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Dow 10,000, We Hardly Knew Ya'

The Dow closed below the psychologically important 10,000 level on Friday after disappointing earnings from General Electric and Bank of America suggested the road to economic recovery may be rather bumpy.

GE's weaker-than-expected revenue and Bank of America's loss seemed even more disappointing after such strong reports earlier in the week.

Despite Friday losses, indexes ended the week with gains: the S&P 500 up 1.5 percent, the Dow up 1.3 percent and the Nasdaq up 0.8 percent.

With hundreds of companies set to report next week how should you position yourself?

Strategy Session with the Fast Money traders

I don’t think investors expected the market to hold above 10,000, muses Steve Grasso. But all we saw was profit taking which is to be expected. I think the bull continues running next week.

I don’t think Friday’s market action is surprising either, echoes Tim Seymour. It would surprise me if the market trades lower on Monday but I don’t think we’ll see that.

I’m watching 1076 on the S&P, muses Joe Terranova. We settled above this important technical level and oil seems to be climbing. That says to me the market should make more gains next week.

I’m concerned about the complacency in the market, counters Pete Najarian. The Vix is around 21. Nobody is buying puts. Quite frankly I’m a little worried that investors are too euphoric.

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BANK OF AMERICA PULLS FINANCIALS DOWN

As we mentioned above, financials led the way lower after Bank of America posted a $1 billion third-quarter loss citing credit card and mortgage woes. The weakness from consumers eclipsed strength from BofA’s Merrill Lynch unit which generated $2.2 billion in profits.

What’s the trade?

CEO Ken Lewis also said he didn’t know when the credit cards business was going to be profitable, adds Tim Seymour. I’m a little concerned. It could speak volumes about the state of regional banks.

I bought a little BofA on Friday around $17.50, reveals Pete Najarian. As credit improves I think this stock has the biggest upside potential.

The numbers tell me that Bank of America isn’t ready to be considered a best of breed financial – at least not yet -- , says Joe Terranova. But I remain bullish on Goldman and JPMorgan .

If you’re looking for a trade look at Morgan Stanley, counsels Seymour. I thought the action in that stock was impressive.

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GE DOWN AFTER EARNINGS

General Electric dragged down investor sentiment on Friday after the firm cautioned that recovery from the brutal recession would be gradual.

The biggest U.S. conglomerate's revenue fell 20 percent as demand for everything from jet engines to MRI machines for hospitals remained weak. The company said its orders -- an important indicator of future sales -- were down 18 percent.

What’s the trade?

In the space I think 3M is the play, says Joe Terraniova. I like it into earnings.

Or look at Danaher, counsels Pete Najarian.

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TOPPING THE TAPE: GOOGLE ROARS AS TECH FALLS

Though the Nasdaq closed modestly lower, one bright spot was Google. Strong earnings from the Internet giant led to a series of analyst upgrades on Friday. Canaccord Adams said the company's shares could hit $700 a piece, a level not reached since December 2007 while Jefferies analyst Youssef Squali lifted his price target on the stock to $600 from $470.

These and other analysts interpreted earnings to mean on-line advertising is experiencing a turnaround and that Google is set to be the prime beneficiary.

Ga-Ga For Google: New Analyst Price Targets

Canaccord Adams: $700
UBS: $635
Goldman Sachs: $635
FBR: $680

What’s the tech trade?

I think these prices targets are going up because these analysts see the growth potential, says Joe Terranova. I still think Google is a name to own.

I wouldn’t chase Google at these levels, counters Pete Najarian. Instead I’d look at Yahoo!

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OPTIONS ACTION: TRADERS BETTING BIOTECH

Pete Najarian has spotted unusual options activity in Human Genome Sciences.

A large volume of the Nov 22 calls and Nov 30 calls suggests to Najarian this stock could soon make a significant move higher.






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Trader disclosure: On Oct. 16th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (HGSI) Call Spread; Najarian Owns (XLF) Calls; Najarian Owns (YHOO) Call Spread; Najarian Owns (BAC); Najarian Owns (WFT) Calls; Grasso Owns (ASTM), (BAC), (C), (COST), (PRST), (V), (WMT), (FAZ), (XLF), (AAPL); Terranova Owns (SUN), (OIH), (HOC), (HES), (POT); Terranova Is Short (GRMN), (CCL)

GE Is The Parent Company Of CNBC
NBC Universal Is The Parent Company Of CNBC

For Steve Grasso:
Stuart Frankel And Its Partners Own (AIZ)
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (MSFT)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NXST)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (ROK)
Stuart Frankel And Its Partners Own (TLM
Stuart Frankel And Its Partners Own (XOM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (XLY)
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 (XLI)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (DBA)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (UA)

For Mike Khouw
Cantor Fitzgerald & Co. Is A Market Maker In (AAPL)
Cantor Fitzgerald & Co. Is A Market Maker In (MSFT)
Cantor Fitzgerald & Co. Is A Market Maker In (YHOO)


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