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Are Investors Getting Comfortable or Complacent?

Wednesday, 17 Mar 2010 | 5:20 PM ET

After a 7-day winning streak the Dow closed at a new 2010 high on Wednesday. Investors put on new easy money trades, confident interest rates would remain low.

The performance in the S&P was equally bullish with the index touching a new 18-month high led by energy and financials.

What must you know to trade this market?

As the market creeps higher the Vix is getting crushed, muses Karen Finerman. I don’t know what to make of it.

It suggests to me that complacency is becoming a factor in this market, says Jared Levy of Peak6 on the Halftime Report. It makes me concerned as we melt-up. I’d be a cautious buyer.

The Vix isn't so much complacney as it is investors getting comfortable with the market, counters Joe Terranova. It also suggests to me that the Street is getting comfortable with the jobs report coming in April.

With the Vix at these levels, I'd buy put protection, says Pete Najarian. It's cheap.

As far as I'm concerned, we’re in a market melt-up, explains veteran trader Gary Kaminksy and I expect it to continue through the end of the quarter. Right now fundamentals don’t matter. The fear of not owning stocks should drive the indexes. I’m a buyer of the broad market and expect larger names to see money flow.

It agree that big investors are freaking out, says Tim Seymour. They’re desperate to get in. And I think it’s because fundamentally the global recovery is stronger than many investors ever thought it would be.

I think the trade is market laggards, adds Terranova. They should do better in a market melt-up. I’d put Alcoa and Qualcomm on the radar – refiners too.

If you’re looking for a trade I’m bullish Intel, says Pete Najarian. I think the stock breaks higher.

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TOPPING THE TAPE: COMMODITIES

Oil prices rose above $82 a barrel Wednesday after a report showed U.S. crude inventories grew less than expected last week and OPEC decided to keep its output targets unchanged.

What’s the trade?

I think oil takes out $85, says Joe Terranova.

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CHART OF THE DAY: DOW TRANSPORTS

The Fast Money traders are closely watching the action in the Dow Transports which hit a 52-week high on Wednesday. According to Dow Theory gains in the transports and industrials is typically a bullish sign.

What’s the trade?

In this space I’m bullish on the rails, says Pete Najarian.

I’m bullish FedEx, says Tim Seymour.

I’d be a seller of airlines if oil stays above $80, says Joe Terranova.

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AFTER HOURS ACTION: NIKE

In the aftermarket shares of Nike surged as much as 5% after the company said stronger sales helped more than double the company's third-quarter profit.

Nike reported Wednesday that it earned $496 million, or $1.01 per share, for the quarter. That's up sharply from the $244 million, or 50 cents per share, it reported for the same period a year earlier.

What’s the trade?

I’d continue to ride this name, counsels Patty Edwards of Storehouse. I think it goes to $80.

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THE BEAR NECESSITIES

Not everybody believes the market rally is for real. I expect we’re in an inverted V recovery, Michael Pento of Delta Global Advisors tells the Fast Money desk.

SQM
Eldorado Gold
IAMGOLD
Penn West Energy Trust

Find out why he can’t get on board and as a result suggests the stocks above. Watch the video now!

Word on the Street
The Fast Money traders take a look at today's top business stories.



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Trader disclosure: On March 17th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman's Firm Is Short (SPY), (IWM), (MDY), (IJR), (SPY), (USO); Finerman's Firm Owns (IYR) Puts; Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm And Finerman Own (JPM); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (TJX); Seymour Owns (AAPL), (BAC), (BX), (F), (GE), (TSO), (XOM), (SSL); Najarian Owns (AA) Calls; Najarian Owns (BAC) Call Spread; Najarian Owns (C); Najarian Owns (F) Calls; Najarian Owns (GE) Calls; Najarian Owns (TSO) Calls; Najarian Owns (YHOO) Call Spread; Terranova Owns (QCOM) April Calls; Terranova Owns (TER); Terranova Is Short (AMR); Terranova Is Short (UAUA); Terranova Is Short (CAL); Terranova Is Long Dec. 2010 Crude Oil Futures; Edwards Owns (AAPL) For Clients; Edwards Owns (BAC) For Clients; Edwards Owns (CVX) For Clients; Edwards Owns (GS) For Clients; Edwards Owns (GE) For Clients; Edwards Owns (JPM) For Clients; Edwards Owns (MSFT) For Clients; Edwards Owns (NKE) For Clients; Edwards Owns (PG) For Clients; Edwards Owns (QQQQ) For Clients; Edwards Owns (SPY) For Clients; Edwards Owns (SNE) For Clients; Edwards Owns (WFC) For Clients; Edwards Owns (XOM) For Clients

GE Is The Parent Company Of CNBC

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 (EXR)
Virtus Investment Partners Owns More Than 1% Of (GOK)
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 (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLI)

For Michael Pento
Pento And His Clients Own (SQM), (EGO), (IAG), (PWE)

For Mike Khouw
Cantor Fitzgerald & Co. Is A Market Maker In (AAPL)


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  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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