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Pro Traders: Don't Go Rushing into Market Here

Despite rage in the Middle East and air strikes in Libya, optimism prevailed on Wall Street with bulls driving stocks higher. The action suggests that Japan was a much bigger drag on the market, at least in the short-term.

In fact, the S&P shot sharply higher after a top U.S. Nuclear Regulatory Commission official said the nuclear crisis in Japan is "on the verge of stabilizing.”

On top of that, billionaire investor Warren Buffett said that he believes Japan's devastating earthquake was the kind of extraordinary event that creates a buying opportunity for shares in Japanese companies.

Adding to the bullish tailwinds, AT&T said it would buy wireless rival T-Mobile, sparking expectations of more deal activity.

Are Monday's gains a sign that the market wants to break higher? How should you position now?

Instant Insights with the Fast Money traders

It appears the Fast Money traders are mostly cautious.

From the floor of the NYSE, Fast trader Steve Grasso says he’s seeing investors chase the gains. However, he doesn’t recommend doing the same. “It’s a good spot to pause,” he says. “It’s a good spot to hedge your bets."

He thinks the S&P has trouble at 1303, the pre-quake level. “I wouldn’t go rushing into the market here,” he counsels.

However Grasso doesn’t think sellers will push the market a lot lower, either. “1294 and 1287 both look like levels of support.”

Trader Stephen Weiss also expects the rally to pause but for fundamental reasons. “Once earnings season begins, guidance from tech could take a hit because of Japan,” he says.

Brian Kelly is also skeptical, but largely because of Dr. Copper which slipped on weaker-than-expected U.S. existing home sales. Also China's February imports of refined copper hit a 27-month low due to high stocks of the metal.

The red metal is sending anything but bullish signals, he says. In fact, he sees the weakness as the proverbial canary in the coal mine. “It paints a picture of a weaker global economy.”

Pete Najarian is very focused on action in Vix. With Wall Street's favorite measure of fear receding, he sees investors growing more comfortable with the market.

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THE BANK TRADE

The traders are closely watching the financials after the Fed cleared the way for some banks to resume dividend payments on Friday. (Click here for more details)

What’s the trade?

Brian Kelly is cautious of the space. With the yield curve getting flatter, and the Treasury announcing plans to sell mortgage backed securities he thinks the entire sector is challenged. He’s short the XLF and considering getting shorter.

Pete Najarian has Goldman and Morgan on the radar because they’re both outperforming the money center banks.

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M&A TRADE: AT&T

The traders had wireless stocks on the radar after AT&T inked a deal to acquire T-Mobile for $39 billion. If the acquisition passes regulatory scrutiny, AT&T will become the largest US wireless carrier.

Specifically, the transaction will increase AT&T's U.S. market share to an estimated 43 percent from 32 percent, putting it well ahead of Verizon Wireless's current 34.5 percent share of U.S. mobile customers, according to Tolaga Research estimates.

What’s the trade?

Stephen Weiss thinks the deal leaves Sprint out in the cold. "It’s a two horse race now," he says.

Options investors are on the other side of that trade, according to Pete Najarian. He's seeing a larger than usual volume in the 5.5 Sprint May calls. That suggests that at least some investors expect the stock to move higher by the third week in May.

Bernstein analyst Craig Moffett says the acquisition is a really good deal for AT&T. In fact, if the deal passes government scrutiny as it stands now, he thinks AT&T effectively gets T-Mobile for free.

Find out why he says that. Watch the video now!



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Trader disclosure: On Mar. 21, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Steve Grasso Owns (AMD), (ASTM), (BA), (BAC), (C), (CSCO), (D), (JPM), (LIT), (LPX) (MHY), (MU), (NDAQ), (PFE) and (PRST). Stephen Weiss owns (FAS), (JON), (HBAN), (VZ), (QCOM), (CF), (MEE) (CNX), (COP), (DVN), (EMC) and (MSFT). Pete Najarian is Long (AAPL) and (AAPL) Call Spreads. Pete Najarian is Long (BAC) Calls. Pete Najarian is Long (PMCS) Calls. Pete Najarian is Long (BIG) Call Spreads. Pete Najarian is Long (AKAM). Pete Najarian is Long ( C ). Pete Najarian is Long (KEY). Pete Najarian is Long (HPQ). Pete Najarian is Long (HK). Pete Najarian is Long (PAL). Pete Najarian is Long (PFE). Pete Najarian is Long (TCK)
Pete Najarian is Long (TEVA). Pete Najarian is Long (MS).

Comcast Is The Parent Company Of CNBC
Comcast Is The Parent Company Of NBCUniversal
GE Owns 49% Of NBCUniversal
GE Owns 49% Of CNBC

Stephen Grasso
Stuart Frankel & Co and It’s Partners Own (CSCO)
Stuart Frankel & Co and It’s Partners Own (CUBA)
Stuart Frankel & Co and It’s Partners Own (GE)
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 (msft)
Stuart Frankel & Co and It’s Partners Own (NYX)
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 (SDS)
Stuart Frankel & Co and It’s Partners Own (UAL)
Stuart Frankel & Co and It’s Partners Own (XRX)
Stuart Frankel & Co and It’s Partners Are Short (QQQQ)
Stuart Frankel & Co and it’s partners Are Short (AAPL)

Brian Kelly
Accounts Managed by Kelly Are Long (GLD)
Accounts Managed by Kelly Are Long (SLV)
Accounts Managed by Kelly Are Long (XLF) Puts
Accounts Managed by Kelly Are Long Gold
Accounts Managed by Kelly Are Long Silver
Accounts Managed by Kelly Are Long (TLT)
Accounts Managed by Kelly Are Long Treasury Bonds
Accounts Managed by Kelly Are Long Corn
Accounts Managed by Kelly Are Long Wheat
Accounts Managed by Kelly Are Long Soybeans
Accounts Managed by Kelly Are Long (VLO)
Accounts Managed by Kelly Are Long (TSO)
Accounts Managed by Kelly Are Long (DBA)
Accounts Managed by Kelly Are Short S&P 500
Accounts Managed by Kelly Are Short Copper
Accounts Managed by Kelly Are Short (FCX)
Accounts Managed by Kelly Are Short (LOW)
Accounts Managed by Kelly Are Short (XLF)
Accounts Managed by Kelly Are Short (IXG)
Accounts Managed by Kelly Are Short (XRT)

Craig Moffett
**Waiting on disclosures from Craig Moffett



CNBC.com with wires.

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