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Stocks Erase Stock Freefall Swoon

Wednesday, 12 May 2010 | 5:24 PM ET

U.S. stocks capped their best three-day run in 10 months on Wednesday, lifted by technology and industrial shares after Spain unveiled an austerity plan that reassured investors Europe was addressing its fiscal ills.

In fact, the Dow ended back above the May 5th close of 10,868.12, the close the day before the swoon.

However gold also traded higher, in a flight to safety.

Can gold and stocks move in the same direction for more than a day or two?

Instant Insights with the Fast Money traders

Right now it looks like stocks and gold can climb simultaneously, says Tim Seymour. The move in gold has to do with investors looking at gold as a hedge for currency failure. The move in stocks, however, is a growing willingness to assume greater risk.

But as far as the traders are concerned, gold probably has greater upside.

The charts look phenomenal, says Joe Terranova. I think hedge funds are all-in on the precious metals trade. I think gold is pushing toward $1250.

As far as I can tell every scenario seems bullish for gold, adds Brian Kelly. Either we get inflation and that’s good for gold. Or Europe falls apart and that’s good for gold.

Stocks by contrast, could be challenged.

Looking at the market broadly I wouldn’t get too giddy just yet. 1172 remains a critical level on the S&P, says Guy Adami.

And if we advance rather quickly to the highs we saw a couple weeks ago and fail we’re looking at a classic double top, adds Joe Terranova. That could signal we’ve made the high for several months.

After Hours Action
The Dow erases losses from last week's 1000-point plunge, with the Fast Money crew.

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SAP- SYBASE DEAL?

In extended trade shares of Sybase surged after Bloomberg reported SAP was close to buying the company for $6 billion.

What must you know?

I’ve never seen a deal in which SAP was involved that Oracle didn’t also get into the fray, says Gary Kaminsky. Watch for that.

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GOLDMAN GETS ON BOARD WITH LIESMAN: WE CAN DECOUPLE

Looks like Goldman Sachs economists are big fans of Fast Money and CNBC's Steve Liesman.

Those economists came out with a note on Wednesday detailing Steve's argument that the U.S. economy will be largely unaffected by euro-area turmoil.

Get all the details. Watch the video now!

CNBC's Liesman: Vindicated!
Goldman economists today put same theory as Liesman on the EU growth, with CNBC's Steve Liesman.





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Trader disclosure: On May 12, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (DRYS), (INTC), (TIE); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Kelly Owns (FXE) Puts; Kelly Owns (FXB) Puts; Terranova Owns (PFE), (GLD), (XCO), (SWN), (TER); Terranova Owns Gold; Karabell Owns (GOOG), (AAPL), (IBM), (CSCO), (TIE), (GS), (C); Levy Owns (GS), (GS) Calls

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 (AMKR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBV)
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 (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Brian Kelly
Kanundrum Capital Is Short (IBM)
Kanundrum Capital Is Short (DB)
Kanundrum Capital Is Short (BCS)
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short British Pound
Kanundrum Capital Is Short Swiss Franc
Kanundrum Capital Is Short (FDX)
Kanundrum Capital Is Short (DE)
Kanundrum Capital Is Short (XLK)
Kanundrum Capital Is Short (XLI)
Kanundrum Capital Is Short (XLY)
Kanundrum Capital Owns (TLT)
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (GFI)
Kanundrum Capital Owns (AUY)
Kanundrum Capital Is Long U.S. Dollar

For Jared Levy
Peak6 Investments is Long And Has An Options Position In (GLD)
Peak6 Investments is Long And Has An Options Position In (IBM)
Peak6 Investments is Long And Has An Options Position In (INTC)
Peak6 Investments is Long And Has An Options Position In (CSCO)
Peak6 Investments is Long And Has An Options Position In (VZ)
Peak6 Investments is Long And Has An Options Position In (AAPL)
Peak6 Investments is Long And Has An Options Position In (MSFT)
Peak6 Investments is Long And Has An Options Position In (BA)
Peak6 Investments is Long And Has An Options Position In (BEAV)
Peak6 Investments is Long And Has An Options Position In (GS)
Peak6 Investments is Long And Has An Options Position In (JPM)
Peak6 Investments is Long And Has An Options Position In (C)
Peak6 Investments is Long And Has An Options Position In (BAC)
Peak6 Investments is Long And Has An Options Position In (WFC)
Peak6 Investments is Long And Has An Options Position In (M)
Peak6 Investments is Long And Has An Options Position In (JCP)
Peak6 Investments is Short And Has An Options Position In (GOOG)
Peak6 Investments is Short And Has An Options Position In (HPQ)
Peak6 Investments is Short And Has An Options Position In (DELL)
Peak6 Investments is Short And Has An Options Position In (SWKS)
Peak6 Investments is Short And Has An Options Position In (TIE)
Peak6 Investments is Short And Has An Options Position In (XLF)
Peak6 Investments is Short And Has An Options Position In (DB)
Peak6 Investments is Short And Has An Options Position In (GILD)
Peak6 Investments Is Short And Has An Options Position In (LPX)

For Mike Khouw
Cantor Fitzgerald & Co. Is A Market Maker In (XLF)
Cantor Fitzgerald & Co. Is A Market Maker In (GS)
Cantor Fitzgerald & Co. Is A Market Maker In (MS)

For Stephen Weiss
Weiss Owns (GS)
Weiss Owns (C)
Weiss Owns (HBAN)

For Darren Horowitz
Raymond James & Associates Co-Managed A Follow-On Offering Of (PAA) Shares In May 2008, September 2009
Raymond James & Associates Co-Managed A Follow-On Offering Of (EPD) Shares In January 2009, January 2010, April 2010
Raymond James & Associates Received Non-Securities-Related Compensation From (EPD), (PAA) In Past 12 Months



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