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tv   Fast Money  CNBC  April 23, 2010 5:00pm-5:30pm EDT

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the records keep on rolling in for "avatar," the movie that blew away previous high marks at the box office, now has its sights set on your home. "avatar's" dvd sold more than 4 million copies in its first day, easily surpass "the dark knight" as the fastest selling blu-ray dvd ever. thursday's release was not available in 3-d, a feature that drove the movie's popularity in theaters. though some reports are pointing to a 3-d version hitting the market next year. meanwhile, next week pretty busy. want to get the gdp report out, two-day fed meeting and a whole
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host of earnings coming out. take a look at wall street ahead of that busy week. the doufrnlthsds finishing at the high of the day, up 70 points, and we were up every day this week. we end with a gain on the week. have a fantastic weekend, everybody. i'll see you next week. "fast money" begins now. live from the nasdaq marketsite, this is "fast money." the meltup continues as the s&p 500 hits yet another new high. but is this a market trading on flows or fundamentals? gary, what is your first move next week? >> happy friday. this is a market that is trading on massive meltup momentum. we've been on this now for several weeks. i told you mid-week that there was just no way, no way with 400 new highs on wednesday that this was going to be any type of correction. you had 500 new highs on the new york stock exchange yesterday. 634 new highs today on the new york stock exchange. you don't have corrections when you have that type of internal strength. and if you're a portfolio manager running a fund, an actively managed fund right now,
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if the last couple of fridays you had a bad weekend you're going to have a terrible weekend this weekend because more active managers are underperforming the index right now than there's been in many, many years. and that will continue to drive this meltup. >> let's talk about this week real quick. first of all, the hardest trade to make is always the best trade. and right now the hardest trade is to stay with this rally right now. this is not the 2009 hedge fund vip rally. you looked this week, you saw google, you saw amazon, you saw freeport-mcmoran, all 2009 favorites not performing well. this is a credit normalization trade led by consumer discretionary. on monday the market was on defensive. it shook it off. again on thursday the market was on the defensive and shook it off. so i actually agree with gary here. you are now looking at a market that's in meltup mode. except the ranges to expand and volatility to increase. >> and look at the retail stocks. eight of the ten top holders in the xrt are screaming through their 52-week high. people are still buying. people are still piling in these. the volume is light. but there's still a bid in the
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market. >> and it's not just 52-week highs on those -- >> ten-year highs. >> it's multiyear highs here. so this is some rally here in the consumer discretionary names. gary, investors -- i mean, excuse me, anthony, investors are fortunate, though, that this meltup is actually packed by some pretty good earnings data so far. >> we just did some stats on that. 324 companies have reported. 234 of them have outperformed the wall street estimates. so we're at 72% on the ratchet-up, if you will. and this is the best that we've seen in ten years. so that's why you're seeing a lot of base fundamentals to this rally going on right now. >> going back to one thing steve said, we've told you this all along. if you want to be in stocks and you're concerned about the one thing that may derail a stock market rally, that's higher interest rates. retail stocks do well in higher isht rates. that's why you continue to see it feels as though if i've got to be in stocks that's a safe place to continue to try to put money. that may continue as well. >> interest rates are staying where they are. that's a good point. >> watch the energy here, though. 11 1/2% of the s&p, it's underperforming. you'll look for money managers
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to put money in that sector next week. >> anthony, let's talk about energy real quick for one second. talking to some folks at goldman sachs, talking to some folks at morgan stanley, the thinking is now if the equities market is going to reach the targets of 1300 in the s&p, quality names, energy, materials, technology, which has kind of underperformed, that now has to lead the market higher. and i think today you saw the beginning of that. if you look at the xle, that was up 2 1/2% today. and that was rallying in the type of environment that would suggest to me that it was reach out and grab, i just need to own it, i want to buy it. >> let's go do brian kelly who is back at e.c. on the prop desk tonight. you're taking a look at your charts. you're going to spit out some fibonacci retrace sxmts this and that and all that. but bottom line what does this mean, brian? >> a couple things. first of all, the 1230 level on the s&p 500 is very important technically. it's a fibonacci extension on the hourly charts. it's a fibonacci extension on the daily charts. and it's a 61.8% retracement of the 2007-2009 downtrend.
