Stocks jumped on Wednesday, with the Dow and S&P 500 up more than 1 percent after new economic data showed the services sector grew for the second consecutive month in October, while the labor market also showed signs of improvement.
Now, investors are waiting to hear from the Fed at 2:15pm. Will they confirm or deny the rally?
Strategy Session with the Fast Money traders
The general feeling on the Street is that the Fed will keep their language and interest rates unchanged, muses Tim Seymour, and that should keep the weak dollar / strong commodities rally alive.
I’m long the Dollar ETF , says Brian Kelly. I’m a dollar bull. The dollar can go up because the economy is good and the Fed may raise rates because the economy is good. The market can go up with a strong dollar.
But the Dollar Index or Dixie is right on it’s 20-day moving average, counters Tim Seymour. If the Fed statement is benign I think it breaks lower.
Traders are all about the weak dollar play, adds Rick Santelli. That's what the market action is all about. So in my estimation the minutes for the next several Fed meetings may be more important than the statement. That’s because the exit strategy and quantitative easing won’t make the statement but the mere fact that they’re being discussed will make the minutes all that more important.
CHART OF THE DAY: VIX
Options traders including Jared Levy are closely watching action in the Vix. Levy says it’s retreating from its 200-day average. The slide could be a bullish signal for the market, he explains.
GOLD HITS ANOTHER RECORD
Gold hit a record high above $1,095 an ounce on Wednesday as dollar weakness added to momentum triggered by India's purchase of 200 metric tons of gold from the IMF.
Gold is now poised to target the psychological $1,100 an ounce level, dealers say.
What’s the trade?
I’d be cautious in the short-term, says Tim Seymour. However as central banks around the world continue to diversify away from the dollar I’m bullish gold long-term.
I agree that it’s toppy here for the short-term, says Brian Kelly.
If you’re looking to play gold and other metals I’d do it with a long position in FCX , adds Jeff Tomasulo.
OBAMA TRADE: HEALTH INSURERS
Aetna, UnitedHealthcare and the health care sector overall jumped Wednesday on hopes the Obama administration's healthcare reforms may be slowed after Republican scored key election wins.
What’s the trade?
I’ve noticed call buying in the front month in names such as AET and WellPoint and call selling in the out months, explains Jared Levy. That suggests to me a lot of the names are overbaked and there’s limited upside in the future.
TAKE YOUR POSITION: CISCO
Cisco reports earnings Wednesday after the bell and many investors believe results will help show whether the industry has moved past its "tipping point" in recovering from the recession-related downturn.
How should you be positioned?
I think Cisco’s business is very strong and I expect the market to be comfortable with CEO John Chamber’s outlook, but I don’t see a bullish run.
I’d look at getting long around $22.50 with a stop under $22, says Jeff Tomasulo. I think the stock has upside to around $26.
Elsewhere in technology, New York Attorney General Andrew Cuomo filed a lawsuit Wednesday against Intel alleging the world's largest chipmaker of scheming to maintain monopoly power in the market for microprocessors.
Cuomo said Intel violated state and federal antitrust laws through a "systematic worldwide campaign" of illegal threats, bullying and coercion designed to maintain a stranglehold on the market for microprocessors for personal computers.
TRADE TO GO: BANK PLAY
Tim Seymour suggests putting Banco Santander Brazilon your radar. With banks beat up in Brazil and savings rates growing Seymour suggests a long position.
CALL THE CLOSE
Tim Seymour: I’m not trading on the Fed statement.
Jared Levy: I’m a buyer but that could change after the Fed meeting.
Brian Kelly: I’m a buyer.
Jeff Tomasulo: I’m indecisive.
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Trader disclosure: On November 4th, 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); Najarian Owns (CSCO), Is Short (CSCO) Calls; Najarian Owns (GE) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (UUP) Calls; Najarian Owns (YHOO), (YHOO) Puts; Najarian Owns (TXN); Terranova Owns (GS), (RIMM), (CAM), (MA), (OIH); Terranova Owns December Gold Futures; Seygem Asset Management Owns (BSBR)
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