Investors snapped up bank stocks on Monday after published reports suggested the Obama bank plan to crack down on Wall Street may be in serious jeopardy.
Speaking to the Financial Times, Senator Richard Shelby (R-AL) said “if Democrats push forward with the proposals they risk unraveling much of the bipartisan support already reached regarding the passage of financial regulatory reform in the Senate.”
If new regulations are no longer a serious threat to bank profits, are banks oversold?
Instant Insights with the Fast Money traders
JPMorgan , BofA , Goldman, Morgan and the XLF are all buys on the news, counsels Fast Money trader Joe Terranova. I like the way financials are trading. I see this as a tremendous opportunity.
I can’t feel enthusiastic about financials on the day’s news, counters Zach Karabell of RiverTwice. There’s been no change fundamentally. It's all rhetoric out of Washington moving the stocks. As far as I'm concerned trading the news is one of the great fool-hearty moves.
If the broad market bounces, then I think the financials could bounce, adds Todd Gordon of Forex.com. But otherwise I'm not enthusiastic.
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RALLY RESTARTED?
The bulls are hoping the rally has restarted after stocks rose on Monday, following three weeks of losses.
Positive sentiment was largely generated by stronger-than-expected economic data, which showed manufacturing grew in January at a faster rate than expected, echoing strong manufacturing data from China.
Also Exxon added to the positive tone, after the largest U.S. oil company topped expectations, buoyed by the company's exploration arm.
How should you game this market?
Looking at stocks broadly, it seems the market is consolidating around 1070, says Todd Gordon. The market could push higher to 1100 in the short-term perhaps even 1120. However, the long-term trend is down, he adds.
I’m a buyer into the close, adds OptionMonster Jon Najarian, the S&P looks good to 1100.
Looking at the big picture, I’m optimistic about the second half of the year so I’m a buyer of pullbacks, says Zach Karabell.
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TOPPING THE TAPE: GOLDMAN
Bonus money landed Goldman Sachs in the headlines again Monday afterthe London pressreported CEO Lloyd Blankfein “could receive up to $100 million” in total compensation.
But Fast Money veteran trader Gary Kaminsky keeps his ear the ground and he says, “I’ve had a couple conversations and I’m hearing that Blankfein’s bonus will be a fraction of that number,” says Kaminsky on the Halftime Report.
”It will seem like a big number to people on Main Street but on Wall Street it will seem like a bargain.”
What's the trade?
If you’re an investor who feels Goldman sold-off on the bonus news, then this may be a buying opportunity, says Kaminsky.
From a technical perspective, $168 is where Goldman Sachs broke down and I don’t think it recaptures that level, adds Todd Gordon.
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TOPPING THE TAPE: ENERGY
As we mentioned above, Exxon reported a fourth-quarter profit on Monday that topped Wall Street expectations as natural gas projects boosted results at the largest U.S. oil company's exploration arm.
Still, Exxon's net income fell 23 percent as weak demand for fuel in the global economic slowdown caused a loss in its refining business.
"Natural gas production in Asia Pacific and the Middle East was up 31 percent," Pavel Molchanov, analyst at Raymond James, said. "That's where a lot of the growth came from. They had those big liquefaction terminals start up in Qatar in the second half of the year."
Considering a slew of big energy names report in the week ahead, how should you be positioned?
Energy Earnings This Week
Tuesday: BP, SU, MRO, TSO
Thursday: SUN, DO
I’m long the OIH , and Halliburton, says Joe Terranova. I believe energy is where investors should be focused. Historically it bottoms around January and February.
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BUZZKILL: AMAZON.COM
Shares of Amazon traded lower Monday after the e-tailer removed all e-books published by Macmillan from its website due to a dispute over pricing.
The New York Times and other media reported that Macmillan asked Amazon to raise the price of e-books to around $15 from $9.99.
Publishers are widely seen to be demanding more control over prices of their e-books, as more companies like Barnes & Noble and Apple enter the e-reader market.
What’s the trade?
Amazon broke through its November lows, explains Jon Najarian. If it doesn’t hold par I'd be worried. But personally, I think it’s a buying opportunity.
Charts suggest that if Amazon breaks below $115, it could slide to $100, adds Todd Gordon. And if it breaks $100, the next stop could be $93.
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CALL THE CLOSE
Todd Gordon: I’m a buyer up to 1100.
Zach Karabell: I’m optimistic about the second half of the year so I’m a buyer.
Jon Najarian: I’m a buyer into the close; it looks good to 1100.
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Trader disclosure: On February 1st, 2010, 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); Finerman's Firm Is Short (IJR), (IWM), (SPY), (MDY), (UNG), (USO); Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (FLS); Finerman's Firm Owns (KFT), (MSFT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (BSX); Najarian Owns (AAPL) Call Spread; Najarian Owns (AKAM) Call Spread; Najarian Owns (BP), Is Short (BP) Calls; Najarian Owns (ITMN) Call Spread; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (PFE); Najarian Owns (XLF) Calls; Najarian Owns (STLD) Calls; Terranova Owns (XLF) Calls; Terranova Owns (BAC), (JPM), (XOM), (HAL), (OIH), (FCX), (GOOG), (EMC), (DELL), (MSFT), (QCOM); Terranova Is Long British Pound March Futures
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 (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 (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)
Other Relevant Disclosures:
Terranova Owned (FCX) On 1/29/10
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