ANNUAL GATHERING
Two years after the start of the worst global financial crisis since the Great Depression, policy-makers from around the world gather this week to think about how to prevent it from happening again.
The Kansas City Federal Reserve's yearly conference at a mountain retreat in Jackson Hole, Wyoming, will draw central bankers and top economists together at a time when the crisis appears to be easing, with the global economy on the mend.
The event will be a showcase for Fed Chairman Ben Bernanke to reflect on the lessons learned and assess whether signs of recovery are lasting.
What should you expect and how will the markets react. Find out from CNBC’s Steve Liesman. Watch the video now!
