Word On The Street
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Fed Trade
The traders spoke with Steve Leisman about the chances of the Fed hiking rates. Liesman implied that the Fed language will not accommodate those in the market looking for hints at rate hikes in the future. He explained that the market is ahead of the Fed on the next rate move. “market is well wired for rate hikes beginning in August or September,” he said. Macke said if the Fed promotes a steady as she goes message the market will respond bullishly. Adami advised investors that if they don’t think the Fed will be hawkish then get long gold cause the dollar is in trouble.
RIMM Trade
The trades talked about how to play Research In Motion (RIMM) ahead of its earnings report set for Wednesday. Just about every analyst on the street is expecting RIMM to report earnings and revenues toward the high end of their guidance. Tim Long, a senior research analyst for Banc of America joined the traders to talked about RIMM. Long said there’s a lot more on the horizon for RIMM. He thinks a strong quarter out of RIMM bodes well for Apple Computer (AAPL) and Nokia (NOK). “The way we look at the market we see smartphones taking share from other types of electronics devices such as cameras or music players,” he said.
Window Dressing Trade
Fund managers are notoriously famous for dressing up their portfolios at the end of the quarter. Typically, money mangers buy up the best names and sell the worst. Macke said sectors like energy, agriculture and steel are overbought, while autos and financials are oversold. He suggested investors buy heavily shorted General Motors (GM) for a trade here, but not a long-term investment. Adami advised investors to play CVRD (RIO) in the steel space. Najarian thinks technology is going to be great in the second half of the year.
Housing Trade
The traders discussed some stock plays for the beaten-up housing sector. Adami explained that new housing starts are around 1 million and that level has signaled a bottom for the cycle in the last 35 years. Adami said for high risk traders look to play Centex (CTX), DR Horton (DHI), KB Homes (KBH) or Toll Brothers (TOL). Finerman said stay away from housing stocks with a lot of debt. Najarian said he hates housing.
POPS&DROPS
POPS- Raytheon Company (RTN) traded up 3% after JP Morgan upgraded the stock to overweight from neutral. Adami said the stock is cheap at 13 times earnings. Pulte Homes (PHM) popped 5% after Credit Suisse started coverage of the stock with an overweight rating. Finerman said move on. UST (UST) jumped 4% after UBS upgraded the stock to buy from neutral. Najarian said this company is all about chewing tobacco and investors should keep an eye on it. The Cheesecake Factory (CAKE) popped 6% after Wedbush Morgan upgraded the stock to buy from hold. Macke said if you are shorting CAKE he is on the other side of that trade. “Eventually there’s a bottom,” he said. Novartis (NVS) traded up 3% after Exane BNP raised its rating to neutral from underperform. Najarian said they have some great stuff in the pipeline and the company is out there making acquisitions. Pzena Investment Management (PZN) surged 13% on no news. Finerman said Rich Pzena is one of the best names in money management. Starbucks (SBUX) traded up 2% after Wedbush Morgan said the company should form a partnership with The Cheesecake Factory. Macke said the trend is down until they come up with a better business model then letting the hippies run the business.
DROPS- United Parcel Service (UPS) lost 6% after the firm cut its second-quarter profit guidance. Macke said UPS stock only turns down in this economy. Copper Tire & Rubber (CTB) dropped 4% after the tire maker cut production for the second-quarter. Adami said there is big short interest in this stock and it has more room to the downside. comScore (SCOR) plunged 23% on news that Google (GOOG) might launch its own Internet traffic service. Finerman said this news is awful for comScore. Smurfit-Stone Container (SSCC) fell 11% after Citigroup raised its rating on the stock from high to speculative and lowered its price target. Adami said not so good.
Rich Trade
The trades discussed some stock ideas that play off the rising trend of affluent consumers who are pinching their pennies and shopping for deals. Macke said play Wal-Mart (WMT), Costco (COST) and BJ’s (BJ). He advised investors to buy the pull back in BJ’s which was downgraded on Tuesday.
Trader Radar
Shares of Eastman Kodak (EK) were among the most actively traded stocks on the NYSE Monday.
Fast & Furious
The Fed will announce its FOMC decision on Wednesday. Adami said he has a bad feeling that Ben Bernanke might change his tune tomorrow. He advised investors to watch out for a fall in the dollar. Research In Motion (RIMM) will report its last quarterly report before it sees competition from Apple’s business iPhone. Macke thinks the competition from Apple is wildly overstated. He said RIMM will do just fine. CSX (CSX) will hold its shareholder meeting at noon on Wednesday. Najarian said don’t get nervous about CSX, as long as agriculture and coal keep doing well CSX will be strong. Bed Bath & Beyond (BBBY) will report earnings after the bell on Wednesday. Macke said specialty retail is where love goes to die. Oracle (ORCL) reports earnings on Wednesday. Najarian thinks ORCL will deliver on its earnings.
Final Trade
Adami picked Home Depot (HD). Finerman recommended Pharmaceuticals HOLDRS (PPH). Najarian said buy McDonald’s (MCD). 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!