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so you have all these technical indicators, everybody looking at it, everybody knows this. it's going to act like a magnet, kind of like a strike price acts like a magnet in the options market. so i think we're going to melt up to there. and then you're going to be careful that people are going to use that as an excuse to sell. a technical excuse to sell. but going back to what joe was saying and adding on what gary's saying, as long as you have negative real interest rates, money's free, commodities are going higher, market's going higher. it's the place to be. >> not to plate bear but that was the prelehman level, and if you remember what we did in four weeks i'm not saying we're going to do it, but we fell just about 200 points in the s&p. it was a precipitous fall. and like b.k., or beekz, as melissa calls him, we can fall like that again. there's no catalyst i see on the horizon to make us fall like that off a cliff. and 1230 on the s&p is also the time melissa has lunch every day. >> huge difference here. there's a huge difference in this market versus lehman's market, though. if the fed is behind this market, the fed is on the gas pedal and they're not going to let it go down. >> 100%. >> gary. >> and the major difference too
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is you were paid, or you were rewarded if you were a money manager to actually have some cash post-lehman. it was okay to underperform the benchmarks because you were protecting capital. it's the exact opposite. speak of beaks, as clarence beaks would say in one of the greatest movies of all time, steve, this is a different type of market. >> that is some transition you made. >> let's just hope i don't get put in a monkey suit. >> this is a different type of market clearly, but if you look at the market you have now, the poster child for it has been apple. look at apple. the earnings are reported this week. we talked about it. the stop out point on appsale 250. yesterday it began to extend the market higher toward the price target the analysts have 285. got above 270 today. this is an easy trade. stop yourself out below 250. >> let's talk about apple a little more because a major milestone was reached for apple. according to s&p, it is now the second biggest by market cap based on shares available to the public. now, that is a distinction versus shares outstanding. but according to s&p, now number
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two, there you have it, topping microsoft. anthony, you crunched the numbers. you were here the other day on the desk and you were talking about your concern about apple reaching the quarter trillion mark. that is the significance of that when we have a company that seems to be firing on all cylinders, it's got a pipeline, it's got even great momentum in what would be some of those legacy products if you can even call the ipod that. but some people are saying -- >> and it's got a growth -- despite the size. >> hold on. let him answer. >> to protect myself against gary. here's the thing you need to think about. at $250 billion of market cap most of these stocks start to flatline. it's mean reversion. and they just can't jump higher than the increasing in the analysts' estimates. we have several charts up right now. just showed you the biggest names, they start to flatline. now, apple may be different, but it's going to be going against history if it can outmatch, that what you see on that chart.
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go ahead, gare. >> and the point here is very simple. none of those companies when they hit that milestone were growing revenues at the type of rate that apple is and is expected to continue to do. so i've spent the week trying to find any company this size that can grow, organically grow revenues, and i can't come up with one in 23 years. >> really? >> there's not one company at that size that organically, not acquisition, but organically can grow revenues. and that's the difference. and speaking of pms, i made a comment the other night. i want to kind of explain. if you are a money manager, you have apple in the left-hand screen -- left-hand top of your screen, and if you don't own that stock you're watching that stock every day. and if you don't own that stock, it feels like you're short that stock because it keeps growing up and the relative performance is killing you. that's what it means. >> gary, absolutely. bring up a great point. whether you agree with anthony or you agree with spike on apple, when you look at apple itself, we've identified where you get out of the stock, but there are other things that apple's affecting. it affects the consumer. it is not about gary with his track ball on his blackberry anymore. that's obsolete, that track
