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Is Copper Trying To Tell You Something?

Thursday, 2 Sep 2010 | 5:40 PM ET

Both the Dow and S&P closed modestly higher on Thursday as cautious optimism started to take hold of the market.

Investor appetite for risk has increased this week after more and more data suggested the recovery may be in tact, after all. The latest signs of optimism include:
- Pending home sales rose unexpectedly in July.
- New claims for unemployment insurance fell for a second straight week.
- Retail sales came in better than expected.

But perhaps most telling, copper hit its highest level in more than four months. Copper is sometimes called "Dr. Copper" due to its ability to diagnose the state of the economy as well as the ebb and flow of the equity markets.

How should you position now?

Instant Insights with the Fast Money traders

The action in copper gives me confidence that the economy isn’t going into a double dip, says Joe Terranova. We may be looking at a jobless recovery but it’s still a recovery and as an investor I’d start to embrace more risk.

It’s also worth noting that this is a time of year when copper demand typically falls off, adds Tim Seymour. There’s tailwinds coming from the emerging markets. I don’t think we’re in great shape but growth is growth, he adds. I’d trade on the expectations that the S&P melts higher well into next week.

Word on the Street
The Fast Money traders take a look at today's top business stories.

Also look at the Vix, it closed lower, explains Jon Najarian. Ahead of the jobs report that suggests to me investors aren’t terribly nervous with stocks at these levels.

I expect that the market can go higher, muses Steve Grasso. So many stocks are sitting at or near 52-week lows, Friday’s jobs number would have to be really terrible to drag us much lower.



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WILD RIDE AFTER HAIR-TRIGGER TRADERS FEAR ANOTHER BP

Thursday proved to be a whirlwind day for shares of Mariner Energy.

After a fire on an oil platform in the Gulf of Mexico, shares plunged as much as 12% only to pare most of those losses as more details emerged.

What’s the energy trade, now?

If it turns out that there are no leaks as early reports suggest, I’d short Clean Harbors, says Steve Grasso. It popped on the expectations that there might be.

In this space, I’d keep an eye on Pride and Seadrill; both were running on Thursday on almost triple volume.

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TOPPING THE TAPE: OIL

Are we looking at a perfect storm for oil prices? Not only are we in the heart of hurricane season but it appears investor appetite for risk is starting to increase.

What’s the trade?

Into the end of the year if the market rallies and there’s a chase for performance I’d expect to see money rotate into this space, says Joe Terranova.


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HURRICANE EARL TO BOOST INSURERS?

As of Thursday evening, forecasters were predicting that Hurricane Earl would remain mostly offshore as it moved up the eastern seaboard.

Is there a trade here?

After looking at 20 years of data, we’ve found that historically stocks of insurance companies go up in August, September and October the peak of hurricane season, explains Greg Locraft of Morgan Stanley. Ironically, this is a good time to buy. Our favorite names in the space are Travelers and Chubb.

The price action in Chubb looks good to me, says Joe Terranova. It’s making gains despite the approaching storm.

I like Chubb too, adds Steve Grasso, but use 54.75 as your stop.

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THE BIDDING BATTLE THAT WON’T END

The bidding battle that seemed as if it just would not end – did, in fact end. Michael Dell finally folded after HP increased its bid for 3PAR to $33 per share.

What’s the trade?

I think Dell is now in a very bad place, muses Joe Terranova. They lost a battle which told the market they needed to be in the high end digital space.


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BURGER KING POPS ON 3G BID PRICE REPORT

The M&A mojo didn't end in August: After reports yesterday that suggested Brazilian private equity firm 3G was in buyout talks with Burger King , CNBC's David Faber broke news with the terms of the deal: $24 per share, a total price tag of $4 billion dollars.

What’s the trade?

Wendy’s has been mentioned as another name that’s in play, reveals Tim Seymour.

If you want to play fast food I’d do it with McDonald’s, says Pete Najarian on the Halftime Report.

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TAKE YOUR POSITION: FRIDAY’S JOBS REPORT

On Friday Wall Street will be watching for the latest jobs report.

According to Reuters, on average the Street expects the latest data to show about 100,000 jobs were lost in August.

However, private employers are expected to shows gains of about 41,000.

Most investors agree that nothing matters to the recovery more than jobs.

David Rosenberg, Gluskin Sheff & Associates Chief Economist & Strategist is rather pessimistic, to say the least. What does he tell the desk?

Watch the video now and see for yourself!

Take Your Position
What to trade ahead of tomorrow's jobs report, with David Rosenberg, Gluskin Sheff & Associates chief economist/strategist.




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Trader disclosure: On Sept. 2nd, 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), (RIG); Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST); Terranova Owns (APA), (AAPL), (BMO), (FCX), (GS), (IBM), (MRVL), (QCOM), (OXY), (SU), (TER), (XBI), (C), (POT), (GLD); Jon Najarian owns (PDE); Jon Najarian owns (SDRL) ; Jon Najarian owns (BRCD); Jon Najarian owns (MCO); Jon Najarian owns (CEPH); Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (DRIV) call spreads; Jon Najarian owns (JWN)

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (BAX
Stuart Frankel & Co and it’s partners own (COG)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (DHR)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (TRV)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (DRYS)
Virtus Investment Partners own more than 1% of (EXR)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (XLK)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)

For Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (XBI)
Accounts managed by Kanundrum Capital own U.S. Dollars
Accounts managed by Kanundrum Capital own (POT)
Accounts managed by Kanundrum Capital own (TBT)
Accounts managed by Kanundrum Capital own (RAX)
Accounts managed by Kanundrum Capital own (SGG)
Accounts managed by Kanundrum Capital is short (XLF)
Accounts managed by Kanundrum Capital is short (IAI)
Accounts managed by Kanundrum Capital is short (MCO)
Accounts managed by Kanundrum Capital is short the Mexican Peso

For David Rosenberg
***No Disclosures***

For Doug Sipkin
Ticonderoga Securities LLC makes a market in ART, BLK, EV, BEN, GS, GHL, IVZ, JNS, JEF, LAZ, LM, MS, RJF, SF, and TROW ecurities

For Anthony Scaramucci
Scaramucci and SkyBridge Capital own (HNZ)

For Brian Stutland
***No Disclosures***

For Greg Locraft
Greg Locraft owns (ACE), (CB) (TRV)

Morgan Stanley makes a market in (ACE) (ALL), (ACGL), (AXS), (CB), (PGR), (TVL), (WRB), (XL)

Within the last 12 months, Morgan Stanley has received compensation for investment banking services from (ACE), (ALL), (AXS), (CB), (PGR), (TRV), (XL)

In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from (ACE), (ALL), (ACGL), (AXS), (CB), (PGR), (TVL), (WRB), (XL).

Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from (ALL), (ACGL), (CB), (PGR), (TVL), (WRB)

Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: (ACE) (ALL), (ACGL), (AXS), (CB), (PGR), (TVL), (WRB), (XL)




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DJIA
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S&P 500
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CB
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CAH
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HPQ
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PAR
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SDRL
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TRV
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VIX
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WEN
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