Stocks Jump In Shortened Session

Signs of a strong economy and more deal making pushed stocks to their best 2-day advance in 3 weeks. Despite the holiday, the Dow looks poised to set another record later this week with the major average just 100 points from the high set last month. So what are the trades behind these sparkling headlines.

Eric Bolling says factory orders came out at 10am and that’s what led the market higher, Tuesday.

Jeff Macke says the bears left early for vacation.

Pete Najarian adds Apple (AAPL) and Juniper (JNPR) both had strong days today.

Guy Adami says 10-year rates are around 5% and that’s what matters most to him.

STILL FOR SALE:
The headline: Pending Sales Of Existing Homes In May Fall To Lowest In More Than 5 Years

Guy Adami says these numbers say nothing to him about the state of the economy. Only that the homebuilding industry is a mess. And, Guy adds if the sector drifts below 1 times book, Pulte (PHA) and KB Homes (KBH) are buys.

Jeff Macke doesn’t agree.

Eric Bolling says rates must come down before he’d ever recommend homebuilders.

AUTO FOCUS:
The headline: DaimlerChrysler (DCX), Ford (F) Report June Sales Decline... WSJ: China's Chery Automobile To Export Vehicles Under Chrysler Brand; Sees Sales Climb

Guy Adami says total sales for autos are down 28% from last June. That’s a monster drop. However, Guy and Pete Najarian still think Ford (F) is a buy.

Eric Bolling adds that car sales do well in a lower interest rate environment.

CONTINENTAL COOKIE MONSTER:
The headline: Kraft (KFT) To Buy Cookie Unit Of French Food Maker Danone (DA) For $7.2B; Danone Deal Would Give Kraft Largest Cookie And Cracker Market Share In Europe

Eric Bolling explains Danone makes LU cookies and he says it’s a great acquisition for Kraft but a better sale for Danone. Eric says as a result DA is a buy.

WILL PELTZ BID FOR WENDY'S?:

The headline: Activist Investor Nelson Peltz Tells Wendy's (WEN) His Firm Is A "Natural, Strategic Buyer"

Jeff Macke says this is just an activist stirring the pot. Jeff recommends selling Wendy’s when it approaches $40/share. (It’s worth noting on Tuesday July 3^rd WEN closed at $38.39)

SAP'S LAPSE:
The headline: SAP (SAP) Admits It Made "Inappropriate Downloads" Of Oracle (ORCL) Computer Code

Pete Najarian says Oracle has lost a lot of critical contracts recently and this is angering them.

Guy Adami thinks Oracle is heading to $21.

CRUDE AWAKENING:

The headline: Oil Hovers Near $71 Ahead of Holiday Amid Concern Over Gasoline Supply

Eric Bolling recommends owning the energy stocks. He says the play is buying TheEnergy Select Sector SPDR (XLE).

Pete Najarian likes the Oil Services HOLDRs (OIH).

BIG PHARMA BETTER THAN BIOTECH?

The headline:Some Big Pharma Starting To Outperform Biotech... Merck (MRK) Shares Rise Despite WSJ Report On Short-Term Vioxx Heart Risks... Dendreon (DNDN) Shares Surge 8% On New Analysis In Cancer Research Journal

CNBC Pharmaceutical Reporter Mike Huckman joins the guys for this conversation.

Huckman says big pharma has been beating big biotech in the last few months.

Pete Najarian recommends buying Bristol-Myers (BMY). He also likes Isis Pharmaceutical (ISIS) as a biotech name.

Jeff Macke likes Genetech (DNA) as an investment. However, he adds this company is long past fast money.

Huckman also says Dendreon (DNDN) shares surged 7% on new analysis in a cancer research journal.

Pete Najarian explains that 200,000 DNDN options traded on Tuesday and reveals that he owns the call options. Pete adds “it’s a very cheap lottery ticket.”

Guy Adami thinks the stock is either going to $0 or $30 and likes it as a risk reward play.

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Trader disclosure: On July 3rd 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders
Macke Owns (DIS); Najarian Owns (DNDN), (ERIC), (HLT), (JNPR); Bolling Owns (DIS), (T), (XOM), Natural Gas, Corn