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Stocks Close At Fresh 11-Month Highs

Stocks hit fresh 2009 highs on Wednesday in a broad-based rally triggered by positive economic data.

Specifically, a Federal Reserve report said industrial production increased 0.8 percent after gaining 1 percent in July. The results led investors to place bets on a stronger global recovery.

But with stocks up 8 of the past 9 session, can the rally continue?

Strategy Session with the Fast Money traders

I’ve been wrong about this market, admits Guy Adami. The market clearly wants to go higher but I’m scared.

There are a lot of money managers on the sidelines just grinding their teeth, but they have to participate in the rally, adds Tim Seymour.

All that matters to this market is the ytd percentage change in the S&P, adds Joe Terranova. That’s the only number that big investors are watching.

The sellers are just out of gas, adds Pete Najarian. They don’t have the momentum. And part of that stems from the amount of put protection out there.

I think investors are buying puts instead of actively shorting the market, muses Joe Terranova. But that’s the wrong trade.

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AFTER HOURS ACTION: ORACLE

After hours, Oracle posted lower-than-expected quarterly revenue that missed Wall Street projections, sending its shares down 2.4 percent.

Total revenue -- which includes software sales as well as fees for maintenance of previously purchase programs -- fell 5 percent to $5.05 billion in Oracle's first quarter ended August 31. That missed analysts' average forecast of $5.24 billion.

What’s the trade?

I’m concerned -- I think Oracle is a microcosm of Corporate America, says Guy Adami. And at the end of the day you can’t make companies buy if they don’t have the money. That’s what I think you’re seeing here.

I think the stock was due for a pullback, counters Pete Najarian. I’d look at the pullback as a buying opportunity.

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TOPPING THE TAPE: FINANCIALS LEADING THE RALLY

Bank stocks led Wednesday’s rally with investors bullish on the sector after Wells Fargo CEO John Stumpf said the Wachovia merger was on track and published reports quoted Citi CEO Vikram Pandit as saying he will sell the rest of Smith Barney over time.

Also Barclays announced a move that effectively puts a fence around some of its most risky assets, shielding shareholders from them over time.

What’s the trade?

It seems to me that banks are getting the risky assets off the books, muses Tim Seymour. And that’s bullish for banks.

I’m watching the CME and KRE, adds Joe Terranova. They hadn’t been participating and on Wednesday they performed.

And there’s word the some banks may start paying dividends again –JPMorgan suggested it might increase its dividend, adds Pete Najarian. The idea that dividends may be coming back could be big.

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OIL JUMPS AFTER INVENTORIES DROP

Oil prices rose Wednesday after the government reported a large drop in crude supplies. Benchmark crude for October delivery climbed 96 cents to $71.89 a barrel on the New York Mercantile Exchange

The increase was largely triggered by an Energy Information Administration report which showed a decrease of 4.7 million barrels of oil for the week ended Friday, a bigger decline than the 3 million barrel drop expected by analysts.

However Jim Ritterbusch of Ritterbusch and Associates says it’s important to note that the decline is typical this time of year as refiners slow their buying of oil during a period of declining demand.

What’s the oil trade?

I’d look at Walter Energy as an upstream trade, counsels Guy Adami.

Elsewhere in commodities, I’ve got my eye on Arch Coal and other coal stocks with the demand for steel coming back, adds Pete Najarian. And I’ve seen unusual options action in Joy Global.

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THE GOLD RUSH OF ’09

The spot price of gold soared higher on Wednesday largely propelled by the weak dollar and a belief that the stimulus plan will trigger serious inflation down the road.

What’s the trade?

Gold is all about the dollar, explains Tim Seymour.

Gold also has a seasonality, reminds Joe Terranova. I’m long and think we could see as much as 20% to the upside.

I think natural resources is the place to be, adds Pete Najarian. That’s the new currency.






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