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If Dollar Rallies, Will Oil Bulls Stumble? Maybe Not.

Despite a strong earnings report from Johnson & Johnson and stronger than expected housing starts, both the Dow and S&P were little changed on Tuesday.

It appears investors are growing more worried that the flood of earnings reports in the days and weeks ahead could show that the economy remains quite fragile.

In an environment like this, the Fast Money traders always recommend taking a long hard look at what’s working – and on Tuesday that was oil.

Crude made a bullish reversal Tuesday and moved higher as the dollar pared gains made, just one day earlier.

However, many investors including Dennis Gartman and Anthony Scaramucci speculate the dollar might not decline much further, after S&P downgraded our nation’s outlook. Gartman thinks lawmakers will use the downgrade as impetus to become more fiscally responsible.

Is the dollar near a bottom, and is the oil trade over?

Instant Insights with the Fast Money traders

Trader Joe Terranova does not expect the dollar to begin a climb higher. He expects the pattern of dollar weakness to continue for some time. “I don’t think we see a reversal to the upside,” he says.

In fact, he says it’s already priced into the fixed income markets and foreign exchange markets. “I think the depreciation of the dollar continues and that’s bullish for commodities,” he says.

Trader Steve Cortes is on the other side of that trade. He’s bullish the US dollar. “I think it does better from here.” That’s because Cortes thinks the S&P negative outlook “puts the nail in the coffin for investors hoping for a QE3 and without that I think the dollar recovers.”

But that doesn’t mean he thinks oil is in trouble. He doesn’t.

“The fact that are bullets and rockets are flying in the Mideast says to me you have to be a buyer of oil. I don’t think (gains in oil) are about dollar at all.” In other words he thinks the geo-political issues in the Mideast are a much greater catalyst for oil than dollar weakness.

Trader Brian Kelly largely agrees. Even if you’re expecting dollar appreciation, “You just can’t short the oil market with what’s happening in the Mideast,” he says.

Trader Patty Edwards is also bullish oil; “The Mideast is by no means, done,” she says. However rather than play the commodity itself, she says, “I prefer the oil services stocks."

GM SINKING LIKE A ROCK

The traders also have shares of GM on the radar with the stock dropping sharply below its IPO price.

What’s the trade?

Trader Patty Edwards concedes it may be a value but it’s not a value she’d play. “In the space, I’d prefer to put money to work in Paccar ,” she says.

Steve Cortes tells the desk that he’s shortFord. “There’s enormous over capacity in the auto market,” he says. Also platinum and palladium are not trading great and they’re key components in auto making.”



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Trader disclosure: On April 19, 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); Terranova Owns (JPM); Terranova Owns (V); Terranova Owns (BX); Terranova Owns (UPL); Terranova Owns (HOC); Terranova Owns (TCK); Terranova Owns (BAX); Terranova Owns (OXY); Terranova Owns (XOM); Terranova Owns (AKAM); Cortes Owns (SDY): Cortes Owns (EXC): Cortes Owns (RIMM); Cortes Is Short (BAC); Cortes Is Short (F); Cortes Is Short Nasdaq Futures; Cortes Is Short EUR/CHF; Cortes Owns (GS)

For Patty Edwards
Edwards Owns (GLD) For Clients
Edwards Owns (JNJ) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (QCOM) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (SLV) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (GLW) For Clients

For 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

For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (AGO)
Accounts Managed By Brian Kelly Capital Own (CLNE)
Accounts Managed By Brian Kelly Capital Own (EWP)
Accounts Managed By Brian Kelly Capital Own (GLD)
Accounts Managed By Brian Kelly Capital Own (SLV)
Accounts Managed By Brian Kelly Capital Own (JJG)
Accounts Managed By Brian Kelly Capital Own (DBA)
Accounts Managed By Brian Kelly Capital Own (TSN)
Accounts Managed By Brian Kelly Capital Own (MCP) Calls
Accounts Managed By Brian Kelly Capital Own VIX Calls
Accounts Managed By Brian Kelly Capital Own (SPY) Puts
Accounts Managed By Brian Kelly Capital Own (CLF) Puts
Accounts Managed By Brian Kelly Capital Are Long Wheat
Accounts Managed By Brian Kelly Capital Are Long Soybeans
Accounts Managed By Brian Kelly Capital Are Long Natural Gas
Accounts Managed By Brian Kelly Capital Are Short (XLF)
Accounts Managed By Brian Kelly Capital Are Short (SMH)

For Craig Berger
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (INTC)
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (AMD)
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (NVDA)
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (MRVL)
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (MXIM)






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