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Low Volume Capitulation - Fast Money Recap (10/13/08)

by: SA Editor Joan Wickham October 13, 2008 | about stocks: AAPL / AKS / CHK / FCX / GOOG / MET / MS / WDC / X    

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Recap of CNBC's Fast Money, Monday October 13.

No Volume Move - Morgan Stanley (MS)

Dylan Ratigan began the show with a discussion of the 1,000-point rally in the Dow. He mentioned that the last time we had a "rally this big" was in March of 1933. Karen Finerman said the rally was "extraordinary to the upside," but it brings us back to where we were on Wednesday at lunchtime. Tim Seymour said he was covering stocks short on Friday, but "today's move was without any volume." He says he "isn't convinced" and you don't "put in a bottom on a Friday." Jeff Macke pointed out that the "the fat cats are coming up with another scam for America," but if you're smart "you threw up all your stocks at the end of the day." Ratigan mentioned that Morgan Stanley soared 80% after making a deal that involves a $9 billion equity stake from Mitsubishi-UFJ. Guy Adami says Morgan somehow managed to get out of the "death spiral" that Lehman Brothers and Bear Stearns couldn't avoid. Macke said the deal is dilutive to Morgan's shareholders. Ratigan asked the traders if they think we will see a validation in the credit markets on Tuesday for the stock market rally. Finerman said yes, and "expect a one-day bounce in the credit markets." Seymour mentioned that "Europe jumped ahead of the U.S." and it will trade much better as credit spreads come in. Seymour went on to say "we will have some follow-through on Tuesday," but investors should look to fade it.

Performance - Freeport-McMoRan (FCX), U.S. Steel(X), Apple (AAPL), Google (GOOG), Western Digital (WDC)

Adami pointed out that most of the financial stocks underperformed today and material stocks did well. He says "as trading vehicles, you've gotten your gains with Freeport-McMoRan and U.S. Steel. Seymour says "emerging markets turned harder than anything else," and they will rally the most. Ratigan moved the discussion to tech stocks like Apple and Google, which looked good. Adami agreed and told investors to look at tech play, Western Digital. He says "someone might be right to buy these guys" in terms of market capitalization and valuation. Ratigan asked the traders if it's time to buy gold on the dip here. Seymour says "the long-term trend for gold looks good," but he said he wouldn't buy it in the short term. Macke says that we have "financial anarchy" but nobody is buying gold. Finerman says, "If this isn't the environment for gold, then what is?"

Capitulation - Chesapeake Energy (CHK), AK Steel (AKS), MetLife (MET)

Oppenheimer Chief Market Technician Carter Worth joined the crew to discuss the possibility of capitulation in the markets. He interprets the patterns as classic signs of capitulation. Specifically, he says massive volume in over-sold names suggest we have touched a bottom. Worth pointed out that Chesapeake Energy use to trade at $74 a share and then hit $11 on Friday. He explained that the chairman was forced out of Chesapeake and said the stock hit a "classic capitulation" when 33 million shares traded. He told viewers that in most cases, just look at the charts you don't need to know the facts. He said the charts of AK Steel and MetLife are other examples of capitulation. Both stocks fell huge and then saw large-volume spikes before rallying strong today.

Final Trade - Advice for Tuesday, October 14.

Guy Adami says the low Friday in the Dow won't be tested again. He doesn’t expect the Dow to break 8,000 again.

Tim Seymour responded that he expects to test the lows again in December. He thinks we will see major redemptions again by year end. But that makes a great environment for picking stocks.

Macke said, "We're becoming a socialist nation, and I don't know how to price that. A bottom might be in but the bottom is not in.”

Karen Finerman adds “I’m a value girl and I look for value stocks. There's a lot out there right now.”

Seeking Alpha is not affiliated with CNBC, or Fast Money.
 

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This article has 5 comments:

  •  
    Oct 14 03:30 AM
    If we add up what all the experts are saying, we will get a net result of 0 with infinite variance in what they are yapping.
    Reply
  •  
    Oct 14 08:00 AM
    Macke's comment "the fat cats are coming up with another scam for America" is the most telling........ He is essentially telling us we have been taken, and only if we are fools will we be taken again............

    Secondly, if he knows this, then WHY DON'T WE KNOW WHO THEY ARE & WHY AREN'T THEY BEING PROSECUTED?????????
    Reply
  •  
    Oct 14 11:08 AM
    to "eddie 64" Of couse we know who "they" are. The US congress, beyond prosecution. Just read the quotes from Barney Frank's committee meetings published in the journal a couple weeks ago. More evidence than they had on OJ.
    Reply
  •  
    Oct 14 11:14 AM
    Eddie 64

    The link to the article is: online.wsj.com/article...

    You may need a subscription. The article is entitled "What they said" from the 10/2 issue of the WSJ
    Reply
  •  
    Oct 14 11:42 AM
    interesting array of opinions - thanks!
    Reply
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