Word On The Street
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Energy Trade
Saudi Arabia announced over the weekend that it plans to pump more oil. Adami said investors should look at Halliburton (HAL) and Schlumberger (SLB) for ways to play oil. Finerman mentioned she is seeing a lot of insider buying in refiners. Najarian said play insider buying with natural gas plays like SandRidge (SD) and Chesapeake (CHK). He also made bullish comments on BJ Services (BJS).
Options Activity
Najarian highlighted unusual options activtiy in L-3 Communications (LLL). He mentioned that call buying volume is big and the stock should head higher.
Fed Decision Trade
The traders talked with Tony Crescenzi, chief bond market strategist of Miller Tabak & Company about how to trade ahead of the Fed rate decision set for Wednesday. Crescenzi said the Fed’s work is done. He feels all that matters for the economy going forward is oil, and he hopes it doesn’t trade to $200. He said Paulson should support the dollar and the policy makers need to do more. Crescenzi mentioned that it’s becoming a Republican ideology to destroy the dollar and under an Obama administration we could see something different. Macke said the Fed is in a box and they have cuts rates as much as they can. He doesn’t think it would be a smart move for the Fed to hike rates. Najarian said at some point down the line we could start hiking rates. Adami thinks a rate hike could happen in the fall and the bond market agrees. Finerman explained that the Fed needs to hope for some deflation in oil.
Smartphone Trade
Google (GOOG) is preparing to launch its Android mobile software platform. What is the trade? Najarian reminded viewers that he told them a smartphone was coming from Google. However, he expressed concern that Google has 30 companies working to develop the software. Najarian explained that Google needs to get one group together to develop the Gphone before it can compete with Apple’s (AAPL) iPhone and the BlackBerry. He told viewers that if they are looking for a smartphone trade buy Research In Motion (RIMM) ahead of earnings.
Gas Gimmicks
A number of companies are offering special offers that involve gasoline deals in an attempt to drive sales. Chrysler is offering customers to lock-in gas at $2.99 for up to 12,000 miles for three years if you or lease certain models. Toyota Motors (TM) is offering $50 gas cards for consumers who buy tires from its Toyota Tire Centers and Expedia is giving away $50 gas cards for every 3-night stay booked at certain hotels using a MasterCard (MA). Finally, Jack In The Box (JBX) is giving away 2 free tacos to customers who have a gas receipt. Donny Deutsch the host of CNBC’s “The Big Idea’ joined the traders to discuss these gimmicks. Deutsch said these offers will turn-off customers. He explained that these companies are getting away from their core competencies and they all should focus on doing what they know best. Najarian said the car firms should work on making cars more fuel efficient.
POPS&DROPS
POPS- CME Group (CME) traded up 2% after the exchange announced it plans to buyback stock and pay a special dividend. Najarian says he likes the stock. Halliburton (HAL) jumped 6% after the company said it will not buy Expro. Finerman said they blew the takeover with Expro. Cameco (CCJ) popped 5% after RBC Capital Markets reiterated its outperform rating in the company. Macke said he is bullish on the energy sector and he likes CCJ. Evergreen Solar (ESLR) traded up 4% after Lehman Brothers reiterated its equal weight rating on the stock. Najarian said solar is the real deal.
DROPS- Ford Motor Company fell 9% after the car market said it was cutting production and delaying the new F-150 pickup truck. Adami said if Kirk Kerkorian buys a stake in General Motors (GM), run. UAL (UAUA) plunged 15% due to high oil prices. Najarian said high oil prices are hurting the profits at airlines. Big Lots (BIG) dropped 3% after Bloomberg said the company has the highest percentage of insiders selling it short. Finerman said what do the insiders know that we don’t. Buffalo Wild Wings (BWLD) slipped 11% after Raymond James downgraded the stock to underperform. Macke said stay away. Circuit City (CC) plunged 21%. Adami said stay away. R.H. Donnelly (RHD) fell 6% after the publisher said the expiration for its senior notes expired. Finerman mentioned the company’s president retired. Motorola (MOT) lost 6% after Piper Jaffray cut the stock to sell from neutral. Macke said Ichan should get out. Pier 1 Imports (PIR) plunged 17% after Goldman Sachs criticized the company’s bid to buy Cost Plus. Adami said he doesn’t like the stock, but it could bounce tomorrow.
Trader Radar
Shares of Walgreens (WAG) were among the most actively traded stocks on the NYSE Monday.
Emerging Market Trade
Inflation is on the rise in emerging markets like China, India, Indonesia, Vietnam, Sri Lanka and Pakistan. Tim Seymour joined the traders to discuss his best trade ideas for emerging markets. Seymour said the remedy for inflation is to raise interest rates. He explained that central banks around the world will be forced to hike rates in the second half of the year, which will crimp growth. He recommended playing iShares MSCI Mexico Index (EWW) or iShares MSCI Brazil Index (EWZ) because their central banks are ahead of the curve. Seymour also likes Wisdomtree Trust Chinese Yuan ETF (CYB), WisdomTree Indian Rupee ETF (ICN) and WisdomTree Brazilian Real ETF (BZF) for a play on stronger currencies coming out of these countries. Najarian said be careful with the EWW because three stocks make up 50% of the ETF.
Final Trade - Stock Picks For The Million Dollar Portfolio Challenge
Macke said play Circuit City (CC) for a run-up ahead of its company meeting. Adami said go long Pier One (PIR) for a bounce. Finerman said gamble on Alliance One (AOI). Najarian recommended Washington Mutual (WM) for a trade. 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!