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Halftime Report: Treasury Auctions Boost Stocks, But How High?

STOCKS BREAK OUT OF RUT

The Dow made triple digit gains on Thursday led by energy and consumer shares after new data showed that GDP contracted less than expected and the price of crude shot higher due to an attack on a pipeline in Nigeria.

However, the major tailwind came from the successful auction of Treasuries. You could almost hear a collective sigh of relief sweep across Wall Street after Thursday’s auction, which ended a week long sale totaling a record setting $104 billion in debt.

How should you be positioned?

Instant Insights with the Fast Money Traders

Strong buying for Treasurys is a very good thing, muses Patricia Edwards of Storehouse. If there are people buying Treasurys then stocks are probably not heading down south.

In fact, all the auctions this week have gone off extremely well, adds Dennis Gartman of the Gartman Letter. That’s also a good thing for interest rates – especially mortgages.

It was $104 billion in debt, reminds Jon Najarian. That’s an enormous number and I think the market is quite relieved the auctions are now behind us. In fact you can see that relief in the Vix which is significantly lower. I think the Vix settles in between 24 and 30.

Although the S&P 500 moved higher on the news, don’t forget 92.50 is a level of resistance in the SPY, reminds Jeff Tomasulo of SMB. It wouldn’t surprise me if stocks start to have trouble at this level.

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CRUDE ABOVE $70

U.S. crude oil futures rose back above $70 a barrel at midday on Thursday, supported by a rally in gasoline futures and news that a militant group had sabotaged a Royal Dutch Shell oil pipeline in Nigeria.

What’s the oil trade?

If prices at the pump continue higher I think it hits the consumer pretty hard, muses Patty Edwards. I’d play it with the discount retailers such as Wal-Mart.

I’m long high beta oil such as Suncor and Petrobras and short low beta such as Chevron and Exxon , reveals Dennis Gartman. That works in a bullish market.

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TAKE YOUR POSITION: PALM AFTER THE BELL

Traders are eager to hear from Palm after the bell. This quarterly release Thursday is arguably the most important in the company's recent history, writes CNBC’s Jim Goldman. This stock has been on a wild ride since January, and on Thursday investors will learn whether they're aboard a rocket to the moon, or a nuclear missile ready to explode

The Street anticipates a loss of 64 cents on $79 million in revenue for Palm's fourth fiscal quarter.

What’s the trade?

I think if you can buy Palm around $12 it’s a buy, counsels Jon Najarian.

If Palm closes above $14.50 I might get involved, adds Jeff Tomasulo.

If you’re looking for a smartphone trade, look at RIM, counsels Patty Edwards.


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Trader disclosure: On June 25th, 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), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (LM) Call Spread;’ Najarian Owns (PALM) Call Spread; Najarian Owns (YHOO) Call Spread; Finerman's Firm Owns (MSFT); Finerman's Firm And Finerman Own (FLS), (RIG); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (IWM), (IYR), (IJR), (MDY), (SPY), (USO); Seymour Owns (AAPL), (BAC); Seygem Asset Management Owns (FCX), (MOS)

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