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Halftime Pt. 2: A Sign of Economic Health?

Tuesday, 10 Aug 2010 | 1:40 PM ET

Signs of economic health could be coming from the railroad.

Over the past year, the transportation exchange-traded fund, iShares Dow Jones Transportation Average , outperformed the Standard & Poor's 500 index.

"It suggests that earnings are accelerating, economic activity is accelerating," says Joe Terranova of Vitrus Investment Partners. "The earnings for the rails have been very strong."

As CEO of railroad king Norfolk Southern , Wick Moorman tells the Money desk that business has been picking up since the second-quarter of last year. He says the Norfolk, Va.-based company transports good for all aspects of the economy and things have been "steady as it goes." Customers, however, are a little apprehensive and aren't making any substantial changes in terms of expansion or cut backs.

Moorman says Norfolk Southern has been hiring though. With the services name being down 6% last year in the composite service index, the railroad sees the need of allocating more resources to perform better. When financial crisis hit the company 18 months ago, Moorman says they had to cut a lot of resources. Things have started to turn around though, so the company is now hiring and trying to get service numbers to where he thinks they need to be.

Norfolk Southern has not yet been impacted by China's decline in imports, Moorman adds. Total metals is roughly 30% of the company's carloads and coal is 29% of revenues, but Moorman says there are no signs of domestic steel making slowing down.

What's the Trade?

In terms of an individual stock story, Joe Terranova of Vitrus Investment Partners says he likes Norfolk's competitor, Union Pacific , better. He is, however, excited that the railroad is hiring and wants to keep close watch over this company.

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CALL THE CLOSE

If we stay below the 200-day moving average in the VIX, Jon Najarian of optionMONSTER.com thinks the market could bounce.

Steve Cortes of Veracruz is using the pullback to buy resources, namely Freeport-McMoRan Copper & Gold .

Brian Kelly of Kanundrum Capital would wait until after the Federal Reserve's policy meeting Tuesday. After the meeting, the Fed will release a statement.

"All the moving averages have been beginning to converge," says Joe Terranova of Vitrus Investment Partners. "That tells me you have to fade any significant move in either direction."

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Trader disclosure: On Aug 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; Terranova owns (AKAM), (BAX), (FCX), (MOS), (PFE), (SU), (XBI); Cortes owns (CIB), (FCX), (OAS), (QQQQ); Cortes owns Crude Oil; Cortes is short Gold; Cortes is short U.S. Treasuries

For Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (PFE)
Accounts managed by Kanundrum Capital own (C)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (MED)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (ORI)
Accounts managed by Kanundrum Capital own (INTC)
Accounts managed by Kanundrum Capital own (ECA)
Accounts managed by Kanundrum Capital own (UNG)
Accounts managed by Kanundrum Capital own (SPY) Puts

Marc Chandler
***No Disclosures***

Rich Greenfield
***No Disclosures***

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FCX
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NSC
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UNP
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