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HALFTIME REPORT: US Dollar, Commodities and Europe Driving the Market

On a day where markets are rattled by sovereign debt issues, yet encouraged that a European bailout of Greece may be imminent, markets have also reacted to domestic developments after Fed chairman Ben Bernanke's indication that a rate hike may be on the horizon, although losses have been paired.

Elsewhere in the market, the US dollar is spiking and commodities are sluggish, while financials stand out as the market's bright spot.

Gauging Market Momentum

With stocks, financials and global markets rebounding on the day, Tim Seymour sees the basis of the story being on the Fed's "game plan," as well as comments coming from the ECB teleconference which may provide good news for a market rally. Brian Kelly sees today's strength as a "relief rally," which is occurring after days of bad news around the globe caused a sell-off but today, investors fears are being calmed by news out of Europe, despite Bernanke's comments, which contain nothing "really new," he says.

Market Buzzkill: Commodities

Lagging the market today are commodities, as prices get clobbered following strength in the dollar. This has seen companies like Alcoa and Freeport-McMoran down in intraday trading, while a mid-day pullback in the dollar saw some of these names making up for some of their losses. "Here's your chance, if you want to get out of some of these names, to do some selling," says Joe Terranova, "or you play these as a tradable item," although he points out that oil is not something you'd want to short, as it is currently off its lows. "You gotta stay long with it," he says.

For emerging market commodity names, Tim Seymour suggests looking at names like BHP Billiton and Vale , who have pulled back dramatically. He also points out that the China story has not changed, and their demand for commodities will still be quite strong. The bottom line in this area is that iron ore prices are rising, which could serve as very good news for these companies. "It's very good news, but it's also good for the broader market that normal relationships are back" says Scott Nations, "I think now that we're back to normal, it's a good thing."

As for other commodities, "I believe the market is trading a lot on technicals," says Jared Levy, who points out that short term fluctuations in price, which represent trader emotions, highlighting that there is a bit of a "pendant" formation in the short term, speaking specifically about how Orange Juice prices have been bid up and may return to normal this summer. The way to play this, he says is to buy upside call spreads or downside puts in Orange Juice, although trades in this area are both complex and risky. He is also watching natural gas, which looks bearish in the short term but is beginning to catch good bullish bids into May.

Chart of the Day: Mosaic

Presenting at a Goldman Sachs conference today, Mosaic painted a bullish picture for the global fertilizer industry as the stock hangs above its $53 resistance level. "It's really an inventory restocking story," says Brian Kelly, as farmers are beginning to plant more, grow more and prices are going up. There has also been some upside call action and call spreads on Mosaic, adds Jared Levy, who sees Mosaic, Conagra Foods and Archer Daniels Midland as stocks to watch.

Financials on the Rise: Why?

With news of a that a rate hike may be on the horizon, the stocks that are set to feel some pain from the news, financials, are leading the market. Scott Nations reiterates Brian Kelly's observation that there is "nothing new here," and may signal traders that Bernanke no longer sees any underlying weakness in the general sector. Although we saw some initial sell-offs, Nations sees this as a "show of backhanded support for the banks."

Topping the Tape: Dell

With shares of Dell on the rise after Bank of America upgraded the stock to "buy," from "neutral," what's the trade? "It's not the space I want to be in," says Brian Kelly, who would rather be more on the enterprise side, like VMWare, as Dell is more consumer-facing.

Fast & Furious: Key Questions into Upcoming Earnings

Should you buy Vale , with earnings out after the bell? Tim Seymour points out strikes in nickel mines in Canada and issues domestically. He thinks in the long term the company's prospects are good, but in the short term he is bearish.

Should you buy or sell Marriott as it announces earnings before the bell tomorrow? Jared Levy suggests a 24-20, bull put spread, signaling that he's moderately bullish and believes that the stock price will be above 24.

On deck to report earnings tomorrow is Pepsi , what's the play? Scott Nations sees good news coming out of Pepsi, mostly focusing on international business and thinks it's "very unlikely" that they'll miss estimates.

Call The Close

Brian Kelly: I'm a buyer, specifically of the financials, seeing Bernanke's comments today as good for the banks.
Scott Nations: I'm a buyer, he says, saying he also thinks Bernanke's comments will be positive.
Jared Levy: He's a buyer, and will also be looking at Teva Pharmaceuticals and Google going into tomorrow.
Tim Seymour: The dollar is going higher, watch for the ECB meeting.


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