It was a nasty morning on Wall Street with investors running for the exits due to fears that overseas woes were spreading and spreading rapidly.
But by late afternoon gray skies had turned to blue with investors snapping up a wide range of names including retailers, materials and financials.
The furious buying spree catapulted the S&P into positive territory with the Dow closing negative but still paring a whopping 300 point loss.
For the love of goodness, what’s going on in this market?
Strategy Session with the Fast Money traders
1040 is currently a key level in the S&P, explains Guy Adami. It’s where the market bounced. I’d use that as a point of reference. I’m still bearish but I also respect the tape.
I’m not sure where we’re going in long-term but I think the buying will continue for at least few days, says Tim Seymour. Valuations in some stocks are stupid cheap. I don’t think the market retests the highs but I do think fund managers are looking at companies such as Rio Tinto and Vale which are attractively priced because of the sell-off.
Short covering likely drove the market on Tuesday, muses Brian Kelly. In fact I was one of those short sellers. I took off about a third to a half of my short positions off, he admits. I agree that you have to respect the tape.
I don’t think it was short covering, says veteran trader Gay Kaminksy. We had actual buying but I think it was defensive buying. In the event that 1040 was a bottom, portfolio managers didn’t want to miss the move higher. However, that doesn’t mean the underlying problems vexing the market have gone away – they haven’t.
I was a buyer on Tuesday, reveals Joe Terranova. Although bears always point out the similarities between now and 2008, I think the fundamentals are much stronger now and the market is flush with liquidity.
I think this is a good time to fade larger moves no matter what the direction, adds Steve Cortes. For example if you were short, I’d be a buyer.
TOPPING THE TAPE: FINANCIALS
As we mentioned above, the financials moved to upside on Tuesday with market bellwether Goldman Sachs the big winner.
What’s the trade?
Goldman was positve for most of the session, says Tim Seymour. I think the action is largely about clarity in financial regulation.
Goldman is trading around 1.2 times book, adds Guy Adami. It’s as cheap as its been since 2008.
If you’re looking for another trade, check out Wells Fargo adds Seymour. They too may benefit from clarity in fin reg.
In the space I’d look at Citigroup as well as Bank of America, adds Joe Terranova. In the race to normalized earnings I think BofA will be one of the first to get there.
I just can’t get excited about the financials, counters Brian Kelly. They may go higher in the short-term but in the long-term I just don’t see it. All is not right in the world.
BEAR OR NO BEAR MARKET BUYS
Whether we’re on the brink of a bear or not, what stocks can you buy now that will thrive in any environment?
I like Pfizer as a defensive play, says Joe Terranova. Although it tends to trade in tandem in the tape I think long-term it’s attractive. Also look at American Express .
If you're inherently bullish I'd atke a look at IBM , says Guy Adami.
TOPPING THE TAPE: COMMODITIES
Commodities were a big part of Tuesday’s turnaround with the metals experiencing heavy buying into the afternoon. AK Steel, US Steel and Freeport led the gains.
What’s the trade?
Some steel companies are down 30%, says Tim Seymour. I’ve got Mittal on my radar as the mothership, he says. But it’s a trade. I don’t think steel is cheap but steel companies are probably oversold. I'd make a basket of names.
I’m long Peabody and Steel Dynamics , adds Joe Terranova. And I like playing nat gas with XCO and Southwest energy .
In the space, I like the Silver ETF with a $16.60 stop, says Brian Kelly. It could go to $20. But it’s a trade. I still believe fundamentally the world economy is slowing.
I’m bullish China and anything China related, adds Steve Cortes. I'd play it with natural resource names such as Freeport McMoran , Rio Tinto, BHP and Potash .
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CNBC.com with wires