Word On The Street
WORD VIDEO HERE
Options Action
Jon Najarian said he is noticing some interesting options activity in a number of stocks. He highlighted the options action in SunTrust (STI) and Wells Fargo (WFC) in which traders are buying puts and expecting more downside. He explained that investors think the stocks will make small moves down in the first week of September. Another stock with options action is Rambus (RMBS). He said the options action in RMBS are trading like the stock is going to explode to the upside. Finally, Pete Najarian mentioned he is seeing unusual options action in Titanium Metals (TIE). He said the call options volume could mean the stock is going to move higher.
Citigroup Upgrade
CNBC’s Steve Liesman joined the “Fast Money” traders to discuss the Citigroup upgrade of Fannie Mae (FNM) and Freddie Mac (FRE). Citigroup analyst Bradley Ball cut his price target on FNM shares to $9 from $21, and on Freddie to $6 from $16, but he issued a buy rating on both stocks. Ball said both stocks have value and he expects the shareholders will be saved for the troubled lenders. Liesman said he doesn’t understand how Citigroup came up with this analysis. He said everyone he is speaking to have said both FNM and FRE could be nationalized. He feels that the common stocks are going to zero if the government does a bailout, but the preferred shares could be good buys if that happens.
China Trade
The traders discussed the outlook for commodities and stocks in China now that the Olympic Games are over. Jon Najarian said he likes the iShares FTSE/Xinhua China 25 Index (FXI). Terranova said the way to play China is with dry shippers like Excel Maritime (EXM) and Genco (GNK). Adami thinks the best way to play China is through multi-nations like Yum Brands (YUM).
POPS&DROPS
POPS- Tree.com (TREE) traded up 3%. Jon Najarian said stay away from the stock.
DROPS- Lowe’s (LOW) fell 3% despite a bullish report from Morgan Stanley that said they prefer the stock over Home Depot (HD). Jon Najarian said stay away. General Electric (GE) lost 3%. Pete Najarian said he expects traders to sell the rips on GE with the stock up 10% of recent. MGM Mirage (MGM) traded off 9%. Adami said stay away its not a good company right now. Starbucks (SBUX) shed 3%. Terranova said take some profits. Healthways (HWAY) plunged 22% after the disease service company missed Wall Street estiamtes. Pete Najarian said stay out of this stock. Cablevision (CVC) dropped 5% after Citigroup cut its rating on the stock. Adami said the stock could be worth a look here for a buy.
Commodity Trade
The traders discussed the best way to play crude oil after Goldman Sachs Group reiterated its year-end price target of $149 per barrel. Terranova said the oil markets are back to trading on fundamentals. He recommended National Oilwell Varco (NOV) for the oil sector, Freeport McMoRan (FCX) in the copper sector and Coal ETF (KOL) for the coal complex. Jon Najarian pointed out that the United States Natural Gas Fund (UNG) is seeing a lot of out of money call activity, which suggests to him the ETF is going higher.
Trader Radar
Shares of MGM Mirage (MGM) were among the most actively traded stocks on the NYSE Monday.
Small-Cap Play - Stock You’ve Never Heard Of
The crew highlighted a small-cap company Digi International (DGII). Najarian pointed out that Digi has 500 employees that upgrade checkout counters, factory floors and traffic lights into wireless information systems. He said the stock company has little debt a strong cash position and insiders are buying.
Final Trade
Pete Najarian picked Titanium Metals (TIE). Jon Najarian said buy the United States Natural Gas Fund (UNG). Adami likes XTO Energy (XTO). Joe Terranova said step away from the market for now. 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!