S&P's Poor Standard - Fast Money Recap (7/9/08)

Recap of CNBC's Fast Money, Wednesday July 9. 

S&P is Poor

The S&P dropped into bear market range on Wednesday, and Pete Najarian said traders can play this market as long as they sell whenever there is a ten point rise. Macke wouldn’t go shopping on the 52-week low list for stocks, because they will likely make a new low.

 Bearishness at Nine Year High

 It is official. Public sentiment is the most bearish it is has been in 9 years. Adami thinks capitulation could be imminent and says we could see an 800 point rise higher. Macke says the sentiment makes it feel like a bottom, but the prices aren’t there yet. Karen Finerman says she’ll be long when the VIX gets a 30-handle. Najarian thinks the time to buy is not far off.

 Banks Bad or at Bottom? Fannie Mae (FNM), Freddie Mac (FRE), Merrill Lynch (MER), Financial Select Sector SPDR (XLF), UltraShort S&P 500 Proshares (SDS), Bank of America (BAC), Citigroup (C), PNC Financial (PNC), US Banc Corp (USB), Wells Fargo (WFC)

Fannie and Freddie were crushed on worries they will issue more stock and dilute value. Merrill Lynch dropped 9% on additional writedowns and decreased earnings prospects. Guy Adami thinks the biggest runs will be in bear markets and would bottom fish. Najarian would rather miss the first 10% and get it right. Finerman doesn’t feel confident that she could spot the bottom, but she thinks one of these stocks could be a value play. Dennis Gartman came on the show to say that current levels are absurd, and that he is buying banks and shorting the general market. He would buy XLF and SDS, which shorts the S&P 500. “Just stay home,” Macke advised.

Analyst Dick Bove has a very different take on financials; The banking industry in the US is both strong and healthy,” said Bove. “All of the fear being driven through the market because of the huge loan losses aren’t relevant because they’re non-cash charges.” Bove is bullish on BAC, C, PNC, USB and WFC.

Cisco (CSCO) Fries Tech

Tech fell on news that Cisco CEO predicts a turnaround next year instead of in 2008. The company was downgraded by several brokerages. Najarian thinks the drop is an opportunity and Finerman likes the stock’s valuation. Adami, however, wants to see capitulation first.

Steely Fan: Nucor (NUE), Steel Dynamics (STLD), U.S. Steel (X)

UBS raised its ratings on NUE and STLD and indicated the selloff in steel was excessive. Adami would look at US Steel, although he is a bit worried about the intensity of its momentum.

Cures for an Ailing Market: Schering Plough (SGP), Merck (MRK), Amgen (AMGN), Novartis (NVS), Pfizer (PFE), Gilead (GILD)

Drugs were working again on Wednesday, and the group reiterated its bullishness on the sector. Merck, SGP and AMGN all finished higher. Finerman thinks PFE and MRK are good places to hide and Adami’s favorite is Gilead.

Lukewarm Commodities: Chesapeake (CHK)

Commodities rose modestly, but may drop again if there is concern about the second half of the year. Adami would buy CHK on the secondary with a tight stop.

Agrium (AGU) CEO Mike Wilson

With the price of corn dropping recently, some wonder if the ag story is over. Wilson said at least his company is doing well, with a new buy rating and a raised price target. Concerning drops in the stock, Wilson says the selloffs are temporary panics, but the price recovers. Finally, Wilson doesn’t see demand falling and in fact thinks yields will have to catch up. Najarian and Adami would buy AGU on a dip.

Best of Breed: ConcoPhillips (COP)

Even though oil is volatile, COP is holding strong and is diversified into natural gas. Najarian noted Abu Dhabi chose COP over competitors Exxon and Royal Dutch Shell in an extensive oil development deal.

Hope in Submerging Markets: Embraer (ERJ), Tata Motors (TATA)

Emerging markets are taking a hit, and the group asked Tim Seymour if there is anything worth buying in BRIC countries. Tim Seymour warned against blanket buying but sees opportunity for ERJ and TATA, and added the latter is expected to double sales in the next seven years.

Final Trade: Adami: Celgene (CELG), Finerman: Target (TGT), Najarian: Chesapeake Energy (CHK) on a pullback.

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