Fast Money
Posted on January 26, 2008 at 11:07 AM EST
Word On The Street The stock market experienced another wild day Friday packed with tons of volatility. The Dow finished down 171 points and the NASDAQ fell 21 points. Karen Finerman explained that with all the volatility the market experienced this week the S&P 500 barely moved. According to Guy Adami, the market gave investors a lot more clarity this week. Pete Najarian expects volatility to spike up for the next 3-5 weeks. He also thinks the Dow will experience 200-300 point intraday swings during that time frame. Financial stocks put in a strong week off the back of a Fed rate cut. Najarian thinks the Financial Select Sector SPDR Fund ( XLF ) is a buy at $25 and a sell at $28. Adami says take profits in Wachovia Corporation ( WB ) and look to buy it back lower. Besides Apple Inc. ( NASDAQ: AAPL ) technology stocks put in a big comeback this week. In Najarian’s opinion, he would stay away from technology stocks right now. Adami likes Microsoft Corporation ( MSFT ) at $32. Gold traded up to $910.70 a new record high after a power shortage in South Africa hit miners. Adami loves mining stocks Freeport-McMoRan Copper & Gold Inc. ( FCX ) which he feels is cheap on valuation. He also likes Peabody Energy Corp ( BTU ) for a coal play. Seymour thinks investors should be short gold and long miners like Gold Fields Limited ( GFI ) or Harmony Gold Mining Company Limited ( HMY ) . Najarian prefers coal names like Joy Global Inc. ( JOYG ) , Peabody Energy Corp. ( BTU ), Massey Energy Company ( MEE ) and Alpha Natural Resources Inc. ( ANR ) . U.S based multinationals like Honeywell International Inc. ( HON ) and Caterpillar Inc. ( CAT ) continued to show strength Friday. Adami highlighted how Honeywell performed well Friday despite the down market. He thinks HON is heading to over $60. Seymour thinks CAT is cheap compared to Deere & Company ( DE ) . According to Najarian, the agriculture plays are a better way to play the global story. According to study in the Wall Street Journal, value investors beat out momentum traders in 2008. Finerman mentioned she is a value investor and the stock she is picking are doing well. Seymour explained the problem is that the market isn’t trading on valuations it trading off of fear and flows. He questioned how do investor price in that risk? Najarian noticed unusual options activity the chemical stocks. He mentioned the options trading on The Dow Chemical Company ( DOW ) is suggesting the stock will move much higher. He would also look at Delta Petroleum Corporation ( DPTR ) which had huge front month options activity. Market Trends The “Fast Money” traders’ highlighted trends in the market that they feel are worth watching for next week. Najarian doesn’t think the market or the global story is broken. He thinks investors should look at coal play Massey Energy Company ( MEE ) . Finerman recommends watching the inflation data coming in next week. Adami likes Microsoft Corporation ( MSFT ) at $32. Seymour would look to buy the South African miners that were sold off heavily and look to sell the miners from other parts of the world that rallied on Friday. He would also sell StreetTRACKS Gold Trust ( GLD ) . Earnings Trades For Next Week A third of all the earnings are set to be reported next week. What is the best earnings trade to get in front of? Najarian thinks the truckers are the play and he recommends watching YRC Worldwide Inc. ( YRCW ) and Con-way Inc. ( CNW ) . Adami thinks Burlington Northern Santa Fe Corporation ( BNI ) is interesting ahead of earnings for Tuesday. He feels $80 is the floor on BNI. Finerman likes Altria Group Inc. ( MO ) but she doesn’t think the stock will move much when it reports. Adami also mentioned watching Merck & Co Inc. ( MRK ) . Najarian likes Marathon Oil Corporation ( MRO ) if the stock trades down when it reports. Lastly, Adami says investors can get long Google Inc. ( NASDAQ: GOOG ) into earnings understanding that if they say something terrible it could go down $50. Chartology With Carter Worth Oppenheimer Chief Market Technician Carter Worth joined the “Fast Money” crew to discuss his take on markets. Worth thinks the S&P 500 is currently experiencing a classic bear market rally. He feels the S&P 500 will do a bunch of nothing for awhile then it will make another move lower. Worth explained that the charts on gold mining stocks show that they haven’t kept up with the price of gold. He recommends buying gold mining stocks with the idea that the sector will play catch up with the commodity. Quicker Then The Ticker On January 17 th Najarian said keep the refiners stocks like Tesero Corporation ( TSO ) and Valero Corporation ( VLO ) high on your list. He was dead right and both stocks traded up more than 9%. On January 22 nd Seymour said look at iShares MSCI Emerging Markets Index Fund ( EEM ) and iShares FTSE/Xinhua China 25 Index Fund ( FXI ) . Seymour was on the money and both emerging market ETFs traded up over 8%. On January 18 th Finerman told investors to look at The Home Depot Inc. ( HD ) because she felt the stock was oversold. She was right and the stock traded up 9% since her call. On January 22 nd Adami said buy Wachovia Corporation ( WB ) . Adami nailed this call and WB went up nearly 20%. Fast Fire On January 18 th Najarian thought Apple Inc. ( NASDAQ: AAPL ) would be a good buy ahead of earnings. He was dead wrong and the stock fell 15%. Najarian still likes Apple even after the big fall. On January 17 th Adami told traders to short The PNC Financial Services Group Inc. ( PNC ) . He missed the mark on the short call and PNC traded up 7%. Adami regrets making the call. On January 14 th Finerman said get long natural gas plays like Devon Energy Corporation ( DVN ) and Apache Corporation ( APA ) . She was way off and both stocks are down over 10% since her call. Finerman admitted she was wrong. POPS&DROPS The following POPS&DROPS segment highlights the biggest movers for the week. POPS- Dupont ( DD ) traded up 7%. Finerman explained that DD is a play on agriculture. SPDR S&P Homebuilders ETF ( XHB ) traded up 20% helped by a Fed rate cut. Seymour feels the move is a bit overdone. Yahoo ( YHOO ) traded up 9% ahead of next week’s earnings report. Adami explained if you’re buying Yahoo you’re buying hope. Macy’s Inc. ( M ) traded up 9%. Finerman says M is oversold. Amgen Inc. ( AMGN ) traded up 5% off of better-than-expected results from their anemia drug. Najarian explained that Amgen has huge growth internationally. Stillwater Mining Company ( SWC ) exploded up 40%. Seymour thinks SWC is an interesting play but he would buy it lower. Nucor Corporation ( NUE ) traded up 13%. Adami explained that pricing power is back in the steel sector. FreightCar America Inc. ( RAIL ) traded up 23%. Finerman sees value in RAIL with their large cash position. Delta Air Lines Inc. ( DAL ) traded up 12% on merger speculation. Seymour wonders if DAL will be bought out. United Technologies Corporation ( UTX ) traded up 10%. Adami likes this stock. DROPS- Schering-Plough Corporation ( SGP ) and Merck & Co. Inc. ( MRK ) both fell more than 8%. Najarian thinks both these firms have issues right now. Tempur-Pedic International Inc. ( TPX ) fell 8%. Najarian says there’s a problem with luxury mattress makers. Final Trade Seymour likes Sasol Limited ( SSL ) for a short term trade. Adami favors United Technologies Corporation ( UTX ) . Finerman recommends Golar LNG Limited ( GLNG ). Najarian says trade with Warren Buffett and buy Burlington Northern Santa Fe Corporation ( BNI ) ahead of earnings.
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