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ball. you've got to get rid of it. >> that's a takedown. >> it is a takedown. it's one of the reasons rimm is struggling right now. on the positive side a consumer name that's doing well right now, it's best buy, a name that karen's talked about. that is all the apple effect. >> wait. you've got to stick with apple. i see guys chasing apple. i sat on this desk we talked about it 200. i was long personally from 162. you're never long enough the stocks that trade up 100 bucks. right? but the product integration, the margins on the ipad, all good. people are still chasing it. >> let's continue and talk about these consumer shares beyond apple. they were surging across the board today. but in particular the home builders saw some nice lift. new home sales giving a lift to that sector here. let's go to brian kelly. brian, you've got some interesting plays because of course we can look at the lennars, the hovnanians, et cetera, but let's go under the radar. >> under the radar name i mentioned on the halftime report, you're talking armstrong worldwide. it's a flooring company. they do both residential and commercial. they've got a great earnings yield. and when you look at home depot and lowe's, they've both been saying flooring has sold very
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well. shaw group, masco, those guys have all done very well. that's why i like being in in th stock. i think there's a lot more room to run. >> steve, you were talking about strandboard. >> oriented strandboard. osb. go ahead. >> you took me way too serious on that one. look at the companies that are in the building cycle. so you have the home depots, the lowe's. but look at the down cycle, lpx, usg, oc, and wy. >> yep. >> all of them benefited from basically a supply chain erosion. not disruption, erosion. the guys during the down cycle that were chopping down the trees and bringing them to market don't exist. they're out of business now. now these guys are starting to come back. you have no supply. it's gearing up. all this space is on fire. literally on fire. >> we should note the usg action on the equities side was matched on the options side. a lot of may 25 calls being purchased in today's session. so that was really across the board when it comes to these home builders. we saw a lot of individual
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options activities. not on the xhb, which is of course the etf that tracks the home building sector, but on individual names here. joe, in terms of the consumer play, what do you like? >> i think the consumer -- again, it is the hardest trade, which is the best trade. now, what i am doing, and again the energy positions that i have, i did buy some xly puts today on the belief that you'll see a mean reversion trade. but that does not believe that i do not believe in the v-shaped recovery. i don't believe, as spike points out, that you're going to see portfolio managers have to chase these names because they will. >> spiker. >> spike. >> ad spending. >> cbs said this week they were seeing a bounceback in ad spending, something, again, that we haven't seen in a long time. but what is to be expected in an economic recovery? the best way to play if you believe in ad spending bounceback, the best way to play is still newspapers. they have the greatest leverage to the local advertising markets in terms of how much of that flows to the bottom line. so newspapers has always been and will continue to be the best way if you want to make this as a macro theme in your portfolio.
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>> spike, when people say buy newspapers, you know what it makes me want to do? dive on a spike. it's a terrible play. i agree with you on the mechanics of it. >> not with the ipad, though. these newspapers are going to get delivered into that ipad. >> here's the problem with newspapers. they're going electronic, like you said, on the ipad. the problem is people are getting their news now, the younger generation are getting their news now from what? blogs. that's how people are doing it. so the increase for the demographics that are reading newspapers are reading off blogs -- >> zeef, i don't disagree with anything you've said. however, if you believe in the local advertising markets, companies want to advertise in local -- >> i got you. it's a beta trade. but the problem waya trade is people think they're safe. so they buy, it the move is over, and they get crushed. same way nokia. it was a laggard. people bought it. and it came in a couple -- you're looking at a 20%, 30% decrease in price in nokia because it was a laggard and as a ten-day outperformed the six months of the group. >> one of the things we pointed out on the program a couple of weeks ago was that with this credit crisis a lot of newspaper or competition in the local markets were not able to get
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credit and in fact shut down. so the newspaper business is in fact healthier than it was in other cycles. >> let's quickly go to b.k. on the prop desk. you've got some newspaper names because you are actually on the side of spike. when it comes to the showdown. >> i'm with spike on this one. there's a huge change that's happening here, particularly with the local media market. back in january supreme court ruled that corporations can directly spend on political advertising. names like media general, meg, blc, big play on texas politics. they have been screaming. i still think you get it with "new york times" and both of those names stilt have room to move. >> beaks, i'm happier on gary's side on this because you told me not to buy the s&p at 1150. >> takedown. >> i'm going to take beaks down. get me the orange juice report, beaks. >> who was the guy who -- >> brian, you felt you hit the mat. >> he was all over the beetle problem in canada. listen to beaks, he'll steer you right. >> brian, i love when you talk about yourself in the third person. it's endearing.
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>> a lot of chest thumping going on. >> let's move on here. a bigger showdown than we saw between grasso and beaks happens next week. wall street will be taken on by some of the senators on both sides of the aisle. to discuss financial reform and, as lloyd blankfein and fabrice tourre will take the stand, here to handicap it all for us is chris whalen, of institutional risk analytics. chris, great to have you on the fast line tonight. >> good afternoon. do i really hear you guys gunning the home builders? please. we have to spend some time after the show. >> it's not the home builders. it's -- >> 3/4 of a million delinquent mortgages festering over at the -- >> it's not really the home builders, though. it's a short interest and a supply chain on the actual building product -- >> let's go back -- >> it's a different thing. >> let's go back, guys, to the topic at hand because it is a big week for the financials, chris. what sort of trading pattern do
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you anticipate given the uncertainty that will, you know, unfold next week? >> oh, no. everything's going to go up next week. we're going to have a good gdp number. we're going to all cheer. then we're going to run higher. >> home builders too? >> go down to washington and defend the kingdom. but the thing of it is, as i've said, i think goldman has a better than 50-50 chance of beating the litigation with the s.e.c. the problem is that's only one battle. the other issue, of course, is the political issue. and every time someone looks at the complaint, looks at the details of the s.e.c. claim against goldman sachs, they don't like it. regardless of what the legal issues are. >> chris, it's anthony. i just -- >> -- in the realm of public policy and public opinion it's going to be very hard for lloyd blankfein to win that battle p. >> chris, it's anthony. i have a quick question. we were talking so much about goldman. don't you see some of these other financials, derivative plays away from gold snan talk a little about citibank and what you see there related to some of the things they're doing. >> i upgraded citi last week.
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you guys may not know this. >> we talked about it on the halftime report, chris. we did. >> i know. everybody thought i had a brain transplant. but they've done more work. they had the pistol to their head, and in terms of referring, in terms of other kinds of restructuring ideas i think vikram pandit is at least a couple steps ahead of wells fargo, very definitely. on the conference call wells wouldn't even talk about their cdo exposure. >> chris, but your rating on citi, even though you upgraded, is a neutral. what -- >> it is a neutral. but given where i was, this is a sea change. >> that is true. all right, contribution we've got to leave it there. thanks so much for joining us. christopher whalen, institutional risk analytics. >> thank you. >> going to take a break here. more "fast money's" up next. with the market splitting down the middle, the broad rally is behind us. so how do you find the best in breed? "fast money" shows you the way. plus, see which under the radar plays are outperforming. when america's post-market show continues.
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let's break down some of those headlines. first of all, the fed holding a two-day meeting on interest rates mid-week. our own steve liesman reporting today they will likely indicate that mbs asset sales will likely begin sometime sooner rather than later. joe, i was talking to some economists this morning on strrt strrt and one of them said
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that's not going to be happening for a long streit and if it does, they will pull back. >> the fed has said they will come in and support mortgages if they need to. i think it's a mistake to think you're going to see any move in the fed funds rate. you're looking at a meeting next week and not another meeting until june 23rd. they need to see more unemployment reports, get the unemployment reports under their belt, looking at unwinding the balance sheet, which would be selling off some of those mortgage securities. i don't think that happens. i think the trade off all of this is to look for a lower dollar again. that theme comes into play. and at some point if you look at fixed income itself that is a little bit of an asset bubble 37 that money comes out and goes -- >> a lower dollar like the dollar index or lower dollar versus a specific currency? >> i think the lower dollar works against most currencies, in particular the euro. what else can come out to push it lower? so i think the theme of lower dollar comes back in. >> let's talk earnings now. could also weigh heavily on the markets next week as we hear some of this year's biggest underperformers, including bristol-myers, exxon, and
