Word On The Street
WORD VIDEO HERE
Dennis Gartman Take
The traders spoke with Dennis Gartman, author of The Gartman Letter about what he thinks the Federal Reserve will do next with interest rates. Gartman said the Fed will not raise rates because we are moving into an election year in November. He said the country needs a strong dollar, but the policy makers need to start taking action instead of paying lip service. Gartman said the action in oil today was very bearish after crude set a record intraday high and then closed on the lows. He explained that the news of Saudi Arabia upping oil production was worthless because they are boosting production for cruddy old heavy crude and not light sweet crude, which they don’t have any of. He said if someone put a gun to his head and asked him if he would short or go long oil, he would say shot. Gartman said if someone has to trade oil he would buy UltraShort Oil & Gas Proshares (DUG). Adami also thinks DUG is playable here.
Alternative Energy Headline Trades
Credit Suisse upgraded alternative energy company SunPower (SPWR) to outperform from neutral due to expectations of better-than-expected pricing power in Italy and other places. Energy Conversion Devices (ENER) announced plans to expand into the solar business. IBM (IBM) formed a partnership with Tokoy Ohka Kogyo to develop solar technologies and Honda (HMC) launched its new zero-emission, hydrogen fuel cell car that is set to be sold in Southern California. Najarian said he likes SunPower, but his favorite name in the alternative energy sector is Energy Conversion Devices. He advised investors to wait for the stock to fall before buying. Adami recommended MEMC Electronics (WFR) with a stop at $63.
Corn Top Trade
Corn prices ripped higher Monday hitting a new record high of $8 a bushel as floods continue to destroy corn crops in the U.S. The U.S. government will announce how many acres have been lost to flooding on June 30. Is there a trade here? Adami said he likes Pilgrim’s Pride (PPC) for a trade on a peak in corn prices, plus the stock has a heavy short-interest. Terranova agreed with Adami and said he feels corn has topped and PPC is the play. Macke said get long Fesh Delmonte (FDP) with a stop at $25. Najarian picked Dupont (DD) on valuation.
Feel Good Trade
Macke talked about some stock ideas to play the weak consumer. Macke said as people look to feel good they will find ways to do it cheaper. He likes Disney (DIS), Corning (GLW), IMAX (IMAX) and DirecTV (DTV). Terranova suggested Wal-Mart (WMT).
Trader Radar
Shares of Hershey’s (HSY) were among the most actively traded stocks on the NYSE Monday.
Chartology With Carter Worth
Goldman Sachs Group (GS) is set to report earnings on Tuesday and Morgan Stanley (MS) will report their earnings on Wednesday. Carter Worth, chief market strategist for Oppenheimer joined the traders to discuss his technical outlook for Goldman Sachs Group (GS) and Morgan Stanley (MS). Worth said fundamentally both stocks could be a value trap. From a technical perspective, Worth thinks trends in these stocks suggest to him they will trade lower. He advised investors to stay away. Adami said take profits in Goldman Sachs, but he would own Morgan Stanley for a trade with a stop at $40. Najarian said GS could move up to $192 where he would then put on a options put spread. Macke said don’t chase Goldman.
POPS&DROPS
POPS-Las Vegas Sands (LVS) popped 7% on no news. Najarian said the move was from a short-squeeze. Barclay’s (BCS) rose 4% after the British bank said it will raise $7.8 billion. Adami said he likes USBancorp (USB) over BCS. Hess (HES) moved up 2% after FBR Capital Markets raised its earnings estimates for the company by 25% Joe Terranova said the stock will go up if oil trades lower. Landry’s Restaurants (LNY) blasted up 18%. Macke said the company is being taken private by their CEO.
DROPS- Coca-Cola (KO) dropped 2%. Terranova said sales in Europe are down and the stock is close to a 52-week low. Verizon Wireless (VZ ) and AT&T (T) dropped after UBS downgraded the stock on concerns of a slowing U.S. economy. Adami said $34 is support on AT&T. Hershey (HSY) dropped 6% on rumors that shareholders aren’t interested in selling the company. Macke said stay away. Republic Services (RSG) moved down 6% after the company announced a merger with Allied Waste on Friday. Najarian said this stock worries him.
Final Trade
Macke said buy Pier 1 (PIR). Najarian recommended Rambus (RMBS) due to the interesting options activity in the names.
CNBC Portfolio Challenge Trades
Macke picked Fresh Delmonte (FDP). Adami said look at Ambac (ABK) or UltraShort Oil & Gas ProShares (DUG). Joe Terranova said short Green Mountain (GMCR) and get long Starbucks (SBUX). Najarian picked American Airlines (AMR) for a bearish play on oil.
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