tv Fast Money CNBC July 24, 2020 5:00pm-5:30pm EDT
>> it's all relative as you were obviously saying anyway, mike. for the week as a whole, ending down but only a third of a percent to the s&p 500, 1/3 of a % for the nasdaq gold was up 5%, silver up 16%. it's been a fascinating week thanks for watching. i'm melissa lee. tonight on "fast" after big tech's big selloff this week the chart master looking at a few stocks that are flashing real warning signs. what they are and why you might want to get out. plus, home building stocks have been on a tear since march lows. there's one name in the space that's poised for even bigger wins we'll tell you what it is. friday night at 5:00 means only one thing, happy hour. we'll crack open a cold one with a stock that's got a nice buzz
going. we'll start off with game called market jeopardy the final market jeopardy answer tonight, the most important event for the markets next week. now, remember, the rule is you have to phrase your response in the form of a question or it might not count. the stakes are high here bk, set the tone. >> i'll set the tone, alex how do i play this game? i just blurt out an answer i say what's the most important thing? >> yes that's how it works. have you not seen "jeopardy. >> what? no i mean, i haven't seen it in a while. i'm more of a "wheel of fortune" guy. it's a lot easier game what is the stimulus bill? that is my answer, melissa
i'll tell you why. i think a lot of people are kind of writing that off, okay, we're getting this back and forth, this is how the sausage is made. ultimately they're going to come to an agreement. there's not much incentive for democrats to come to an agreement on this given this election year. that could be the wildcard in this. >> what happens if we don't get a stimulus bill, in your view, brian kelly and what do you do >> yeah. so i'm extremely cautious going into this. i think we could see a lot of volatility in the market by volatility i mean it goes lower. you look at some of the tech stocks and what stocks did today. they've certainly broken some patterns there's a lot of fragility in markets and bonds and commodities and gold to me, i stick with the gold and silver trade we have the fed next week. if anybody thinks they're not going to add more ink to the printer when it's needed, then you're not paying attention. number two, if we don't get the
stimulus, then the fed is going to have to print more money. i think ultimately gold and silver benefit from it. >> how much does the market go down if there's no stimulus bill >> it's so hard to know. i think if there was no stimulus bill, it would be good for maybe a 10% pullback conservatively. incomes have been higher post virus and preprievirus. we've had spending hold up if we don't get the stimulus bill continuing to put money in people's pockets, you're going to have problems with the overall economy. the unemployment rate is still unusually high we need this for asset prices to continue to maintain the levels that they are.
>> steve grasso? >> i would say what is large cap earnings for me we have to see that switch we've never seen the chasm between growth and value be as wide as it is right now. for me, how would you position that i mentioned the other night when i was on air that i sold my apple and i sold my microsoft last week. i doubled up on a lot of my value plays. so i wound up buying tse, wrk, oln. and i think that's the biggest question for the market. we know what the fed is going to do, to brian kelly's point we sort of know what that stimulus plan is going to look like if we don't get it, 15% down would be my guess. i think there's a vested interest in both democrats and republicans not looking like the bad guys in the marketplace.
>> there is one day next week where we get apple, amazon and alphabet that's going to be a crazy night on "fast." bonawyn, some might argue the setup for big tech earnings is even better after the big pullback we saw this week in advance of those earnings. >> yeah. sticking to the rules of the game, i'm going to go for the gusto here and the daily double. my question or answer is what are stimulus and gdp figures i think the gdp figures are going to shine a little more insight into what exactly economic activity is and the breakdown there as well. i think the devil will be in the details as it pertains to the stimulus bill. i think bk, mills, grasso all hit on it. really we're going to need to see how much of the unemployment
benefit is going to be continued. the way that i'm playing it, as they pointed out, the fed is going to continue to print money. i think that bodes well for precious metals. again, i hate to hop on the band wagon but this is clearly the right train to be on the home builders are also set up nicely. you saw pulte's earnings yesterday. you have their unique situation with specifically to home builders because they serve a slightly high eer niched market with the low rate environment and given that we've all been talking about stress valuations across asset classes, it's really a case of where else do you put your money >> bonawyn is in the penalty box for creating his own rule. i said what is the biggest market event for the week? it's not plural. it's singular and you did plural jeff mills, i feel you can play
by the rules. >> i'm an avid watcher of "jeopardy. i've got this. i say what is the fed meeting? i do think it's important. you'll get a little bit of an assessment of economic conditions i think that will still be cautious but the big thing is the balance sheet. i don't think it's coincidence that the balance sheet started to peak and roll over a little bit the beginning of june along with stocks. i think what that will look like is the fed saying we are not going to let the balance sheet shrink, we are going to do more. i think that's rates staying low and the dollar rolling over and maybe taking a little bit of momentum out of the cyclical trade we've seen if you look at industrials, small cap, mid cap, they are always losing momentum at that downward slope 200-day moving average. number one, i would like to staples. i think staples are obviously levered to low rates i think they hold up better if things get a little bit dicey.
