Investors are buying into the EU bailout with the Dow and S&P both seeing huge moves to the upside.
Financials were among Monday’s biggest winners after leaders in Europe agreed on a $1 trillion emergency rescue package.
The move, on the scale of our $700 billion TARP Program quelled fears that Greece's debt crisis would spread.
"This could've been another situation like when Bear Stearns and Lehman Brothers failed, but the rescue plan shows how serious Europe is about preventing that," says Alan Lancz, president of Alan B. Lancz in a Reuters interview.
Analysts cautioned, however, that longer-term concerns remained about whether euro-zone nations saddled with high debt loads would be able to manage their balance sheets.
"We're not totally out of the woods on this issue, but this shows that Europe recognizes how big the problem is, and that's always the first step," Lancz adds.
Did European leaders signal the all clear? Is the market about to resume its climb higher?
Strategy Session with the Fast Money traders
What these developments suggest to me is that Europe is very much at risk, says international trader Tim Seymour. Debt restructuring is probably still in the cards. I would expect to see the euro remain under pressure. Looking at stocks broadly, the market was oversold coming into Monday and now it appears overbought. I’d watch 1150 as a key level in the S&P.
Markets tend to overdue themselves, I’d be a seller into the close, echoes Steve Grasso of Stuart Frankel.
I agree with Tim; as far as I can tell the euro is still in deep trouble, adds OptionMonster Jon Najarian. I see no reason that the euro doesn’t reach parity to the dollar. There’s nothing that happened over the week-end that leads me to believe the euro should be getting stronger.
And it makes sense that these developments should buoy the US stock market, muses Zach Karabell of RiverTwice. It appears that we're becoming the flight to safety right now.
JOHN PAULSON GIVES A LIFT TO HOUSING STOCKS
The Homebuilders ETF soared on Monday after famed investor John Paulson said he sees a sharp V-shaped recovery in the economy. He also predicted housing prices would rise as much as 5% in 2010 and as much as 12% in 2011
What’s the trade?
I’d play it with Cemex , says Tim Seymour. The stock has been beaten down.
I agree with playing the trend with cement, adds Zach Karabell.
Or look at LPX or OC , adds Steve Grasso.
TECH STOCKS MAKE A COMEBACK?
Tech appears to be making a huge comeback on Monday following last week's turmoil with Apple , Hewlett-Packard and Cisco all jumping.
How should you play the space now?
I’d look at Apple and Google , says Tim Seymour. Google at '18 times' seems like a fantastic place to play and I also think Apple will move higher.
MOODY’S WELLS NOTICE
Investors punished shares of Moody’s after the firm said it received a Wells notice from the SEC. (A Wells notice alerts a firm to a potential enforcement action).
In this case, the SEC is probing whether Moody’s may have misled regulators in a 2007 application to remain a nationally recognized rating agency.
The SEC is specifically looking at Moody's response to its own finding that in April 2007, members of a European rating surveillance committee had violated its code of conduct.
Moody’s has challenged the finding.
What’s the trade?
Heightened legal and regulatory uncertainly facing Moody’s as well as McGraw Hill is something that represents a hurdle for stock investors, says Morning star analyst Bill Bergman.
*Check out our entire interview with Bergman. Watch the video above.
TRADE THE TITANS: EXXON
All this week CNBC is focusing on titans of American industry. Today we're looking at Exxon. the stock has been dead money the last year, falling over 7%.
How should you trade this titan of the oil industry?
I’m starting to see new life in this stock, says Steve Grasso. But it’s still trading below pre-Lehman levels.
Fast Money host Melissa Lee noted a bullish trend first spotted by Biryini; on Monday the market experienced the 4th largest positive futures move since 1993.
Looking at the ten most positive futures moves, on average the market continues higher during the day and closed up 4.6%.
10 MOST POSITIVE FUTURES MOVES
Pre-Mrkt Op-Close Day
Average 3.98% 4.64% 4.61%
% Positive 100% 89% 89%
And it appears the best opportunity to get in may be around lunchtime because the Dow typically sees its biggest gains after that time.
CALL THE CLOSE
Tim Seymour: The market was oversold coming into Monday and now it appears oversold. I’d watch 1150 as a key level in the S&P.
Jon Najarian: I’d take profits today but I’d expect volatility to come in through the end of the week.
Zach Karabell: I think we’re a little overdone on the upside but long term I think we head higher.
Steve Grasso: Markets tend to overdue themselves, I’d be a seller into the close.
Got something to to say? Send us an e-mail at firstname.lastname@example.org and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to email@example.com.
Trader disclosure: On May 10, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Grasso Owns (NDAQ), (DYN), (LPX), (ASTM), (ABK), (BAC), (BGP), (C), (CVGI), (JPM), (NEM), (PRST), (PFE), (BA), (T), (CSCO), (X); Jon Najarian Owns (SPY) Call Spreads; Jon Najarian Owns (QQQQ) Call Spreads; Jon Najarian Owns (NYX); Jon Najarian Owns (CME); Jon Najarian Owns Stock In CBOE; Jon Najarian Owns Seats On NYSE, CME, CBOE; Jon Najarian Is Short (MCO); Seymour Owns (CX), (GOOG); Karabell Owns (CME)
For Steve Grasso
Stuart Frankel And Its Partners Own (AMR)
Stuart Frankel And Its Partners Own (BAX)
Stuart Frankel And Its Partners Own (DYN)
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (DYN)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (HSPO)
Stuart Frankel And Its Partners Own (MERC)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PALM)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PFE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)
Stuart Frankel And Its Partners Are Short (AAPL)
CNBC.com with wires