Word On The Street
Dylan Ratigan hosted CNBC “Fast Money” show Monday night. He started the show with a discussion of how stocks are near new credit crisis lows. Guy Adami said he thought the Dow would have traded above 9,000 today. He says “if the Dow closes below 7,800, we will see 6,000 next.” Tim Seymour said there is no reason to do anything here with so much policy hanging in the balance. He says “Europe and Japan are in recession for the first time since World War II.” Pete Najarian pointed out that the financials haven’t participated in any of the recent market runs. He says “the Financial Select Sector SPDR (XLF) is right on its 52-week lows.”
Short Sales
Karen Finerman told viewers there is more pain to come for financials, so she is short BB&T (BBT), Vornado Realty Trust (VNO) and Simon Property Group (SPG). Najarian mentioned the iShares Dow Jones US Real Estate (IYR) is seeing massive put options activity.
Auto Bailout
Ratigan reported breaking news that the Senate proposed $25 billion in aid similar to the TARP Plan for the auto sector. Seymour explained that this is what the market doesn’t want, when there is no volume and no buyers. Adami said shares of General Motors (GM) are probably worthless regardless of what happens.
Energy Trade
Ratigan asked the traders if there is an investment to be made in the oil complex. Adami said there is no real money to be made in the commodity market. However, he says “look at ConocoPhillips (COP) for a valuation play and a piggyback play off Warren Buffett’s recent stake.” Najarian said Chevron (CVX) and Exxon Mobil (XOM) could have more downside if oil continues to plunge.
Earings Play
Ratigan mentioned that Lowe’s (LOW) beat earnings and traded up 4% in after hours trading. Jon Najarian said he is watching Limited Brands (LMT) for a play on their earnings report.
Commodity Plays
The traders talked about where the opportunity will be in the market when equity investors put money back to work. Adami said the money will go back into a lot of the commodity stocks. He says “the problem is it won’t go back tomorrow or next week, but will probably happen in January.” He likes Agrium (AGU), Potash (POT) and Archer Daniels (ADM).
Kudlow’s Take
The traders spoke with CNBC’s Larry Kudlow about the new auto bailout plan and Barrack Obama’s plans for the future. Kudlow said he doesn’t like the $25 billion bailout for General Motors. He says “General Motors isn’t competitive to Toyota Motor (TM) and Honda Motor (HMC), and I prefer some type of pre-packaged bankruptcy.” Kudlow told viewers the market is disappointed that Obama hasn’t announced who the new Treasury Secretary will be and whether they will raise taxes in 2009. He says “people wanted to be reassured by a moderate to conservative Treasury appointee, and none was fourth coming.”
More Auto
CNBC’s Phil LeBeau joined the traders to discuss the proposed aid for the automakers. LeBeau said it’s his understand that the $25 billion is for the entire auto industry, not just General Motors. He explained that under the plan, there will be no bonuses for executives making over $250,000 a year and the government wants assurances the automakers have a viable business plan for the future.
Trader Radar
Shares of Baidu.com (BIDU) were among the most actively traded stocks on the Nasdaq Monday.
POPS&DROPS
Pops- Las Vegas Sands (LVS) popped 6% after the casino operator completed a $2.1 billion offering of common stock, preferred stock and warrants. Adami said the only problem is that nobody is going to Casinos. Colgate-Palmolive (CL) traded up 1%. Adami mentioned the stock rose off a positive mention in Barron’s over the weekend. Eaton (ETN) rose 2%. Adami says “good company, cheap valuation but probably not the right time to buy it.”
Drops- Abercrombie & Fitch (ANF) fell 13%. Finerman told viewers to “stay away.” Alcoa (AA) dropped 10% on deeper recession concerns. Seymour said it’s a great opportunity to buy this stock. Baidu.com (BIDU) plunged 25% after reports surfaced that said the Chinese search engine might have let unlicensed health clinics buy medical ad keywords on its search engine. Najarian says, “this is the Google (GOOG) of China, and this might be a very interesting opportunity.” Dell (DELL) lost 3% after Merrill Lynch downgraded the stock to neutral. Finerman joked “it’s not that bad for a Nasdaq stock.” Bank of America (BAC) traded down 8% after the banking giant said it raised its stake in China Construction Bank. Seymour said it’s a very good strategic purchase for BAC. United Therapeutics (UTHR) plunged 35% after the company’s oral PAH drug failed in trials.
Final Trade
Seymour picked Aloca (AA). Adami recommended Charles Schwab (SCHW). Najarian selected Home Depot (HD). Finerman likes Rohm and Hass (ROH). Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!