they're also levered to a lower dollar they have the third highest international revenue exposure in the s&p i think you look to home builders and more stimulus. need to keep buying gold. >> grasso, are you worried that a lot of those sectors you rotated into may look like they may be rolling over? >> yeah, totally i had such large gains in the tech space that i feel as if i didn't want to push the trade a little too hard. where will tech go from here where does an apple or a microsoft go from here longer term, i think, higher but they're so high already and so overbought. all these value plays are trading at trough valuations so my downside is limited there. i'd rather be a buyer of that than holding onto limited
upside. >> let's get some more analysis on tech. it will be a big week for tech earnings the sector already hit hard this week carter says there are a few names in the space flashing even bigger warning signs >> it was a bad week for tech. not fatal, but tech worst sector on the week. what we also know is we're approaching a record that was only set one time before, which is to say the sector, s&p 500 technology, has now gone 96 sessions without having three down days in a row the longest stretch ever was 108. inve it was in the july to december period of 2004 after it ended, tech dropped 15%, twice the rate of the market drop in the period. let's look at a few charts what we know is that key tech stocks and by inference tech sectors and tech aggregates are all breaking trends. the first is apple apple is a tremendous performer.
we know it's up 26% year to date you can see the well-defined trend line in effect since the march low and the break of trend. take a look at microsoft it's really the same circumstance the socks, again same circumstance well-defined trend line in effect since the march low and now a breach or break of trend the next chart is the technology sector, the s&p 500 technology sector having a great year, of course, up 15% here too if the big constituents break trend, the sector you see here is breaking trend two more take a look at the nasdaq
composite itself than the nasdaq 100 which is the marquee names, the biggest and best is this the beginning of a more meaningful giveback? the tech sector is down on a three or four day basis 6% drawdowns of 10 or 12 are perfectly normal in high flying sort of higher excitement stocks that are embraced, crowded, loved. the presumption of this break in trend is not over. >> what outperforms in tech's stead while tech is on this 10-15% pullback? >> that's a good question. what we know is that in great periods there's a lot of auto correlation, sort of all behave the same what i would be looking for are one-off idiosyncratic names that
aren't tied to the aggregates. is it the tale thail that wags the dog. we saw what happened to intel today. it's picking their own favorite. i like salesforce.com. >> brian kelly, do you like any of carter's suggestion there is? >> i like service now. that stock has just been absolutely on fire crm would be another one that he mentioned in there if you want to try to hide someplace, again, if the market is going to go down 15%, almost all stocks are going to go down. but i still like these kind of cloud plays. i think they continue to do well i mean, alternatively jeff i think mentioned the staples. if we are going to get the selloff, it could be precipitated by a weaker dhaoll.
maybe they get some tailwind on that that's the way i would kind of play this and hide out. >> i thought it was interesting that the chart master didn't say this sector will outperform when tech underperforms or has its pullback he said it's going to be idiosyncratic names because you don't know if this is a sign of weakness for the broader market or a sign of weakness just for this particular sector. >> that's right. i'm concerned about the cyclical trade. i mentioned that as losing momentum as its downward sloping resistance on the other hand you have all this crowding that took place in tech the question is where do you do, what do you do i think about semiconductors now you sort of know what's wrong. the stock very quickly priced in a 15% decline. now it's trading at a valuation at ten times forward earnings where the stock has been well-supported over the past couple of years.
looking idiosyncratically at certain names, that may be a good strategy. i think for us and the way we're positioned, i think about our three largest holdings, amazon, apple and microsoft. but they're also our three biggest underweights relative to the benchmark. when you think about that and trying to retain some diversification. >> the context is that the nasdaq 100 along with the break and trend is sitting at a valuation that is the highest in two decades. >> so am i out of the penalty box now? >> yeah, yeah. me calling on you and allowing you to speak is you out of the penalty box. >> yes, ma'am. >> honestly, i'm a bit cautious on intel the stock has rolled over 15-16% it's broken its trend. yes, we can speak to valuation
i'm not going to knock that whatsoever however, i'm going to be following the trend until i find a support level. i'm going to have to stick on the sidelines. moments ago president trump signed an executive order aimed at big pharma. plus, it's always 5:00 here on "fast money." what better way than to kick off the weekend than with a stock that isbubbling higher save hundreds on your wireless bill
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get a $50 prepaid card when you switch. 5g is now included with all new data options. switch and save hundreds. xfinity mobile. welcome back to "fast money. president trump signing an executive order or actually a few of them aimed at lowering drug prices. meg? >> he actually signed four executive orders, which was one more than everybody was
expecting. and the extra order is actually one that's favorable to the pharmaceutical industry. let's walk through what he is promising here the first order promised discounts be passed through on epipens and insulin. it's bad for those pdms. fourth is what's known as reference pricing to other countries or most favored nation status this is one that the president says won't take place for 30 days he's inviting drug industry executives to the white house on tuesday to basically hash out a deal to avoid him implementing this order i've been reaching out to pharma companies all afternoon to see who's going. nobody yet has an answer for me.
but the industry trade groups are starting to weigh in on this bio, which represents the biotech industry, saying while we strongly support today's action to help a broken rebate system, adopting foreign price controls by executive fiat will cripple the small innovative companies developing vaccines and therapies that will help end this pandemic. pharma say they've been working around the clock to develop vaccines to treat and prevent covid-19 and the administrati administration's proposal is a reckless distraction the stocks we move on this were those pharmacy benefit groups. >> one of those executive orders basically paves the way for the importation of drugs from
canada, lower-priced drugs >> yes although a lot of folks are saying that would be very difficult to implement that's kind of the reaction i'm hearing across the drug industry on this right now. it's just that president trump has tried a lot of these different things none of them has really stuck. it already seems like he's backing off the fourth executive order. you're not seeing drug stocks react strongly to this because there's disbelief any of this will have a major impact on them. >> you've got to thinks that an election year. this really sets the tone in terms of what will be an issue come election year what will joe biden put forth to counter what president trump is trying to do because lowering drug prices, i mean, that sells in america. everybody wants to pay less for drugs. >> i was just going to say it's a bipartisan issue so what we've all commented on on this show here and there is that with the pandemic it seems as though the bullseye on the
back of pharma and biotech was or had been erased short-term. this is a sign that it's still there. when you see the ibb in the last couple of days drop 7.5%, that's an awakening when you see pharma stocks drop, that's an awakening. for me i would play it with a muted etf. the 50-day moving average is 135 to 75. wait for it to hold. there's still a bullseye on the back of all of these names on a political front. >> brian kelly >> yeah. i mean, i agree with grasso in that there's a bullseye. both sides of the aisle this is going to be an issue for so i think these stocks are challenged i actually think it goes to what would happen to the stock that find the vaccine are they going to be able to
charge any price i think for those playing biotech or any of those names making the bet that one of those companies was going to come out and get the vaccine and beable to charge a high price, i don't think that's going to happen, whereas i think it's probably better if you get a vaccine to just buy the broad market or cyclicals rather than biotech. coming up, investors are seeing double digit gains in this stock what's so kpox kaintoxicating at this thing you're first. first to respond. first to put others' lives before your own. and in an emergency, you need a network that puts you first. that connects you to technology to each other and to other agencies. built with and for first responders. firstnet. the only officially authorized wireless network for first responders.
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welcome back to "fast money. check out boston beer topping the tape today, shares bubbling over 25% after the company reported a monster earnings b t beat do the gains keep flowi ining w people are apparently drinking while they're home bonawyn, i hear through the grapevine that you have firsthand knowledge of some of these products [ laughter ] >> you know, i love the
products if you kind of look out of the whole competitive landscape going on in the food sector, you're seeing a rotation into health conscious consumption whether it's calories on menus or a vegan burger at some of the fast food chains i think this is a trend. when the bars opened you saw a glut of consumption there. those got closed i can be health conscious and calorie conscious while i do it. >> the hard seltzer with a beer. the question is will these consumption patterns continue as the economy reopens? as the economy worsens, is this an area in the budget that gets cut back >> that's part of my concern if you listen to the ceo of boston beer, he basically said
people are buying 38% more alcohol. i don't know that that continues forever. there's a ton of competition i was at the beach last weekend. this was truly in the corner but also high noon, white claw it's emblematic of the hysteria in this market >> time for your final trade bonawyn? >> xhb. >> general mills. >> talked about home builders. dl horton is one i like. i think it continues to benefit from the low rates and plays in that high demand, low price home space. >> steve grasso? >> tfe i cannot pound the table hard enough that this one is undervalued. >> brian kelly >> that's an interesting one
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we know it's friday because it's "options action" time here's what's coming up on the big show. >> as the saying goes, home is where the heart is now carter worthi this iie thin where the money is and tony zang has a way to pilot you through. plus, hold the phone, literally. after a huge run, apple and other tech giants are on dec