Financial Talk
The traders discussed the financial stocks following the negative article from Barron’s that took Freddie Mac (FRE) and Fannie Mae (FNM) down, and a number of analysts downgrades the drove Goldman Sachs Group (GS) lower. Joe Terranova said stay away from both stocks. Zach Karabell said investors should not invest in Fannie or Freddie. Terranova thinks Goldman looks good at $160 and he disclosed he’s long the stock. Macke said Goldman is going to break $160. He also mentioned that Fannie and Freddie are stocks you can’t be long. Najarian explained that Goldman is a leader and the bad news will end soon.
Unusual Options Activity
Jon Najarian joined the traders to talk about some unusual options activity in Zimmer Holdings (ZMH) and Broadcom (BRCM). Najarian said the options action in ZMH makes him think the stock is heading higher. He said the rumors on the street suggest that Johnson & Johnson (JNJ) might buyout Zimmer. Najarian also said the options players are speculating on calls for Broadcom because the company makes the touch screen for the iPhone. He said the stock could be worth buying because Apple Computer’s (AAPL) iPhone is doing well.
CEO Interview Chesapeake Energy
The “Fast Money” crew spoke with Aubrey McClendon, CEO of Chesapeake Energy (CHK) about the prospects for his company. McClendon said he is seeing strong demand for natural gas which trades at $8. “From where prices have fallen to now I think we’re in a place where we’re putting in a bottom in nat gas,” he said. “There’s been concern about excess supply but we think there’s good demand.” He told investors to take advantage of the selloff in the stock, which he feels was unwarranted, and build a position. He also pointed out that CHK is hedge for natural prices by 100% in 2009 and 75% for 2010. Terranova said that coal could be a good play right now after taking into account what McClendon said. WATCH THE VIDEO INTERVIEW HERE
Merger Talk
The NYMEX (NMX) shareholders are set to vote on whether to approve a merger with CME Group (CME). Terranova thinks the merger is going to happen and he owns CME. Macke said avoid all the exchanges because regulators are getting into their business.
Dollar Chat
The traders discussed the weakness in the dollar on Monday ahead of the housing and inflation data due out Tuesday. Macke said he is still long the dollar and he thinks the pullback today was healthy. Karabell thinks the pullback in commodities is a sucker’s move. He thinks a move back to the plus side is coming for the commodities complex.
Chart Of The Day
The Chart of the Day was the Russell 2000. The iShares Russell 2000 (IWM) is up 9% for August, vs. a rise of only 2% for the S&P 500. Karabell explained that small-cap stocks have been rallying harder because they were beaten up. He thinks the rally is only a short-term and he said isn’t excited about it.
Hewlett-Packard Talk
Hewlett-Packard (HPQ) traded off 4% ahead of its earnings report set for August 19th. Najarian said that traders are selling off HPQ because it generate a lot of their revenues from overseas, and the dollar is rising.
Home Improvement Stocks
The gang took a look at the home improvement sector after Lowe’s (LOW) beat on earnings but issues a disappointing forecast for the third-quarter. Macke said avoid the retailers like Home Depot (HD) and Lowe’s. He explained that the fundamentals for the sector aren’t strong and its not priced into the stocks yet. Najarian said sell Lowe’s and Home Depot and wait for a pull back. Chat and share ideas with the best small cap traders LIVE each day free at Stocknetworkonline.com