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Gains in Nat Gas Mostly Short Covering: Pro Traders

On Tuesday energy bulls were practically giddy after nat gas finally showed signs of life.

The spot price rose sharply on Tuesday with chatter suggesting that both technical and fundamentals were turning bullish.

Looking at technicals “we crossed some moving averages,” explains top energy trader Dan Dicker. As for fundamentals, “Chesapeake said it had curtailed drilling and planned to shut in production of marginal gas fields.”

"Developments appear to have created a temporary floor," he adds.

However, despite these bullish catalysts, Dicker thinks the move higher is only temporary. "I don't think it's long lasting," he says.

That's because Dicker believes most of the gains are due to short sellers who are now covering their positions. Trader Joe Terranova concurs. “It’s a heavily shorted space and shorts are being unwound.”

Conversely, Dicker thinks the oil market above $100 is ‘very sticky.” He believes the growing unrest in the Middle East and a shut down in Sudan will give this market a floor.

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Trader disclosure: On Feb. 14, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova is long VRTS; Terranova is long LQD; Terranova is long SWN; Terranova is long CSCO; Terranova is long TBT; Terranova is long SBUX; Terranova is long FXE; Terranova is long OXY; Terranova is long MCD; Terranova is long JOY; Terranova is long AXP; Terranova is long EMC; Terranova is long IBM; Terranova is long UNG puts; Terranova is long short AAPL put spreads; Baker is long AAPL; Baker is long JPM; Baker is long AMZN; Baker is long RL; Weiss is long QCOM; Weiss is long BRCM; Weiss is long WLP; Weiss is long HK; Weiss is long EUO; Weiss is long CSC; Weiss is long MOS; Weiss is long NS; Weiss is long ETP; Weiss is short AAPL puts; Weiss is short AMZN puts; Weiss is long MT; Weiss is long BTU; Weiss is long MDRX;

For Dan Dicker
Dicker owns UPL

For Willie Williams
No disclosure

For Ken Sena
No disclosures

For David Gober
As of January 31, 2012, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: Amazon.com, Liberty Interactive Group, Office Depot Inc., Under Armour Inc..

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In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Advance Auto Parts, Amazon.com, AutoZone Inc., Bed Bath & Beyond Inc., Best Buy Co. Inc, Liberty Interactive Group, Lowe's Companies, Inc., Nordstrom, O'Reilly Automotive Inc., Office Depot Inc., Ralph Lauren Corp, Staples, Inc., The Home Depot, Inc..

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For Dennis Gartman
Gartman is long S&P 500 futures
Gartman is long gold
Gartman is short Euro

For Peter Misek
I, Peter Misek, CFA, CPA, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report.


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