Bulls continued to run Thursday, pushing stocks higher despite signs that the economy may be facing some serious headwinds.
U.S. claims for unemployment benefits rose last week to their highest level since January. Also, separate data showed U.S. economic growth slowed more than forecast in the first three months of the year.
But investors shrugged off the negative economic news and instead hit the buy button – believing comments made by Fed chairman Ben Bernanke earlier in the week remained far more market moving.
Specifically, the Street is focused on Bernanke’s words that suggested the Fed will keep rates low – and the dollar weak - for an extended period – now defined as at least two more FOMC meetings.
"That takes us out to the autumn at least,” explains strategic investor Dennis Gartman.
Should you bet that a weak dollar pushes commodities and commodity related stocks higher – and ultimately the entire stock market?
Not so fast, according to trader Jon Najarian.
He’s spotted unusual options action in the Dollar ETF, which he says is not bearish. “I’m seeing big sellers of the June 21 puts,” which he takes as a sign investors expect the dollar to stabilize. “They’re more or less saying they don’t think it’s going a lot lower.”
Pro trader Stephen Weiss is also on board. “I’m long the UUP,” he says. “I still think the dollar is going to work its way higher. There’s no more negative news that can come out of it.”
Weiss explains that the Fed’s easy money policy is starting to rankle the EU and China and he’s betting it won’t be long before both entities pressure the US Fed to raise rates.
If Najarian and Weiss are right, the dollar's decline may not be a foregone conclusion as many investors are assuming.
However, trader Brian Kelly is on the other side of the bet. He says he’s short dollars and long euro and would add to that trade. “Bernanke opened the door for the dollar to go lower or at the very least said I’m not going to support it. That means the dollar is going lower.”
“If there's going to be even a minor uptick in inflation investors will put money to work in assets that will beat inflation and that makes the stock market the place to be. The outcome is a much higher stock market.”
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OIL: GIVE AND TAKE
On Thursday, the Fast traders were also closely watching the action in crude which turned lower in volatile a tape, after rising more than $1 a barrel.
"U.S. crude stalled under $114 and Brent before it got to $127 and the dollar pared some of its losses so crude came right back down," explains Chris Dillman, analyst at Tradition Energy in a Reuters interview.
Weakness largely stemmed from the latest economic data, which showed economic growth of the United States slowed in the first quarter as higher food and gasoline prices sent inflation rising to its fastest pace in 2-1/2 years.
What’s the trade?
Jon Najarian says his favorite area in energy is exploration, and would recommend playing Halliburton , Schlumberger or Transocean .
Brian Kelly thinks the trade is long refiners because “spreads are wide.”
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SILVER SOARS
Silver soared to an all-time high Thursday nearly hitting $50 an ounce before paring some gains. The level eclipses the white metal’s peak price hit when the Hunt brothers sought to corner the silver market three decades ago.
What’s the trade?
Brian Kelly remains bullish. He’s long 48 calls in SLV.
Jon Najarian has spotted options investors on the other side of that bet. “There’s been a lot of interest in the ZSL – the double short,” he says. He adds it’s not clear if the position is a bet lower or a hedge against long position in stocks such as Silver Wheaton or PanAmerican.
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TOPPING THE TAPE: RETAIL
It might seem counterintuitive but investors pushedsome retail stocks higher on Thursday, despite surging commodities.
How should you trade it?
Trader Stephen Weiss suggests only playing the space with high end names. “Coach and Tiffany continue to do well,” he says. “But I’d avoid lower end due to high cost of energy.”
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EARNINGS GRINDER: EBAY
Shares of eBay also landed on the trader radar, after the company topped estimates in part due to growth in their PayPal division.
What’s the trade?
Brian Kelly reveals that he’s long eBay and intend to remain long for an extended period. “I plan to hold it for 6-months to a year,” he says. “I like the growth story in PayPal.”
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Trader disclosure: On April 28, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss owns (AKAM), (CSX), (VZ), (GDX), (UUP), (TBT), (DVN), (COP), (QCOM), (DE), (JPM), (MSFT), (BTU), Weiss owns (TXN) and (NIHD). Stephen Weiss is short (X). Stephen Weiss is short (AKS). Jon Najarian owns (AMSC), is short (AMSC) calls. Jon Najarian owns (BBBB), is short (BBBB) calls. Jon Najarian owns (AET), is short (AET) calls. Jon Najarian owns (MS), is short (MS) calls. Jon Najarian owns (VHC), is short (VHC) calls. Jon Najarian owns (UA), is short (UA) calls. Jon Najarian is long (ZSL) calls. Steve Grasso owns (AMD), (ASTM), (BA), (BAC), (C), (CSCO), (D), (JPM), (LIT), (LPX), (MHY), (NDAQ), (PFE) and (PRST).
Brian Kelly
Accounts Managed By Brian Kelly Capital own (GLS)
Accounts Managed By Brian Kelly Capital own (SLV)
Accounts Managed By Brian Kelly Capital own (AGO)
Accounts Managed By Brian Kelly Capital own (BCSI)
Accounts Managed By Brian Kelly Capital own (CTXS)
Accounts Managed By Brian Kelly Capital own (DBA)
Accounts Managed By Brian Kelly Capital own (EBAY)
Accounts Managed By Brian Kelly Capital own (GDXJ)
Accounts Managed By Brian Kelly Capital own (JNPR)
Accounts Managed By Brian Kelly Capital own (LMT)
Accounts Managed By Brian Kelly Capital own (RVBD)
Accounts Managed By Brian Kelly Capital own (PWRD)
Accounts Managed By Brian Kelly Capital own gold futures
Accounts Managed By Brian Kelly Capital own wheat futures
Accounts Managed By Brian Kelly Capital own soybeans futures
Accounts Managed By Brian Kelly Capital own natural gas futures
Steve Grasso
Stuart Frankel & Co and its partners own (CSCO)
Stuart Frankel & Co and its partners own (CUBA)
Stuart Frankel & Co and its partners own (GERN)
Stuart Frankel & Co and its partners own (HPQ)
Stuart Frankel & Co and its partners own (HSPO)
Stuart Frankel & Co and its partners own (MSFT)
Stuart Frankel & Co and its partners own (MU)
Stuart Frankel & Co and its partners own (NYX)
Stuart Frankel & Co and its partners own (PFE)
Stuart Frankel & Co and its partners own (PRST)
Stuart Frankel & Co and its partners own (SDS)
Stuart Frankel & Co and its partners own (UAL)
Stuart Frankel & Co and its partners own (XRX)
Stuart Frankel & Co and its partners are short (QQQQ)
Stuart Frankel & Co and its partners are short (AAPL)
Nicole Miller Regan
Disclosures for universe of: Nicole Miller Regan
(BBRG) and (CCSC) are Piper Jaffray Investment banking clients during the past 12 months.
Piper Jaffray expects to have (BBRG) as an investment banking clients within the next three months.
Piper Jaffray is a market maker in (BAGL), (BBRG), (BJRI), (CAKE), (CPKI),(MSSR), (PFCB), (PNRA), (RRGB), (RUTH), (SBUX), (SONC)
Piper Jaffray usually provides bids and offers for the securities of the following companies and will, from time to time, buy and sell the securities of these companies on a principal basis: CCSC, CMG, DRI, EAT, MCD, MRT
Heather Bellini
**pending disclosures
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