On Friday, the traders were closely watching the action in the S&P 500, which turned positive as investors began to feel that the Fed’s discount rate hike might not be such a bad thing.
Unlikely winners included the financials and utilities .
Although the knee-jerk reaction was to sell and ask questions later, the Street came to believe the Fed’s move may signal the economy is getting stronger .
How should you be positioned now?
Strategy Session with the Fast Money traders
I’m very bullish, says Joe Terranova. The Fed moves says to me the financial system is flush with liquidity and the capital markets are functioning. I think the trade is long the reflation trade.
You can’t discount the price action in the market, agrees Guy Adami. You’d think it would have dropped 200 points on the rate hike, but it didn't. You can't turn a blind eye to that. But I also think the Fed move is the beginning of the race to raise rates.
The rate hike is too little too late, counters Pete Schiff of Euro Pacific Capital. The rally on Friday is about inflation. Investors are buying stocks because they don’t want to hold cash.
The end of easy money is here, adds veteran trader Gary Kamninksy. We’re seeing the market absorb a rate increase and that’s a bullish thing. But I don’t agree with Joe Terranova that the capital markets are functioning well. I don’t see any M&A happening.
CHART OF THE DAY: GOLD CHART
Gold turned higher on Friday, despite a stronger dollar, with the precious metal retaining appeal as an alternative investment.
What’s the trade?
I’m a buyer, says Peter Schiff. Inflation is a real concern. I expect gold to go higher, much higher.
Gold tested and held $1065, reminds, Gary Admai. I like gold but I’m not nearly as bullish as Schiff.
TOPPING THE TAPE: OIL
Oil appeared to be breaking the rules on Friday; it showed some surprising strength despite the dollar's rally.
What’s going on?
There is a concern about geo-political issues, explains Joe Terranova. Institutions have been aggressive buyers.
I thick it’s a currency phenomenon, says Pete Schiff. People want to get out of currencies and so they’re buying oil.
SECOND DERIVATIVE TRADE
Some traders are looking at agriculture stocks as a second derivative trade off the Fed's move.
Should you follow?
As oil prices rise ag names typically go with it, says Joe Terranova. I’d look at Potash and Mosaic as a bet on higher oil prices.
ANALYZE THIS: WALL STREET'S NEW FED STRATEGY
There was a lot of confusion on Wall Street Friday as traders struggled to position themselves for a rising rate environment.
Here’s what Goldman says:
Goldman's Post-Fed Calls
Upgrade discount brokers, Schwab
Buy weakness in Dr Horton (DHI)
I agree with the long position in DR Horton , says Joe Terranova.
I never trust when brokerage firms upgrade each other and I can’t imagine why they’d upgrade a homebuilder unless they’re trying to dump shares, counters Peter Schiff.
CALL THE CLOSE
Joe Terranova: I’m a buyer
Guy Adami: I think we fizzle out.
Gary Kaminsky: Sell Dell.
FAST EXCLUSIVE: NEW DOMINO'S CEO
Totally devoid of flavor - that is how Dominoes new ad campaign described its very own pizza. The company says it is devoted to improving its product. In terms of corporate candor, it doesn't get much better than that.
What must you know before you trade this stock?
Find out from Patrick Doyle, the new boss at Dominoes Pizza. Watch the video now!
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Trader disclosure: On February 19, 2010, 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); Kelly Owns (AMZN) Calls; Kelly Owns (JPM); Kelly Owns (FXE) Puts; Kelly Owns (ELX) Call; Kelly Owns (QLGC); Jon Najarian Owns (AAPL), Is Short (AAPL) Calls; Jon Najarian Owns (AMZN), Is Short (AMZN) Calls; Jon Najarian Owns (BAC); Jon Najarian Owns (BBY), Is Short (BBY) Calls; Jon Najarian Owns (C); Jon Najarian Owns (CAT), Is Short (CAT) Calls; Jon Najarian Owns (FCX), Is Short (FCX) Calls; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (HD), Is Short (HD) Calls; Jon Najarian Owns (HPQ), Is Short (HPQ) Calls; Jon Najarian Owns (MS); Jon Najarian Owns (PCLN), Is Short (PCLN) Calls; Jon Najarian Owns (RSH); Jon Najarian Owns (SBUX), Is Short (SBUX) Calls; Jon Najarian Owns (WMT), Is Short (WMT) Calls; Schiff Owns (POT); Schiff Owns Gold; Schiff Is Short U.S. Dollar; Kaminsky Owns (EPV); Terranova Owns (JPM), (RIMM), (IBM), (QCOM), (GOOG), (EMC), (AAPL), (DELL), (MSFT)’ Terranova Owns Crude Oil Futures (March 2010, April 2010, December 2011, December 2012)
For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)
For Brian Kelly
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Copper
Kanundrum Capital Owns (GDXJ)
Kanundrum Capital Owns 9MOS)
Kanundrum Capital Owns (POT)
Kanundrum Capital Owns (IPI)
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (C)
Kanundrum Capital Is Short (FCX)
For Robert Samuels
Oppenheimer & Co. Is A Market Maker In (FINL)
Oppenheimer & Co. Expects To Receive/Seek Investment Banking Compensation Frmo (UA) In Next 3 Months
Other Relevant Disclosure
Jon Najarian Owned (GOOG) On 1/21/10
Terranova Owned March British Pound Futures On 1/29/10
Kanundrum Capital Owned (GOOG) Calls On 1/13/10
Kelly Owned (GOOG) On 1/13/10
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