Stocks rallied for a second day on Tuesday with miners leading the charge after gold hit an all time high surging above $1,040 per ounce.
The precious metal has benefited from a convergence of factors including the dollar's decline, technical buying momentum and worries about potential inflation as central banks struggle to emerge from unprecedented fiscal stimulus measures.
Gold was also buoyed by chatter, which was later denied, that OPEC was considering ending the dollar's role in the pricing of oil.
Is it too late to get in on this trade?
It seems to me the conviction is there and it’s going to sustain, says Fast Money trader Pete Najarian. I’m seeing an incredible amount of bullish call activity in miners such as Gold Fields . But whether it’s a short squeeze or not – I can’t tell you.
Patterns in the chart of gold suggest to me on a new breakout, gold could climb another $300 higher, adds Greg Troccoli of Opalesque.
It seems to me that investors are turning to gold because of the weak dollar as a way to protect their buying power, adds Patty Edwards of Storehouse. Taking that downstream, that’s not going to be a good thing for any retailer based in the United States.
Also, part of the move in gold stems from speculation mentioned above that gold could be part of the currency basket that OPEC may someday use to price oil , adds Brian Kelly of Kanundrum. Considering the run we've already had in gold, I think the better play is long oil, he counsels.
I’m considering adding to my position in gold, counters Fast Money trader Joe Terranova. This technical breakout combined with strong fundamentals makes me bullish. The key for me is if the S&P closes above 1033, he adds. That was the Bear Stearns high. If the market closes above that level I’ll add to my position.
What do you think? We want to know!
FINANCIALS KEEP RALLYING
Financials continued their march higher after Calyon Securities upgraded Goldman Sachs today from Underperform to Outperform and raised their price target on the stock to $230 from $194.
Adding to the positive tailwind, Buckingham upgraded JPMorgan and BofA to ‘Strong Buy.’
What’s the bank trade?
At these level, I can’t get excited about Goldman, says Brian Kelly. I’d look further down the chain at something like Federated Investors . If this market does takes off I think retail investors will come in, and Federated should capture all that retail flow.
I’m seeing a lot of put action in the XLF, says Pete Najarian. But there is no panic. I think it’s protective buying.
Retailers charged higher on Tuesday after Goldman added TJ Maxx to it’s prestigious conviction buy list with a $43 price target saying the stock is too cheap to ignore.
Also, Citigroup initiated coverage of Tiffany with a "buy" rating and a $50 price target, citing an expected return to sustained positive same-store sales in the fourth quarter.
However, on a bearish note, a new report from the National Retail Federation suggests retailers will likely experience a 1 percent drop in sales during the holidays -- albeit an improvement from last year's dismal season, but far below the 10-year average of 3.39 percent growth.
What’s the retail trade?
I agree with Goldman. For me the play in the space is TJMaxx, says Pete Najarian. I think this stock has a lot of catalysts that could take it higher.
Looking at the RTH, I think recent gains stem from optimism about the comp numbers that are coming out Thursday, muses Patty Edwards.
I’m not a buyer of retailers, counters Brian Kelly. I think consumers are still trapped for cash.
FAST & FURIOUS: THE KEY QUESTIONS INTO THE CLOSE
BUY YUM? With Yum Brands reporting after the bell today, should you buy?
The stock may be ahead of itself, but I think it still has upside, says Pete Najarian.
BUY FDO? Considering BMO upgraded Family Dollar to outperform; should you buy?
I am a buyer, says Patty Edwards. I think Family Dollar is a place where consumers who are strapped for cash will shop for the holidays.
BUY GOLD MINERS? With gold hitting new highs today, should you buy the miners?
I’d wait 3 days, says Brian Kelly. If they hold the gap then I’m a buyer.
BUY COST?Costo reports earnings before the bell tomorrow, should you buy today?
I’m a buyer but I’d also put a stop about $3 lower, counsels Greg Troccoli.
CALL THE CLOSE
Pete Najarian: Goldman turned negative so I’d sell the close.
Patricia Edwards: I’m a buyer, she says to the panel's surprise. (Typically Edwards is bearish)
Brian Kelly: If the dollar stays weak I’m a buyer.
Greg Troccoli: I’m short as a technical play. I’d only buy if my buy stop is selected.
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Trader disclosure: On Oct. 6th, 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); Terranova Owns (NOV), (MOS), (JPM); Terranova Owns Dec. Gold Futures; Terranova Owns March Sugar Futures; Terranova Owns Crude Futures; Terranova Is Short (CCL), (WYNN), (GRMN); Seymour Owns (AAPL), (STD), (EEM), (RIMM), (BAC), (MSFT), (SBUX), (VIP), (RTP); Najarian Owns (C) Calls; Najarian Owns (BRCD) Call Spread; Najarian Owns (DELL) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (LAZ) & Short (LAZ) Calls & Long (LAZ) Put Spread; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (MYL) Calls; Najarian Owns (TEVA); Najarian Owns (ORCL) & Short (ORCL) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (WFC) Puts; Najarian Owns (YHOO) Call Spread ; Najarian Short (AA) Calls
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For Greg Troccoli:
Troccoli is Short (SPX)
For Dennis Gartman:
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Gartman Owns Gold
Gartman Is Short British Pound
Gartman Owns US 10-Yr Note
CNBC.com with wires