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Halftime: Is the Gold Trade Over?

Even as gold moved lower Tuesday, Goldman Sachs said the precious metal will be going higher with the prospects of further quantitative easing. The firm thinks that monetary policy will lower US real interest rates, causing gold to hit $1,650 an ounce within the next 12 months.

Joe Terranova, chief market strategist of Virtus Investment Partners, can get his arms around that argument because the price action of gold has done nothing to suggest that a significant sell off is about to occur. If the Federal Reserve decides to address inflation, there will be an underlying support for gold.

There are some data points that suggest gold is going lower, argued Steve Cortes, founder of Veracruz. As long as the euro stays below $1.40, the gold trade is in trouble. Also, gold rallied last Thursday to hit a new high at $1,366 an ounce and then closed down for the day on a $40 range. Technically, he thinks that's a bad sign for gold. If the high of $1,366 holds, he suggests betting against gold.

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WHAT TRADERS WANT OUT OF FOMC MEETING MINUTES

The Dow slipped below 11,000 in trading Tuesday, as investors anxiously await the release of the minutes of the Federal Open Market Committee's September meeting.

"My guess is that the market is ultimately going to be disappointed in QE2," said Veracruz founder Steve Cortes. "There's been a reasonable amount of public dissention among Fed members."

Cortes will look to see what the minutes say about those internal arguments. Kanundrum Capital's Brian Kelly, meanwhile, thinks the market is overdone regarding those inside arguments at the Federal Reserve because Chairman Ben Bernanke ultimately makes the decision regarding monetary policy anyway.

"The interesting thing about today's minutes will be the conversation about inflation," added Joe Terranova, chief market strategist at Virtus Investment Partners. "When you talk about inflation, you go back. You talk about commodities. You talk about copper , oil and gold and there's underlying support in all of those assets when the Fed is targeting inflation."

Watch the video to see an interview David Rosenberg, chief economist at Gluskin Sheff & Associates, who also discusses what difference QE2 might make—it starts at 8:00.

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TRADING TECH AS APPLE LIFTS NASDAQ

With Apple out in front, technology stocks topped the tape in trading Tuesday.

Barclays, meanwhile, raised it's price target on the iPad maker to $385 from $340.

"If Apple's up, the NASDAQ's up," said Brian Kelly, founder of Kanundrum Capital, noting that the company accounts for 20 percent of the index .

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After a sharp sell off in the cloud computing space recently, the software companies are doing well, but the data storage plays continue to struggle.

Joe Terranova, chief market strategist at Virtus Investment Partners, said it's OK to start nibbling on "best in breed" names Akamai Technologies and Salesforce.com because "fundamentally, they have the best sustainable story going forward."

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TRADING OIL AFTER DRILLING MORATORIUM LIFTED

Oil drilling stocks pushed higher Tuesday in anticipation that the US Interior Department will make an announcement regarding its deepwater drilling moratorium.

"I think that the overall expectation is that it will get lifted and the market's been anticipating that for some time," said Virtus Investment Partner's Joe Terranova, adding he recommends owning the Oil Services HOLDRs exchange-traded fund off the news.

Terranova is also looking at Nabors Industries , which handles more land drilling. If NBR sells off, he recommends picking it up.

Steve Cortes, founder of Veracruz, isn't in oil services names, but said he would be tempted to fade them if he was. The temptation is there because he thinks crude oil itself isn't trade well. It had a decent start this month, but is still trading well below where the S&P is. He thinks crude is struggling because of Chinese tightening policies and wouldn't want to own the space because of that.

Brian Kelly, founder of Kanundrum Capital, said that even though the announcement on the moratorium is coming weeks ahead of schedule, the news isn't all that surprising. Furthermore, many drillers had moved their operations out of the Gulf to other parts of the world. Kelly likes Pioneer Natural Resources , which does a lot of on-shore drilling. The name sold off on the moratorium news, so he thinks now is the place to get in.

Trutina Financial's Patty Edwards likes ConocoPhillips because of it's dividend and how the company is integrated.

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Trader disclosure: On October 12, 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 (APA), (AAPL), (IBM), (OXY), (RSH), (UPL), (XBI), (JOYG), (C), (AXP), (SWN), (AGU), (EOG), (HES), (OIH), (ORCL), (SU), (VRTS), (FTO), (RIG), (PEP), (POT), (CRM), (CF), (VMW); Terranova Owns (TBT) Calls; Terranova Owns (FFIV) Puts; Terranova Owns (FCX) Put Spread; Terranova Owns (JOYG) Put Spread; Terranova Owns (GLD) Puts; Cortes is short (XLF); Cortes is short (BAC); Cortes is short (BIDU); Cortes is short Euro; Cortes is short Crude Oil; Cortes is short GoldFor 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 Brian Kelly
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (GPRE)
Accounts managed by Kanundrum Capital own (JJG)
Accounts managed by Kanundrum Capital own (SGG)
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 (AGM)
Accounts managed by Kanundrum Capital own (MSFT)
Accounts managed by Kanundrum Capital own (FRO)
Accounts managed by Kanundrum Capital own (GLGC)
Accounts managed by Kanundrum Capital own (GS)
Accounts managed by Kanundrum Capital own (JEF)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital own (UUP)
Accounts managed by Kanundrum Capital are short (HYG)
Accounts managed by Kanundrum Capital are short (SLF)
Accounts managed by Kanundrum Capital are short U.K. Pound
Accounts managed by Kanundrum Capital are short Mexican Peso

For Patty Edwards
Edwards Owns (GLD) For Clients
Edwards Owns (PGM) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (SH) For Clients
Edwards Owns (VXX) For Clients
Edwards Owns (SBUX) For Clients
Edwards Owns (INTC) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (GE) For Clients
Edwards Owns (JPM) For Clients

For David Rosenberg
***No Disclosures***

For Jeff deGraaf
***No Disclosures***


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