Playing Stock Market With Contrarian Bets

Stocks finished flat on Monday, but that doesn’t mean there wasn’t money to be made in the market.

Some of the biggest gains stemmed from betting against the crowd. For example financials closed higher despite growing uncertainty about the health of Europe’s banks. Even the National Bank of Greece ended higher.

Also investors made bullish bets on HMO stocks such as Aetna despite a renewed push by the White House to overhaul the health care industry.

"Over the next few weeks, I feel confident that’s how investors will make money," says veteran trader Gary Kaminksy – "with contrarian trades."

What must you know?

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CONTRARIAN TRADES: FINANCIALS

In the financials, I think investors are waiting to see what happens on Wednesday. That’s when Bernake testifies before Congress, says Joe Terranova. However, I did take profits in JPMorgan as a contrarian play - because I believe a smart investor buys when the rhetoric is negative and sells when it's positive.

I don’t think the financials gave the market the kind of boost that I’d expect if there was truly strength in the sector, says Pete Najarian. As far as I'm concerned, financials probably remain stuck in a range.

I still believe in the long-term bank story, says Karen Finerman. I haven’t done a thing with my positions in BofA or JPMorgan. The catalyst for money center banks will be earnings – not rumors.

I don’t think interest rates are going anywhere, anytime soon and banks are an okay place to be, says Tim Seymour.

Turning attention to Europe, I took a long national Bank of Greece because I thought the whole thing was totally overdone, explains Brian Kelly of Kanundrum. But I’m starting to sell out of my position, because Greece has to refinance by April. The problem has to resolve itself soon.

If you’re looking for a derivative trade, I’d look at the municipal bond market, says Joe Terranova. Just like Greece may not be able to service its debt, I can’t help but wonder if the tax receipts are going to be there for some municipalities to service their bonds.

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CONTRARIANT TRADE: HMO STOCKS

We’ve spotted another noteworthy contrarian trade. HMO stocks such as Aetna are seeing some healthy price action even after President Obama renewed his efforts to pass healthcare.

How should you be positioned?

I think the market likes the clarity, muses Pete Najarian. With valuations in the single digits, I like what I'm seeing. Maybe look at Teva .

I’d play it with a long position in Tenet Health Care, says Joe Terranova.

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CONTRARIAR TRADE: BRAZIL

Since the February low, the Brazil ETF has generated nearly double the return of other BRIC nation's ETFs. Considering the global turmoil, should you make make a contrarian bet and go long emerging nations?

Will Landers of BlackRocks' Latin America fund tells the desk if the US crisis didn’t take Brazil down last year, Greece sure won’t.

And with the growth of Brazil’s middle class, “I’d want to get more and more involved – especially with the consumer,” he says.

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CONTRARIAN TRADE: CONSUMER?

With a slew of retailers reporting earnings this week, we asked top analyst Deborah Weinswig for her best trading insights.

Should you trade against the trend and get long retailers despite the weak consumer?

I’m a buyer of Nordstrom on the pullback after Monday earnings, says Weinswig. And I like Macy’s , she says. It’s one of our top picks for 2010.

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EAR TO THE WALL...MONSTER OPTIONS ACTIVITY

The traders are keeping a close eye on CMC due to unusual options activity, especially in the March 17.5 calls.

What must you know?

The number of calls versus puts suggests to Pete Najarian something could happen for CDC in a positive way.

According to market rumor, Nucor is believed to be a potential buyer of CMC, explains host Melissa Lee. And we’ll be talking with the Nucor CEO later in the week on the Fast Money Halftime Report.

What do you think? We want to know!

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Trader disclosure: On February 22nd, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kaminsky Owns (LULU) Puts; Kaminsky Owns (EPV); Seymour Owns (AAPL), (F), (INTC), (BAC), (INTC), (TSL); Najarian Owns (BP); Najarian Owns (CMC) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (MYL); Najarian Owns (MS); Najarian Owns (TEVA), (TEVA) Puts; Najarian Owns (TMO) Calls; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM); Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Is Short (CAKE); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (KFT), (M), (SKS), (TGT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (WMT); Finerman's Firm And Finerman Own (JPM); Finerman's Firm Owns (MCD); Finerman's Firm Owns (YUM); Kelly Owns (FXE) Puts; Kelly Owns (QLGC) Calls; Kelly Owns (AMZN) Calls; Kelly Owns (HOV) Calls; Kelly Owns (FXE) Puts; Kelly Owns (FXE) Puts

For Tim Seymour
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For JoeTerranova
Terranova Owns (JPM), (IBM), (QCOM), (GOOG), (EMC), (AAPL), (DELL), (MSFT)
Terranova Is Long December 2010 Crude Oil Futures
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)
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Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For Brian Kelly
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Kanundrum Capital Owns (JPM)
Kanundrum Capital Owns (ELX)
Kanundrum Capital Owns (QLGC)
Kanundrum Capital Owns (BRCM)
Kanundrum Capital Owns (EWP)
Kanundrum Capital Owns (NBG)
Kanundrum Capital Is Short (FCX)
Kanundrum Capital Is Short Copper Futures
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Is Short Euro, Yen, British Pound, Singapore Dollar
Kanundrum Capital Is Short British Pound
Kanundrum Capital Is Short Yen
Kanundrum Capital Owns (GDXJ)

For Will Landers
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Landers Owns BlackRock Latin America Fund

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(SKS), (KR), (SVU), (DG)
Citigroup Global Markets Or Affiliates Expects To Receive/Seek Investment
Banking Compensation From (WMT) In Next 3 Months
Citigroup Global Markets Or Affiliate Received Non-Investment Banking
Compensation In past 12 Months From (COST), (M), (JCP), (KSS), (TGT), (WMT), (HD), (WAG), KR), (SWY) (SVU)
(DG), (TGT), (WMT), (SKS), (KR), (SVU) Are Or In Past 12 Months Were Investment Banking Clients Of Citigroup Global Markets
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Months Were Clients Of Citigroup Global Markets (Non-Investment Banking, Securities-Related Services)
(COST), (M), (JCP), (KSS), (TGT), (WMT), (HD), (WAG), (KR), (SWY), (SVU) Are Or In Past 12 Months Were Clients Of Citigroup Global Markets (Non-Investment Banking, Non-Securities Related Services)
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For Louis Navellier
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(F), (AMT), (BIDU) Are Holdings In Navellier's Blue Chip Growth Newsletter
Portfolio

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Cantor Fitzgerald & Co. Is A Market Maker In (LULU)
Cantor Fitzgerald & Co. Is A Market Maker In (MSFT)
Cantor Fitzgerald & Co. Is A Market Maker In (QCOM)
Cantor Fitzgerald & Co. Is A Market Maker In (T)
Cantor Fitzgerald & Co. Is A Market Maker In (VZ)
Cantor Fitzgerald & Co. Is A Market Maker In (YHOO)
Cantor Fitzgerald & Co. Is A Market Maker In (C)
Cantor Fitzgerald & Co. Is A Market Maker In (GS)
Cantor Fitzgerald & Co. Is A Market Maker In (MS)
Cantor Fitzgerald & Co. Is A Market Maker In (JPM)
Cantor Fitzgerald & Co. Is A Market Maker In (XLF)
Cantor Fitzgerald & Co. Is A Market Maker In (BAC)
Cantor Fitzgerald & Co. Is A Market Maker In (WFC)

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