It's also worth noting that Europe called for a yuan revaluation and Brazil doubled taxes on money going into fixed-income, says Tim Seymour. Every nation is worried about their currency in a world where economies are weak. I think commodities win to that. However it makes me concerned about Europe. They’re looking to export their way out of their economic woes.
I’d buy Japanese assets because the move out of the BOJ suggests they’re going to support assets, says Brian Kelly. And keep an eye on the Dollar Index. 77.32 is a key technical level and we’re right around that area, says Brian Kelly.
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THE RALLY: STEEL-MAKERS AND MINERS
As we mentioned above, among the biggest beneficiaries of that weak dollar was anything made of metal., Steelmakers such as Nucor as well as miners including Freeport McMoRan all shot higher.
What’s the trade?
I like the commodities broadly, but I’m worried about steel, says Tim Seymour. There’s chatter that steel prices could go down in 2011.
In the space I like the specialty steel makers such as Allegheny Technologies , says Brian Kelly. They’re a supplier to Boeing.
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THE RALLY: CRUDE OIL & ENERGY
Oil bulls pushed crude higher on Tuesday with the weaker dollar sending the spot price of oil to 5-month highs.
What’s the trade?
In commodities I think the best trade is long energy, says Joe Terranova. I think there’s further upside.
In the space, I like Baker Hughes, says Guy Adami.
I’m interested in the big integrated names, which have lagged, but I’d want to see them crush through the 200-day before I get long, says Tim Seymour.
In this space I’d look at Pioneer Natural Resources and other on-shore oil explorations companies, says Brian Kelly. And I also like Andersons , Green Plainsor even Archer Daniels as a play on ethanol.
If you want to play on-shore drillers I’d look at Nabors , adds Terranova. And on a related note I think this is a good time to get into nat gas with names such as UPL and/or Southwestern Energy . If nat gas gets north of $4 I think we see huge short covering in the space.
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THE RALLY: BANKS JUMP
Banks led the bounce Tuesday after J.P.Morgan Securities raised its third-quarter earnings forecast for large U.S. banks, including Bank of America and Fifth Third Bancorp , citing strong mortgage banking revenue and better-than-expected net interest income.
"We expect core mortgage production revenues to benefit primarily from sharply higher origination volumes and gain on sale spreads in the third quarter," analyst Vivek Juneja said.
Juneja raised Bank of America's third-quarter estimate to 15 cents a share from 10 cents and Fifth Third's estimates to 16 cents from 1 cent.
JP Morgan also raised PNC Financial Services estimate to $1.27 a share from $1.09, Wells Fargo & Co's estimate to 56 cents from 47 cents and for SunTrust Banks forecast a profit of 2 cents a share, from its prior view of a loss of 27 cents.
What’s the trade?
BofA is trading at a very modest price to book value, says Karen Finerman. I think the risk reward is compelling.
If you’re looking for a trade you might want to get into Goldman ahead of earnings and then get out, says Guy Adami. Or USB around 22.5 seems attractive, too.
If the rally continues I expect we see a chase for performance and that should lead to higher volumes, adds Brian Kelly. That’s good for the trading banks.
In the bank space I’m watching Morgan Stanley but it needs to trade above $26 before I can feel bullish, says Tim Seymour.
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THE RALLY: TECH STOCKS
Tech stocks were also big winners on Tuesday with IBM, Texas Instruments, and Juniper all rallying to 52-week highs.
What’s the trade?
If you want to play the space, says Guy Adami, I think IBM at current levels is considerably cheap
Also IBM is a beneficiary of the weakness in Hewlett Packard, adds Joe Terranova.
I’m sticking with HP, says Karen Finerman. The stock is trading like it’s broken and I don’t think it is broken. I just can’t believe the new CEO has blown up the company in less than a week.
I’m also a buyer, says Brian Kelly. The weakness in HP is just the CEO effect.
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WEALTHY BUYING GOLD EN MASSE, SHOULD YOU?
Looks like the Park Avenue Set has been infected with the gold bug - as more and more wealthy investors are buying physical gold to protect their fortunes.
Should you follow the famous and fashionable into this trade?
Find out from John Stephenson senior vice president at First Asset Management -- and author of the "Little Book Of Commodity Investing.
