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How Are Pros Profiting Amid the Market Schizophrenia?

Thursday, 23 Aug 2012 | 5:36 PM ET

Stocks dropped Thursday after St Louis Fed president James Bullard tossed cold water on the QE3 rally.

Yet PIMCO’s Bill Gross still says QE3 is a done deal.

How can you possibly make money in a schizophrenic market such as this?

The Fast Money pros all say that if there’s one takeaway, it’s that there’s no way to tell what’s next for the market.

Terranova's Shake The Tree Correction
Joe Terranova, chief market strategist for Virtus, is looking for something he calls a "Shake the Tree Correction." What does he mean and how is he trading it?

If you’re bearish and you want to short the market, trader Joe Terranova says you have to short single stocks where the secular story has changed. He points to Staples, Wendy’s and Advanced Micro Devices.

Stephen Weiss says JC Penny is probably the best short out there, but on the same thesis.

All the pros, however, are cautious of shorting the market broadly.

“It’s too hard to make broad market calls in this environment,” explains trader Karen Finerman. “If anything, I'll be looking for long opportunities in a sell-off.”

Joe Terranova agrees. In the event of a sell-off he suggests watching a few areas of the market that he finds attractive. “On a pull back I’d be acquiring technology names and I’d look at consumer discretionary next.”

But at the end of the day, Terranova says with the market at a 4 year high he believes it's looking forward to something. "It just feels like investors are expecting some kind of compromise on the issue of the fiscal cliff."



Posted by CNBC's Lee Brodie

Read More from Fast Money:


> Fast Money’s Favorite Dividend Yielders
> Top Secrets of Pro Traders
> 10 Top Stocks for the Long-Term Investor






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Trader disclosure: On August 23, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders;
Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long MSFT; Karen Finerman is long GOOG; Karen Finerman is long M; Karen Finerman is short SPY; Karen Finerman is short MDY; Karen Finerman is short IWM; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long WFC; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long XLF; Josh Brown is long WMT; Josh Brown is long TGT; Josh Brown is long SMBL; Steve Weiss is long QCOM; Steve Weiss is long UGL; Steve Weiss is short AAPL PUTS; Steve Weiss is short VALE; Joe Terranova is long VRTS; Joe Terranova is long SBUX; Joe Terranova is long WFM; Joe Terranova is long AAPL; Joe Terranova is long CSTR; Joe Terranova is long CHKP; Joe Terranova is long EMC; Joe Terranova is long NXPI; Joe Terranova is long AAPL SEPT. $640 PUTS


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