Halftime Report: Gold Heading To $1163?

Renewed worries about Greece triggered a flight to quality on Wednesday sending the dollar higher and the S&P lower.

Adding to the headwinds, investors worried that the latest auction of 10-year notes could further drive up yields – a benchmark for mortgage rates.

In the wake of so much uncertainty, the traders say the action in one asset stands out - Gold . The precious metal climbed higher on Wednesday despite the stronger dollar.

How should you be positioned now?

I’m a buyer of gold, says Fast Money trader Joe Terranova. It looks like gold is breaking out again. $1163 was the high for the year and it looks like that’s where we’re headed again. And don’t forget that central banks are buying gold to diversify away from dollars.

If bond yields break above 4% and Greece gets worse I think gold could have another $70 to the upside adds OptionMonster Jon Najarian.

Gold may do well as interest rates go up, says Zach Karabell but I think it’s a short lived phenomenon. If you’re in it, I’d make sure to have an exit plan.

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KARABELL: DOW 11,000 IS ONLY THE BEGINNING

In Wednesday’s Wall Street Journal Zach Karabell wrote an op ed piece in which he said, Dow 11,000 is only the beginning – and that markets are likely to move up even if we don’t see robust growth the U.S. economy or in Europe.

Companies go where the global growth is, and with leaner inventories and more efficient work forces, they can make profits even when national economies sputter.

What's the trade?

Companies like Microsoft , Intel and Cisco don’t need a strong US economy to do well, says Karabell.

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10-YR AUCTION

U.S. Treasuries extended gains on Wednesday with 30-year bonds up a point after strong demand at a $21 billion sale of 10-year notes, part of this week's $82 billion note supply.

What’s the trade?

If the auction is good -- a 3-1 bid to cover -- I would go long the 10-year, counsels Brian Kelly. I think investors are looking for safe investment and a 4% yield isn’t bad.

Personally, I wouldn't draw any conclusions yet. I think the 30-year Treasury auction on Thursday is more important, muses Joe Terranova.

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TOPPING THE TAPE: PALM

The traders are keeping a close eye on Palm which fell over 18% after a dismal earnings release only to rally again.

What must you know?

Takeover chatter is heating up in the options pits, explains Jon Najarian, with Lenovo being thrown around as a potential buyer. There’s also speculation Nokia and Motorola could step-in.

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CHINA CURRENCY BATTLE CONTINUES

The Street is talking about currency trades on Wednesday after published reports in the FT suggested China was growing ever more receptive to revaluing the yuan.

What’s the trade?

I think this has been the most telegraphed move known to man-kind, chuckles Zach Karabell.

If China goes to a crawling peg I’d interpret it as a signal China is an easier place to invest, explains Brian Kelly. And that will attract capital. In turn, that could hit the Treasury auctions.

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ECP/EMB

There could be a lot more news out of Europe later this week with some key meetings ahead including policy meetings at both the Bank Of England and the European Central Bank.

What’s the trade?

I’m watching the ECB, says Joe Terranova. Greece needs a suitcase full of cash and they’re not getting it. That makes me bearish on the euro. I think the trade is short FXE.

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EAR TO THE WALL: TXT

Jon Najarian has spotted unusual options action in Textron.

What’s the trade? Najarian penned an exclusive post for Fast Money’s website with all the details. Check it out now. Click here to go to “Najarian: Trade Long on These Takeover Targets”

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CALL THE CLOSE

Jon Najarian: I’m bullish into the close.

Joe Terranova: Long bare necessities and short consumer necessities against it.

Zach Karabell: Ditto what Najarian and Terranova said.

Brian Kelly: I’m a buyer of the market.

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Trader disclosure: On Apr 7, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Jon Najarian Owns owns call spreads in (PALM), (TXT), (AAPL); Jon Najarian Owns (AAPL) Call Spreads; Jon Najarian Owns (AKS), Is Short (AKS) Calls; Jon Najarian Owns (BAC) Preferred; Jon Najarian Owns (FCX), Is Short (FCX) Calls; Jon Najarian Owns (C) Preferred; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (IP) Call Spreads; Jon Najarian Owns (MCD), Is Short (MCD) Calls; Jon Najarian Owns (MS) Preferred; Jon Najarian Owns (NYT); Jon Najarian Owns (PALM) Call Spreads; Jon Najarian Owns (RIMM), Is Short (RIMM) Calls; Jon Najarian Owns (WFC) Preferred; Jon Najarian Owns (WMT), Is Short (WMT) Calls; Jon Najarian Owns (PALM) Call Spreads, (TXT) Call Spreads, (AAPL) Call Spreads; Terranova Owns Gold, Oil; Terranova Is Short (XLY); Kelly Owns (FXE) Puts; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (CVS); Finerman's Firm And Finerman Own (JPM); Finerman Owns (USO); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (WMT), (YUM), (MCD), (SKS); Funds Managed By Dennis Gartman Are Short S&P 500; Funds Managed By Dennis Gartman Are Short Euro; Funds Managed By Dennis Gartman Are Short Yen’ Funds Managed By Dennis Gartman Are Long Gold; Funds Managed By Dennis Gartman Are Long Natural Gas Trusts; Funds Managed By Dennis Gartman Are Long Copper; Funds Managed By Dennis Gartman Own (AAPL); Funds Managed By Dennis Gartman Own (DRI); Funds Managed By Dennis Gartman Own (FCX); Funds Managed By Dennis Gartman Own (GLD); Funds Managed By Dennis Gartman Own (PNRA); Funds Managed By Dennis Gartman Are Short (RIMM); Funds Managed By Dennis Gartman Are Short (SPLS)

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