Today's CNBC headline "BEAR MARKET"
Halftime Pt. 1: Odds Favor Bear Market Or Correction?
Published: Wednesday, 30 Jun 2010 | 1:17 PM ET
Buyers nudged stocks cnbc_comboQuoteMove('popup_.SPX_ID1EZG15839609');[.SPX 1030.71 -10.53 (-1.01%) ] ; higher Wednesday, one day after a heavy sell-off sent the S&P to an 8-month low.
As bulls will quickly tell you, the S&P held 1040 - a key technical level - which they say means the market may have found its bottom.
However bears argue that the S&P made a new correction low yesterday, a clear sign of a downtrend.
The latest research from Bespoke suggests the bearish argument may pan out.
According to Bespoke; the market is currently down over 14% from its April highs. They say of the 32 times a drop of 14% or more has happened -- only seven times has it not turned into a bear market.
How should you position now?
Instant Insights with the Fast Money traders
Traders on the floor are still extremely negative, reveals Steve Grasso. Tuesday was the first time this year the market closed below 1050. That’s bearish. I think Wednesday's gains are a dead cat bounce and I'd sell into strength.
I’m watching 1025 as a critical level, says Joe Terranova. Below that level, the chart of the S&P looks broken. I admit there are plenty of headwinds, but nothing is typical about this market so 2010 could be exception to the rule laid out by Bespoke above.
Personally, I think it will be very difficult to establish any trend next quarter, Terranova adds. I think the way to play the market is with pairs trade; get in and get out quickly.
Where do you see the S&P 500 heading in the second half of the year? * 2954 responses Up 10% or more37
% Down 10% or more41
% Flat for the year22
% Your response cannot be recorded. For assistance please contact MSNBC technical support.
I’m bearish, adds Brian Kelly. We’re still looking at a slowdown in Europe. You can’t cut budgets, raise taxes and have economic growth, he says. If the market rallies I'd use the opportunity to take profits.
I don’t like this market either, says Patty Edwards. Broadly I'm negative but I do think you can find opportunity if you pick and choose.
OIL: QUARTERLY DROP
Oil traded lower Wednesday, with the commodity heading for its first quarterly drop since 2008, despite hitting a 19-month high of over $87 in May.
What should you make of it?
Over the next 6 months I think the trend in oil is higher, muses Joe Terranova. Long dated future contracts are trading around $85 and I think they get to $100 by the end of the year. I'm a buyer of this weakness.
Elsewhere in the space, I’d look at nat gas
cnbc_comboQuoteMove('popup_NGc1_ID1EACAE15839609');[NGC1 4.6190004 0.071 (+1.56%) ]
cnbc_quoteComponent_init_getData("NGc1","WSODQ_COMPONENT_NGC1_ID1EACAE15839609","WSODQ","true","ID1EACAE15839609","off","false","inLineQuote"); , adds Terranova. It’s underperformed in the first half of 2010 and I think it’s part of the longer term energy story for this nation, I’d play it with a long position in UPL
cnbc_comboQuoteMove('popup_UPL_ID1EBHAE15839609');[UPL 44.25 -0.10 (-0.23%) ]
Next quarter I think energy moves higher broadly
because the entire sector sold-off due to uncertainty stemming from the BP gulf spill, adds Steve Grasso.
If you’re bullish energy I’d play Chicago Bridge and Iron
cnbc_comboQuoteMove('popup_CBI_ID1EKMAE15839609');[CBI 18.81 -0.35 (-1.83%) ]
cnbc_quoteComponent_init_getData("CBI","WSODQ_COMPONENT_CBI_ID1EKMAE15839609","WSODQ","true","ID1EKMAE15839609","off","false","inLineQuote"); , says Patty Edwards. Buy the company that supplies the shovels.
The only way I see oil going higher is on geo-political risks, counters Brian Kelly. To me it looks like a well supplied market with a global economy that’s slowing down. I wouldn’t be long.