GO
Loading...

If QE2 Is Priced In, Is Rally About To Stall?

Though it may seem counter-intuitive, in the wake of the lousy jobs report (which showed the economy shed jobs again in September-- the 4th time in four months) the market rallied somewhat sharply.

In fact, the Dow closed above the psychologically important 11,000 level and the S&P continued its march toward 1,200.

As you may have heard by now, investors took the weak jobs report as a sign that the Fed is that much closer to another round of quantitative easing. Hence the gains.

However, if that expectation is now priced in, how should you position now?

Instant Insights with the Fast Money traders

Equity markets are on fire all around the world, As far as I’m concerned 1135 is the critical level the S&P, says Guy Adami. Right now the market wants to go higher. I don’t think it ends well but I wouldn’t stand in front of it.

As far as I'm concerned the trade going forward is long commodities, says Joe Terranova. We have a Fed that wants inflation and intends to expand their balance sheet. Chatter suggests $500 billion is already priced in, but in the wake of the weak jobs report the Street thinks QE2 now comes in around $1 trillion.

I agree that the trade now is all about risk assets, says Tim Seymour. But you have to pick and choose. I think the moves continue in copper stocks such as Freeport and Southern Copper. But I don't see bullish fundamentals in the steel names. I'd take profits in Mittal and US Steel.

Personally, I can't make sense of it all, says Karen Finerman. As far as I can tell the positive sentiment in the market can change to the downside as quickly as it turned positive. I sell into big moves like this. Retailers had an enormous run so I sold some TJX and Children's Place.

---------

TOPPING THE TAPE: HISTORIC DAY FOR GRAIN MARKETS

Friday will go down in the history books as a key day in the grain markets after the latest government crop report showed the corn harvest was far lighter than expected.

In the wake of the new data corn futures spiked 6%, prompting a halt in trading. Meanwhile, wheat soy and sugar also spike sharply.

How should you trade?

I think these developments are good for fertilizer stocks, says Tim Seymour. I like Monsanto and Syngenta . But I was surprised by the run in ag equipment names such as Deere. I’m not sure the price increases mean farmers are going to buy more equipment.

Deere on valuations doesn’t make sense to me, adds Guy Adami. If you have profits in this stock I’d take them.

I’d look at Agrium as well as Potash, says Joe Terranova.

---------

BUZZKILL: FOOD PRODUCERS SLAUGHTERED

Explosively high grain prices are no good for food manufacturers with shares of General Mills, Tyson , and other food producers taking a hit.

What’s the trade?

I expect that food manufacturers are hedged through the end of the year, says Karen Finerman. If the spike in corn is a one day event the sell-off in this space is overdone. However if we’re looking at a trend, then food makers are challenged.




CHART OF THE DAY – DBA

The traders are closely watching the action in the Soft Ag ETF (DBA) which hit a level not seen since the food bubble of 2008.


---------

WHALE WATCHING: BILL ACKMAN

Investors gobbled up JC Penney Friday after Pershing Square's Bill Ackman disclosed a 16.5% stake in the department store.

In a filing, Ackman said J.C. Penney's stock is undervalued and he plans to discuss "business, assets, capitalization, financial condition, operations, governance, management, strategy and future plans," with the company.

Should you follow the crowd?

Ackman began acquiring his position in JC Penney at $20, says Karen Finerman. It would not follow him in at these levels.

If you want to trade the stock, the play is to hope the shorts get squeezed and then get out, adds Guy Adami. But I would not buy and hold hoping for 30% upside.





______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our Web site send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On Oct. 8, 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), (AA), (BAC), (GE), (GOOG), (INTC), (MON), (POT); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (BTU), (NUE); Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (MDY); Finerman's Firm Is Long Russell 2000 Puts; Finerman's Firm Is Long S&P 500 Puts; Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (CVS); Finerman's Firm Owns (GENZ); Finerman Owns (GOOG); Finerman's Firm Owns (JPM), (JPM) Leap; Finerman Owns (JPM); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (POT) Calls; Terranova Owns (APA), (AAPL), (IBM), (OXY), (RSH), (UPL), (XBI), (JOYG), (C), (AXP), (SWN), (AGU), (EOG), (HES), (OIH), (ORCL), (SU), (VRTS), (FTO), (RIG), (PEP), (POT), (CRM), (CF); Terranova Owns (TBT) Calls; Terranova Owns (FFIV) Puts; Terranova Owns (FCX) Put Spread; Terranova Owns (JOYG) Put Spread; Terranova Owns (GLD) Puts

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 (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 (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 (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Rich Ilczyszyn
* No Disclosures

GE Is The Parent Company Of CNBC


CNBC.com and wires

Symbol
Price
 
Change
%Change
DJIA
---
S&P 500
---
AGU
---
DE
---
FCX
---
GILD
---
JCP
---
MO
---
MT
---
PLCE
---
POT
---
SCCO
---
SYNN
---
TJX
---
TSN
---
X
---

Featured

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET

Halftime Report