The S&P moved to a five-week high in the first half of the trading day Tuesday, rallying past its 50-day moving average. The VIX, meanwhile dropped to a one-month low. Was it the signal of a technical breakout?
Steve Grasso with Stuart Frankel says an S&P close above these levels makes him really want to "get some skin back in the game." "These are the levels where you probably want to get back involved in the market," he said.
But should traders worry about the VIX?
"The last time the VIX got this low, that wasn't such a great sign," Patty Edwards with Storehouse Partners said.
"That's exactly why you'd want to use the VIX in your favor," Pete Najarian said. "I've added to plenty of positions over the last couple of weeks as we've started to make this march higher, but as I've done that I've been rolling up some put protection, because I'm not 100 percent convinced that I walk in some day and it's not just Greece, it's somebody else, and suddenly the market decides to make a big huge pullback."
CHART OF THE DAY
Todd Gordon is watching the AUD/JPY trade instead to determine whether there's a breakout. The pair normally trades fairly in line with the S&P, but that's not the case over the last two weeks, he said. "The risk aversion is higher in the currency markets, not justifying these higher levels. Specifically, watch 1125 in the S&P."
He added that the S&P broke the 50-day moving average in July, down by 39 points and then rallied to a new high, Todd said. Again in November, the S&P broke down by 23 points and rallied to another new high. He says he thinks this break might just be an overshoot.
So, is it a breakout or not?
Should traders wait for the yearly high high of 1147 for confirmation, or will a close over 1125 be sufficient to confirm a technical breakout? Gordon said a daily close above 1125 would be sufficient to disprove his belief that the break above the 50-day moving average was just an overshoot.
The British Pound was being pounded for the sixth consecutive day Tuesday, hitting a new nine-month low as worries over the UK elections and budget deficits gave the currency a drumming.
Brian Kelly of Kanundrum Capital says the “pound has rate differential working against it” and he is shorting the pound. "On rallies, I'd be a seller of it. I think over the next six months we could go much lower."
HIGH ON HERBALIFE
Herbalife as a deficit derivative play? You bet, says Patty Edwards.
"First of all, the stock is darn cheap," she says. Second, the company has great international exposure — only about 22 percent of revenues come from the US, and very little from Western Europe, which is good news, because the remainder of currency plays involved are fairly stable compared to USD, meaning the company has a fairly decent growth rate.
TOPPING THE TAPE
M&A activity continued today, this time in ag space as CF Industries makes another bid for Terra Industries after withdrawing its offer in January. It added to an already incredible amount of activity in the ag space, and all the traders think commodities in general are a segment to watch.
"This is a space that's very, very active right now," Najarian said. He's watching Patriot Coal and Airgas.
The favorite seems to be CF, Steve Grasso said. "It's a win-win for CF no matter how you pose the landscape at this point."
The traders will discuss how to play the entire space at 5ET today on Fast Money.
Good news from the auto industry today, with Hyundai reporting February sales up 23 percent and Ford blowing sales estimates out of the water. The traders say Ford is now posed for a breakout, though there was a little disagreement on where the resistance level sits — at $12 for Grasso or $12.50 for Gordon. Once above that level, though, Grasso and Gordon agreed it has plenty of air to shoot to $14 or even $15.
TRADE TO GO
Steve Grasso: Buy the market
Todd Gordon: Buy the market
Patty Edwards: Nibbling selectively
Pete Najarian: Buy the market, especially tech, commodities
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Trader disclosure: On March 2nd, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Edwards owns (COST) and holds (AAPL), (COST), (F), (MSFT), (SPY) and (QQQQ) for clients; Grasso owns (AAPL), (COST), (COSC) (WMT); Gordon is short EUD; Najarian owns (ARG), (HIG), (INTC), (PXC), (JOYG), (MRVL), (BAC), (CLF), Kelly's Kanundrum Capital is short GBP, JAP, EUD, long USD, owns (NBC), (FXY). For Patty Edwards:
Edwards Owns (COST)
Edwards Holds (AAPL)For Clients
Edwards Holds (COST) For Clients
Edwards Holds (F) For Clients
Edwards Holds (MSFT) For Clients
Edwards Holds (SPY) For Clients
Edwards Holds (QQQQ) For Clients
For Steve Grasso:
Grasso Owns (AAPL)
Grasso Owns (COST)
Grasso Owns (CSCO)
Grasso Owns (WMT)
For Todd Gordon:
Gordon Is Short Euro
For Pete Najarian:
Najarian Owns (ARG) Calls
Najarian Owns (HIG) Call Spread
Najarian Owns (INTC) Calls
Najarian Owns (PCX)
Najarian Owns (JOYG)
Najarian Owns (MRVL)
Najarian Owns (BAC) Call Spread
Najarian Owns (CLF) Calls
Najarian Owns (F) Calls
For Brian Kelly
Kanundrum Capital Is Short Pound, Yen, Euro
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Owns (NBG)
Kelly Owns (FXY) Puts
***BRIAN KELLY DOES NOT HAVE DISCLOSURES ON FXB
CNBC.com with wires
For Patty Edwards: