Both the Dow and S&P slipped on Thursday after a three-day run-up on concerns that stocks may be overextended. Investors are now assessing whether further gains are justified, with the benchmark S&P 500 up 58 percent since its early March lows.
On the bullish side of the equation, the number of U.S. workers filing new claims for jobless benefits fell unexpectedly last week, and new U.S. housing starts and permits increased to their highest level since November.
However on the bearish side, FedEx reported revenues that missed expectations and said the downturn was weighing on shipping volumes.
In tech Oracle spooked investors after it said software sales came in sharply below expectations however Apple hit 52-week highs.
What must you know?
Strategy Session with the Fast Money Traders
The S&P 500 is now 20% above its 200-day moving average for the first time since 1983, says host Melissa Lee. That last time that happened we had a nasty sell-off.
These are very important technical signals, muses Tim Seymour. But if we do have a sell-off I think it will be shallow.
Also, the Vix was lower Thursday, muses Karen Finerman. With the selling you’d think it would go higher, but no. I still think there’s just a lot of money on the sidelines that will continue to chase returns.
I don’t see any conviction from sellers, adds Pete Najarian. When the market pulled back the selling didn’t come in hard. It says to me a lot of protection is in place to the downside.
PALM CATAPULTING AFTER HOURS
Shares of Palm were volatile in extended trading on Thursday, after the smartphone maker reported first-quarter earnings.
The maker of the Pre mobile device reported a loss of 10 cents a share in its fiscal first quarter, Analysts who follow Palm expected the company to turn in a loss of 25 cents a share.
“This company blew past earnings in such a big way that we had to take a longer look at the numbers just to make sure there wasn't something hinky in the accounting,” says CNBC’s Jim Goldman
“But the real numbers come in shipments and sell-through, and they are simply jaw-dropping. Analysts expected Palm to report anywhere from 400,000 to 500,000 smart phone units shipped. Palm instead reported 823,000. The more important "sell through" number was expected to come in as high as 600,000 by some estimates, but instead soared to 810,000.”
What’s the trade?
If I was long I’d say to myself what’s the reason to stay in, muses Joe Terranova. What’s the catalyst for the stock to go higher?
I’ll tell you why to stay in, counters Pete Najarian. Because they’re with Sprint . But if they can go with Verizon or AT&T it should send the stock higher.
> Click here for CNBC.com complete coverage of Palm earnings
TOPPING THE TAPE: CITI, MORGAN BUCK MARKET
While the rest of the financials were flat both Citigroup and Morgan Stanley bucked the trend and closed higher.
The bullish sentiment was partly due to veteran banking analyst Richard Bove who said Citigroup shares could return to $5 levels, and that the possibility of a share offering by the company or sale of stock by the U.S. Treasury appears slim.
What’s the trade?
I wouldn’t trade Citi, says Karen Finerman, just because I don’t know what the business will be going forward. Instead I like Bank of America.
Bove also had a $58 price target on JPMorgan , adds Pete Najarian. I love that name.
TOPPING THE TAPE: AMERICAN AIRLINES
American Airlines shot higher on Thursday after the company said it had bolstered its liquidity and planned to take steps that include buying new planes in a bid to return to profitability.
And in a letter to employees, AMR Chief Executive Gerard Arpey said the company's ability to raise money in troubled capital markets is a vote of confidence from lenders, but he expressed caution as the company attempts to find its way out of an economic downturn.
"It certainly has been important to investors that we have a track record of paying people back when we borrow money from them," Arpey said. "But the fact is, we cannot borrow our way to prosperity."
What’s the trade?
It’s very bullish for AMR, says Tim Seymour.
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Trader disclosure: On Sept. 17, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AA), (F), (BAC), (EEM), (FXI), (SBUX), (VIP); Seymour's Firm Owns (MTL); Finerman's Firm Owns (BAC) Preferred Shares, Finerman Owns (BAC) Preferred Shares And Owns (BAC); Finerman Owns (PDE); Finerman's Firm Owns (WFC) Preferred Shares And Is Short (WFC); Finerman Owns (WFC) Preferred Shares; Finerman Owns (RIG) ; Finerman's Firm Owns (WMT), (RIG), (MSFT), (NOK), (PBR), (PDE), (TGT); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (IYR); Najarian Owns (AAPL) & Short (AAPL) Calls; Najarian Owns (ACI) Call Spread; Najarian Owns (BAC) & Short (BAC) Calls; Najarian OWns (C) Calls; Najarian Owns (CUX); Najarian Owns (FCX), Owns (FCX) Put, Is Short (FCX) Calls; Najarian Owns (GE) Calls; Najarian Owns (JPM) & Is Short (JPM) Calls; Najarian Owns (JOYG) & Short (JOYG) Calls; Najarian Owns (MS) And Is Short (MS) Call; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (PALM) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (TEVA); Najarian Owns (V) & Short (V) Calls; Najarian Owns (WFC) Put Spread; Najarian Owns (YHOO) Calls ; Najarian Owns (WNR) Calls; Terranova Owns Gold Futures; Terranova Owns Dec Crude Contracts; Terranova Owns Dec 2010, Dec 2012 Crude Contracts; Terranova Owns (WNR) & (WNR) Calls; Terranova Owns (HOC)
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Gartman Owns Gold
Gatman Owns Canadian Dollar
CNBC.com with wires