Relationship Sustained - Fast Money Recap (8/11/08)
Recap of CNBC's Fast Money, Monday August 11.
Oil/Market Relationship Sustained – Energy Select SPDR (XLE)
Dillon Ratigan commented that Joe Terranova was actively trading oil. He noted that crude oil and gold were pulling back Monday, helping various sectors rally strongly -- most notably financials and retailers. The oil/markets relationship has been sustained today. Gold and oil are tanking. Financials look sensational and chips are performing well. The Energy Select SPDR is about to break a trend line. Crude oil futures were down about 2% to $113.37, and gold was down about 4% to $832.40. Joe Terranova believes that commodities are in a bearish stance and are helping the stock market, particularly retailers. Jeff Macke said the reason these things are moving is the dollar which is breaking out. He is long the dollar and believes it will continue to rally. Jon Najarian loves the dollar. He is playing the dollar rally by shorting gold. Terranova said he is bearish on crude oil short term, but in the long term he still believes it will trend higher. He said he is long oil, with a December 2012 contract.
Chart of the Day - Home Depot (HD), Costco (COST)
Home Depot broke its 200-day moving average. The stock is up about 9% to $28.65. “I like the chart break,” Macke said, but added that all the consumer names are rallying today. He believes people simply missed the rally and shouldn't be so quick to rush in. He went on to say that the Costco move makes sense. There has been penetration without conviction. Macke said the moves were a function of the dollar.
Financial Rally - Goldman Sachs (GS), Select Financial Sector SPDR (XLF)
Goldman Sachs was up 3% to $181.74. Najarian said he loves Goldman Sachs all the time. He thinks it's a buy even after a big move. The Goldman Sachs break out is lifting financials. Quint Tatro said if you are nervous or hesitant on buying a particular financial to buy the financial ETF Select Financial Sector SPDR. He also said he would buy Goldman Sachs. Macke believes this is not a sustainable financial rally.
In The Chips - Apple (AAPL), Microsoft (MSFT), Intel (INTC), Marvell (MRVL), Taiwan Semiconductor (TSM)
Ratigan mentioned the strength in the chip sector, as well as in Apple. Najarian stated the strength in Apple's stock had to do with Steve Jobs mentioning today that the company's online applications store for the iPhone reached $30 million in sales during its first month. Najarian stated there is clear demand in the case of Apple. Intel unveils a new chip today sending the stock up. Najarian likes Intel, Marvell, and Taiwan Semiconductor. Macke said he is not too sure about Microsoft's action today, moving up less than 1% to $28.30, but feels bullish on the tech sector.
Dollar Performance Meaningful - Amazon.com (AMZN), Target (TGT)
Amazon.com soared 12% to $90.34, thanks to expectations for its Kindle book-reader.
Ratigan stated that the dollar performance was meaningful. Amazon is exploding while Target moved 6%. Najarian stated “consumer sentiment has changed” and feels confident that the dollar will not change its current uptrend. He said “billions of dollars” are being poured into the dollar, which he feels is temporary but naturally will continue to prop up the greenback. As a result, with the dollar moving higher, this presumes the stock market will move higher because crude oil will move down. Tatro disagreed with the importance of the dollar movement, stating that it did not move higher until crude oil started to move downward. Therefore, he said, “it's all about oil and not the dollar.” He suggests investors watch crude oil and believes the real test for the stock will be when or if oil bounces higher.
Alternative Energy - Energy Conversion Devices (ENER)
Najarian noticed money flowing into alternative energy names such as Energy Conversion Devices but believes investors should take some profits, as he is. Tatro advised they need to fall further to be attractive.
Unusually Strong Put Activity - JPMorgan Chase (JPM)
Najarian discussed the strong put-option activity the weekend before Bear Stearns went under and had to be bought out by JPMorgan Chase, suggesting that insiders knew the company was in serious trouble.
Georgia on His MindRatigan discussed the armed conflict between Georgia and Russia, saying that it may not be priced in and it could eventually send crude oil prices back up. Tim Seymour, founder of Seygem Asset Management, said America will not get involved in the Russian conflict. He thinks the conflict is about Russian pride. Tim Seymour stated that he believes Russia is cheap but be wary of its volatility.
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