S&P 500 JUMPS 4%
Stocks jumped on Tuesday snapping back from 12-year lows, after Federal Reserve Chairman Ben Bernanke delivered a big dose of relief when he signaled that nationalization of big banks was not at hand.
Bernanke said the significant value built up in the country's banks would be lost if they were government-owned, easing investor fears that shareholders would be wiped out if the banks were taken over.
In testimony to the U.S. Senate Banking Committee, Bernanke added that although there could be a time when it is necessary to close banks down, now is not the time.
It comes as little surprise that bank stocks were among the biggest winners of the day. Both Citigroup and Bank of America surged while the Financial Select Sector SPDR also posted impressive gains.
Strategy Session with the Fast Money Traders
I think the bounce was all about technical trading, muses Jeff Macke, and not Bernanke. The S&P hit the critically important 743 level and bounced.
I thought Mr. Bernanke exuded an impressive degree of confidence, counters Pete Najarian. I added to my position in Morgan Stanley on Tuesday because the stock was so beat up. I'd forget all the scattered brained bank stocks. In the space only look at Visa , Mastercard , GoldmanSachs and Morgan. Those are the four horsemen of the financials.
There was a ton of short covering on Tuesday, adds Tim Seymour. I went after the most beaten up stocks in our book and covered them.
Remember the market doesn’t needs financials to go higher for a recovery, we just need the financials to stop going lower, says Guy Adami.
CONSUMER NAMES UP DESPITE CONFIDENCE LOW
Despite an abysmal consumer confidence number shares of consumer names such as Home Depot , Macy’s and Nordstrom all closed higher.
That's because there’s not short trade left, explains Jeff Macke. But I wouldn’t get long.
I think going forward Home Depot is the name to own, counters Guy Adami. I think the housing thing will end sometime in June or July, he says. That's when the supply and demand component should stabilize.
We’re not going to get out of this pickle by trading housing, that’s just silly, bristles Macke.
OIL, METALS TRADE HIGHER
Oil prices rose 4 percent on Tuesday, as investors bet that China will soon gobble up more and more crude. Meanwhile figures shows OPEC has stuck to production cuts – also fueling gains.
I’d look at ConocoPhilips or Chevron in this space, counsels Tim Seymour.
Oil is a broken bubble, bristles Jeff Macke. Just go away. I don’t have any expectation that oil is going up.
In this space go after quality, counsels Pete Najarian. Go after Exxon Mobil .
BALLMER TO YAHOO: I CAN’T QUIT YOU
It appears Microsoft may have its eye on Yahoo , after all. CEO Steve Ballmer reiterated his interest in landing a search deal with Yahoo during a midyear strategic update with analysts.
Yes, it seems like Ballmer wants Yahoo, says Pete Najarian. But I’m much more impressed by Apple , however I wouldn’t rush in. And in the tech space, options action in the march calls suggests Hewlett Packard stock should go higher, he adds.
I agree, echoes Guy Adami. If you’re looking for a tech trade, look at Hewlett-Packard.
GOLD FALLS AGAIN
Gold ended more than 2 percent lower Tuesday on a combination of options-related selling and profit taking triggered by comments by U.S. Federal Reserve Chairman Ben Bernanke that inflation was ebbing.
Buyers took a break after the metal's rally to an 11-month high above $1,000 an ounce last week, but some analysts say the metal should stay supported by strong investor interest.
The precious metals trade has gotten crowded. If you’re playing platinum it’s time to take profits, counsels Tim Seymour. However I’d keep an eye on Freeport McMoRan , Vale and other metals companies as investors push back into base metals.
It seems to me Freeport McMoran has a hard time getting above $31, counters Pete Najarian. I’d keep an eye on the Gold Miner ETF instead.
I think we could be looking at a double top in gold, counsels Guy Adami. I’d get out – you can always get back in later.
HOW DO WE BUILD ON THIS RALLY?
Consumer confidence plunged to another record low in February with expectations that already dire economic conditions will continue to weaken and the jobs market will further deteriorate.
What will it take to restore confidence?
FM trader Joe Terranova says consumer confidence will turn higher if our lawmakers do a better job playing their specific roles in this financial drama. Here’s how he sees the story playing out.
Role Actor Motivation
The Cheerleader Obama Consumer Confidence
The Ambassador Bernanke Market Confidence
The Risk Manager Geithner Liquidate Toxic Assets
The Justice League Congress Catch the Crooks
For more please watch the video. You can find Terranova's interview at the end of Word On The Street.
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Trader disclosure: On Feb. 24th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (MSFT), (PALM); Najarian Owns (GE) Put Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (GDX) & (GDX) Short Calls; Najarian Owns (HPQ) Calls; Najarian Owns (JPM) & (JPM) Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (MOS) Call Spread; Najarian Owns (X) Put Spread; Seymour Owns (AAPL), (EEM), (MON), (BAC), (FXI), (VIP), (MS), (SSL) Seymour's Firm Owns (FCX), (COP); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (MS), (TM), (DIS); Terranova Owns (DIS), (FXC), (XBI), (KCE); Terranova Owns (AMGN) & (AMGN) Puts; Terranova Owns (IBM) Call Spread; Terraova Owns Nymex MACI Oil Futures
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