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procter & gamble. and the question, guys, here, is it sort of baked in? these guys are underperformers already. what should we expect? >> the companies that have underprofrmd are underperforming for a reason. we pointed that out. again, i think that's a sign of a healthy market. the fact you may get some laggards versus the index with not such up side surprises is a fine thing. that's not negative for the market. >> any names there, anthony, on that list that attract you? >> well, exxon in particular, i do think that you're going to see, again, people outperforming next week. it's just this 72% rule right now. and you'll see upside surprises again next week. >> grasso? >> steel on tuesday. not on that list, but on tuesday letter x. you have to separate the difference between letter x and ak steel. ak steel, when we heard from them this week, they cited higher iron ore prices as a problem as far as their guidance going forward. letter x has its own iron ore. so right there you have input cost savings. this stock should be bought. ak steel should be sold. >> want to move on here because there is one company that could
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actually surprise to the up side next week and that is radio shack. the stock has rallied 17% this week as talks of a possible takeover continue to surround the name. let's get you set up for the results with our "fast money" 360. take a look. >> radio shack reported after the close monday evening, and i think they'll show some strength in important categories, namely wireless and wireless accessories and that will get people pretty focused and excited as iphone and as target kiosks accelerate further into the base as we look at 2010 here. >> the shack, rsh, in a nice up trend here since march. ran into a little bit of resistance here. 24. if you get a chance to buy this stock around 23 1/2 ahead of earnings, earnings could be the catalyst to pop it through the resistance of 24. >> guys, this is what the option market is looking at in radio shack. looking for almost a 7% move from earnings. now, that's a pretty big number but it's less than some of the numbers that we saw in previous quarters. what we saw today, we saw big put buyers.
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almost three times the number of average put buyers. and most of those puts were bought on the offer. so these are agreft put buyers. these are people who really want to have protection before the number. 87% of those were bought on the offer. >> gary kaminsky, are you bullish on radio shack? >> well, this is what i'll say. this is one of those deals that gets talked about and talked about. when the deal actually happens-f it does happen, it's not a total shock. the one thing i'll point out that was pointed out to me today by a very savvy analyst, radio shack has a lot of long-term leases. so if somebody's going to buy this company for the so-called real estate to get their distribution, remember, this is not a situation where they own a lot of the real estate. it's a lot of long-term leases. and when they do the modeling for that on a deal, on the m&a, it does sometimes end up being less than people anticipated. >> if i'm an equity buyer or a best buy, who buys it? >> you know, this is one of those situations where there's probably an auction going on right now and the strategic buyer probably is the one who
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doesn't make sense. >> okay. let's move on here and get to some of the stocks making extreme moves this week. time for "pops and drops." we kick it off with a pop here for starbucks. it was up 9%. scaramucci. >> they continue to impress. their margins are getting better. people are talking about them flatlining. but i think there's more innovation to come in this story. >> drop for qualcomm, who was down 11%. joe. >> real simple on this one. two quarters in a row of bad earnings. not this i'm. i'm not buying it unless they buy back some shares. >> ebay was a dropper today. 7% was the decline. >> i don't leek the action in the up tape. i would still stay away. >> verizon up 2%. gary. >> again, the business needs to be split. it's time for them to get rid of the land line business and only focus on wireless and cut the dividend. >> giant pop here, and this is for the week. chipt lee mexican grill up 15%. beaks. >> listen, people are going out to dinner again. earnings were great. they're getting out of their house and eating those burritos. zmar fantastic, by the way. let this trade for another day, then you'll have another range to buy. >> we'll take your advice,
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brian. we've got the final trade coming up next. want to trade smarter tomorrow? take another whack at today. only thinkorswim let's you replay the day. pick a day. see every tick, every option, every future, every trade, second by second. paper trade against real historical data... so you can test drive tomorrow's strategy tonight. think on demand. get it free. only from rated #1 on-line broker by barron's.
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time for the final trade. joe. >> short cma. >> grasso. >> goldman sachs. if it heads toward 155, bail. >> anthony. >> siemens.
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going to benefit from the weaker euro. >> gary. >> apple will continue. the pain of not owning it will continue next week. >> that does it for us here on "fast money." coming up next, "options action." have a great weekend.


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