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Halftime: Buy the Highs in Gold, Silver, other Metals?

Both the Dow and S&P advanced on Tuesday with materials stocks far and away the leaders in the S&P 500.

Those gains were largely generated by investor enthusiasm for metals.

Gold prices rose to all-time highs while the price of silver jumped to its highest level since 1980. Adding to the bullish sentiment,in a published report Freeport Richard Adkerson said China's thirst for copper was going to continue to be "significant."

Is this a case of buy the strength?

Instant Insights with the Fast Money traders

Joe Terranova is bullish metals. “I think investors need to be in the space,” he says. He’s particularly enthusiastic about copper and points not only to the comments made by Freeport McMoRan but also China's unsolicited bid for Equinox, a copper miner listed in Sydney and Toronto.

Steve Cortes is on the other side of that copper trade. He doesn’t think China’s strong appetite for copper is a sign of the nation's buildout.

Instead he points to published reports which suggest China is using copper as an investmenttool, “collateral to finance deals,” Cortes says. He calls the situation reminiscent of what homeowners in the US did; that is, they leveraged against a rising asset. “I think copper is in a dangerous spot.”

Brian Kelly says he’d short copper. He too is suspect of the end demand in China. And if you’re thinking about buying the highs in gold or silver he thinks you may be a little late to the game. If you want to get in at current levels, “do it with upside calls,” he counsels so you can limit your risk.

Patty Edwards is somewhere in between. “I don’t think I’d buy here, but I wouldn’t be short either,” she says.

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MARKET BUZZKILL: HOMEBUILDERS

Shares of KB Home took a dive after first quarter earnings came in worse than expected.

What's the trade?

At best Steve Cortes thinks housing goes sideways and more likely, he says, it takes a big dip lower. "The price action in lumber is confirming what we’re hearing from the builders and that’s a lack of construction," he says.

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TOPPING THE TAPE: TECH

Tech topped the tape on Tuesday after Texas Instruments dropped $6.5 billion or $25/ share for National Semi.

Will M&A continue to lift tech?

Joe Terranova is cautious of the technology sector over the next few months. "I believe in the tech story," he says, "but in 2011 I think gains come from August into the end of the year." If you want to play the space sooner, he also says, "Take a second look after we hear earnings from the sector later in the month."

Patty Edwards appears to be equally unenthusiastic. "I always look at fundamentals," she says. "Technology isn’t going away but it’s also not overly exciting."

Brian Kelly reminds the desk he's short the SMH, "because we typically see a slowdown in the summer."

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NASDAQ REBALANCE

Shares of Apple slipped early Tuesday but later bounced higher, after Nasdaq announced plans to rebalance the Nasdaq 100, forcing some money managers to sell the iPhone maker's stock.

Once the rebalancing is effective on May 2, the projected weight of Apple will be 12.33 percent of the index compared with its current 20.49 percent, Nasdaq OMX said.

The rebalancing requires funds which track the Nasdaq 100 including the PowerShares QQQ Trust to also adjust their holdings.

Conversely, Microsoft's weighting in the index will rise, and its shares gained as a result.

NASDAQ 100 KEY SHIFTS
Current Projected
Apple 20.49% 12.33%
Google 4.2% 5.8%
Intel 1.75% 4.20%
Microsoft 3.4% 8.3%
Oracle 3.3% 6.7%

What’s the trade?

Joe Terranova is cautious of Apple but not because of the rebalance. He says price action has been concerning recently with the stock making a series of lower highs. "I’m holding puts," he reveals.

Brian Kelly thinks the sell-off in Apple will present a buying opportunity at some point, "but for the next 30 days the structural change will generate forced selling," he says.

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CITI UPGRADED BY BERNSTEIN

Shares of Citi popped on Tuesday after Bernstein upgraded the stock saying it's currently too cheap.

What's the trade?

Steve Cortes just can't get behind banks. He's focussed on the the yield curve which is becoming less steep. And he says, "There’s just not that much of an appetite for lending."

Brian Kelly reminds the desk that he's short the financials . "76% of the time when oil goes up the yield curve flattens. Not good for banks," he says.




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Trader disclosure: On April 5, 2011, 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 (VRTS), (C), (JPM), (UPL), (PBR), (TCK), (BAX), (XOM), (AKAM), (CVI) and (CNQ). Steve Cortes Owns (SDY). Steve Cortes Owns (EXC). Steve Steve Cortes Owns (SO). Steve Cortes Is Long USD, Is Short EUR. Steve Cortes Is Short (F). Steve Cortes Is Short (BAC). Steve Cortes Is Short Soybeans. Steve Cortes Is Short Wheat. Steve Cortes Is Short (CBOE).
Peter Boockvar Owns Oil, Silver and Gold.

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

JOE TERRANOVA
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of DOMINO'S PIZZA UK & IRL PLC

PATTY EDWARDS
Edwards Owns (AAPL) For Clients
Edwards Owns (GLD) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (ORCL) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (SLV) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (TSLA) For Clients
Edwards Owns (XLB) For Clients
Edwards Owns (PCL) For Clients

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (EBAY)
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (PGH)
Accounts Managed By Kanundrum Capital Own (VLO)
Accounts Managed By Kanundrum Capital Own (DBA)
Accounts Managed By Kanundrum Capital Are Long Gold Futures
Accounts Managed By Kanundrum Capital Are Long Silver Futures
Accounts Managed By Kanundrum Capital Are Long Natural Gas Futures
Accounts Managed By Kanundrum Capital Are Long Oil Futures
Accounts Managed By Kanundrum Capital Are Long Wheat Futures
Accounts Managed By Kanundrum Capital Are Long Euro
Accounts Managed By Kanundrum Capital Are Short Yen
Accounts Managed By Kanundrum Capital Are Short Copper
Accounts Managed By Kanundrum Capital Are Short (XLF)
Accounts Managed By Kanundrum Capital Are Short (SMH)

ADAM JONAS
Morgan Stanley Owned 1% Or More Of (MTOR), (TSLA) As Of Feb. 28, 2011
Morgan Stanley Managed Or Co-Managed Public Or 144A Offering Of (BWA), (F), (GM), (GT), (TEN), (TSLA), (TRW) In Last 12 Months
Morgan Stanley Has Recieved Investment Banking Compensation In Last 12 Months From (BWA), (F), (GM), (GT), (MTOR), (TEN), (TSLA), (TRW)
Morgan Stanley Expects To Recieve/Seek Investment Banking Compensation From (BWA), (F), (GM), (GT), (JCI), (TEN), (TSLA) In Next 3 Months
Morgan Stanley Has Recieved Non-Investment Banking Compensation In Last 12 Months From (BA), (F), (GM), (GT), (LEA), (MTOR), (TEN)
Morgan Stanley Has Provided In Past 12 Months Or Is Providing Investment Banking Services To Or Has Investment Banking Client Relationship With (BWA), (F), (GM), (GT), (JCI), (MTOR), (TEN), (TSLA), (TRW)
Morgan Stanley Has Provided Or Is Providing Non-Investment Baning, Securities-Related Services To And/Or Has Entered Agreement To Provided Services Or Has Client Relationship With (BWA), (F), (GM), (GT), (JCI), (LEA), (MTOR), (TEN)
An Employee, Director Or Consultant Of Morgan Stanley Is A Director Of (F)
Morgan Stanley & Co. Is A Market Maker In (AN), (BWA), (CTB), (F), (GM), (GT), (GPI), (JCI), (LEA), (MGA), (MTOR), (PAG), (TEN), (TSLA), (TRW)



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