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Rally May Signal Time to Add Portfolio Risk: Pros

Tuesday, 16 Oct 2012 | 5:33 PM ET

As the Dow Jones Industrial Average closed within 5 percent of its record high, trading the rally poses a question for investors of which direction to take, Joe Terranova of Virtus Investment Partners said Tuesday on CNBC.

On “Fast Money,” he said, “Do you go for has been working, or do you look at this rebound and say, ‘Not only am I going to buy what has been working, but I’m going to go after some of these underperformers, which today were the leaders in the market?’”

Terranova said he added to technology, such as NXP Semiconductor and Sandisk, Corning and a top consumer discretionary name, Starbucks.

“I thought the market was going to break down. It didn’t, so I was just forced to partake in some of this action. So I bought the high beta. I bought the risk. I put it on. I’m ready to jump,” said Stuart Frankel’s Steve Grasso.

“It looked as if we were going to test 1,400 in the S&P,” he added. “We didn’t, and it shocked the heck out of a lot of people.”

Grasso noted that Cliffs Natural Resources traded up 7 percent for the day.

“People are making individual bets,” he said, adding that put on risk, buying coal and remaining long Wynn Resorts .

“To me, I think you have to add to things that you think make it through this cycle and close high on the year,” said Dan Nathan of Risk Reversal.

Trader disclosure: On Oct. 16, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s “Fast Money” were owned by the “Fast Money” traders: Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long CSCO; Tim Seymour is long YHOO; Tim Seymour is long SBUX; Tim Seymour is long VALE; Dan Nathan is long AAPL OCT 700 CALLS; Dan Nathan is long C NOV 36/34 PUT SPREAD; Dan Nathan is long GS OCT/NOV 115 PUT CALENDAR; Dan Nathan is long JPM OCT/NOV 41 PUT CALENDAR; Dan Nathan is long MS JAN 10/5 PUT SPREAD; Dan Nathan is long YHOO JAN 17.5 CALLS; Dan Nathan is long FB NOV/JAN 22 CALL SPREAD; Dan Nathan is long WFM 95/85/75 PUT FLY; Joe Terranova is long VRTS; Joe Terranova is long WFM; Joe Terranova is long SBUX; Joe Terranova is long NFLX; Joe Terranova is long SWN; Joe Terranova is long TRV; Joe Terranova is long VZ; Joe Terranova is long XOM; Joe Terranova is long CVX; Joe Terranova is long COP; Joe Terranova is long SU; Joe Terranova is long CSTR; Joe Terranova is long NXPI; Joe Terranova is long EMC; Joe Terranova is long GS; Joe Terranova is long CHKP; Joe Terranova is long SNDK; Joe Terranova is long GLW; Steve Grasso is long AET; Steve Grasso is long ASTM; Steve Grasso is long AUO; Steve Grasso is long BA; Steve Grasso is long F; Steve Grasso is long LF; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long MPC; Steve Grasso is long P; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long WYNN;

For Charles Grom
COSTCO: Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from Costco Wholesale Corporation within the past year; DOLLAR GENERAL: Dollar General Corp is an Investment Banking client of Deutsche Bank Securities; GNC: GNC Holdings, Inc. is an Investment Banking client of Deutsche Bank Securities; JCP: JC Penney Company Inc is an Investment Banking client of Deutsche Bank Securities; Deutsche Bank and/or its affiliates own 1% or more of JC Penney Company common equity securities; SAFEWAY: Deutsche Bank (and/or affiliates) own 1% or more of Safeway Inc common equity securities; Safeway Inc is an Investment Banking client of Deutsche Bank Securities; Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from Safeway Inc; Safeway Inc has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services; SUPERVALU: Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from Supervalu Inc; TARGET: Target Corporation is an Investment Banking client of Deutsche Bank Securities; Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from Target Corporation within the past year; Target Corporation has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.

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