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Best Rally Of '09

BEST RALLY OF '09

Stocks posted their best day in four months on Tuesday with Citigroup leading the Dow higher after CEO Vikram Pandit stated in a memo to staff that he was encouraged by the firm’s prospects.

Pandit wrote, "I am most encouraged with the strength of our business so far in 2009. In fact, we are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007. In January and February alone, our revenues excluding externally disclosed marks were $19 billion…”

Investors bid bank stocks higher across the board with Bank of America and Wells Fargo also posting significant gains. The advance by financial shares marks a turnaround in investor sentiment after the sector had been hammered due to credit losses.

Strategy Session with the Fast Money Traders

It’s nice to see this bounce, says Karen Finerman. But all I can think is, the last time we were at this level was lunchtime on Wednesday of last week. Is it really that meaninful?

I think a lot of Tuesday’s rally was short covering, says Tim Seymour.

741 in the S&P is the bogie, adds Guy Adami, What was support may become resistance.

Citigroup’s bounce does not change the fact that they still have toxic assets on the balance sheet, reminds Zach Karabell.

True, but this could be the greatest banking environment we’ve seen in 25 years, counters Karen Finerman. Spreads haven’t been this wide and cost of funds so low, in a long time.

If you’re looking for a trade, look at PNC Financials, says Guy Adami. I think the stock could have a little more upside but the easy money is over.

I’d rather take a risk with Morgan or Goldman , says Tim Seymour.

135 million people still have jobs, reminds Zach Karabell. There’s money to be made in daily economic life. But investing in financials is a crap shoot.

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RETURN OF THE UPTICK RULE

Rep. Barney Frank, chairman of the U.S. House Financial Services Committee, added to the positive tone of the day after he said he was hopeful the SEC would restore the "uptick" rule in about a month.

The rule slows the pace of short selling and could help calm volatile markets.

Why should shorts be penalized for a bearish view, asks Guy Adami.

It’s ridiculous, echoes Karen Finerman. Stocks trade at penny intervals now. That rule was for when stocks traded at fractions.

I think the uptick rule is vital, says Zach Karabell. It’s a circuit breaker.

But instability happens on the upside too, counters Guy Adami. Why penalize investors on the downside but not the upside?

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CHIP STOCKS LEAD TECH SURGE

The Nasdaq closed in positive territory led by chip stocks and the sector bellwethers such as Apple and Research In Motion . Also Texas Instruments generated some positive momentum as the company delivered a somewhat upbeat mid-quarter update.

The sector was so beaten down that I don’t even think of it as a move up, says Karen Finerman. It was just a move less down. That’s a technical term, she chuckles.

If you’re looking for a tech trade, look at Oracle, counsels Guy Adami. At 10 times forward earnings it looks interesting.

I’d keep an eye on Taiwan Semiconductor for demand from China, adds Tim Seymour.

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COMMODITY NAMES CONTINUE STRENGTH

Despite weakness in the spot price of crude , integrated oil companies made gains on Tuesday. Exxon jumped higher as did Chevron , after that firm’s CEO said it didn’t need to make acquisitions to be successful.

I think the shorts got out of crude on Tuesday, explains Guy Adami.

Meanwhile, investors bid industrial names higher with the Materials SPDR ETF surging. Also, metal miners Freeport-McMoRan and Rio Tinto both climbed.

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FAST MONEY WORLD: EMERGING MARKETS

The emerging markets joined the rally Tuesday with investors seeking higher returns. The iShares MSCI Emerging Mkts. ETF jumped 7%.

I’d keep an eye on China, counsels Tim Seymour. Auto sales in that nation are up and that could make metals prices climb. The names you should own to play China are BHP , Rio Tinto and Vale . They’re the companies that sell the most to China.

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BATTLE THE BEAR: SHUN SAFETY?

Goldfell more than 2 percent on Tuesday to below $900 an ounce as investors appeared to have an increased appetite for risk and as a result shunned this safe haven trade.

I told you I thought gold was making a double top, reminds Guy Adami.

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DON’T GET TOO EXCITED

Some market watchers are warning investors not to get too excited by Tuesday’s big rally. They say big rallies come in bear markets. Was today’s rally a headfake?

Rally 1: 3/10/08 to 5/19/08 +12%
Rally 2: 10/10/08 to 10/13/08 +12%
Rally 3: 10/27/08 to 11/4/08 +18%
Rally 4: 11/20/08 to 1/6/08 +24%

I’m not trying to take the wind out of your sails, but you do get rallies on the way down, reminds Dylan Ratigan




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Trader disclosure: On Mar. 10th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (DNA) & (DNA) Calls; Finerman's Firm Is Short (BBT); Finerman's Firm Own (RIG); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO); Syemour Owns (AA), (BIDU), (EEM), (FXI), (TTM), (BAC), (TCK), (RSX); Karabell Owns (AAPL), (BHP), (FCX), (FXI), (GOOG), (GLD), (GE), (JPM)

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