For the second day in a row, investors barreled into stocks as a weaker dollar drove commodity prices higher.
Miners such as Newmont led the charge after gold hit an all time high surging above $1,040 per ounce.
The precious metal has benefited from a convergence of factors including the dollar's decline, technical buying momentum and worries about potential inflation as central banks struggle to emerge from unprecedented fiscal stimulus measures.
Gold was also buoyed by chatter, which was later denied, that OPEC was considering ending the dollar's role in the pricing of oil.
Adding to the bullish momentum, Australia became the first major country to raise interest rates, fanning hopes that the recovery is gaining strength.
On top of that investors seem to be anticipating relatively strong earnings reports for the July-September quarter, which begin arriving this week.
What’s should you be watching?
I’m watching Australia’s move on interest rates, says Tim Seymour. And the fact that’s there’s chatter that OPEC would consider nominating oil in something other than dollars is interesting to me. Keep your eye on the dollar , he adds. I expect the dollar to break lower and as a result the rally should have some legs.
Investors who think this is an inflation story are incorrect, says Joe Terranova. It’s about the continued fight against deflation. The government is keeping easy monetary policy in place and as a result they’ve been successful in reflating the economy.
I’ve been bearish on this market, reminds Guy Adami, but there’s no fighting this tape.
Volume was back today and it was back in a big way, says Pete Najarian. I’m seeing a lot of speculation on upside calls.
TOPPING THE TAPE: GOLD MINERS STRIKE HIGHER
Gold miners helped lead Tuesday’s rally with Newmont Mining and Gold Fields among the day’s biggest gainers.
What’s the trade?
The volume of calls trading in the gold miners suggests companies such as Gold Fields could move higher, explains Pete Najarian.
If you want to be long gold, then I’d be long gold, not the miners counsels Guy Adami. There are too many other risks that accompany the miners.
I agree with Guy, says Joe Terranova. I’d play gold with the GLD. The technicals and fundamentals look like they’re coming together and I’m bullish.
I too expect gold to move higher in the long-term, says Tim Seymour. And other precious metals are probably worth a look. I’d play platinum with PTM or SWC .
TOPPING THE TAPE: OIL TOPS $71 THEN SLIDES
Crude oil gave up much of its gains Tuesday afternoon, in tandem with Wall Street stock prices which came off early highs. Earlier, crude futures rose to near $72 a barrel as a weaker dollar prompted investors to hedge and place bets on commodities.
“At this point, there is really not a lot of fundamentals to support this high price for crude, so it's having a real hard time making big gains stick," explains Mark Waggoner, president of Excel Futures.
What’s the energy trade?
I expect to see oil trading higher, says Tim Seymour. If you're looking to trade the non-dollar chatter about oil, I’d look at Petrobras , he counsels.
I also expect to see oil trade higher through the end of the year, adds Joe Terranova. I wouldn’t be surprised to see oil around $90 by the end of the year. To me the play is oil services names such as National-Oilwell Varco and Cameron .
I’m watching Apache , adds Guy Adami. I think it’s probably headed to $105.
In the space, I like Chevron , says Pete Najarian. It’s really been lagging.
MARKET BUZZKILL: GOLDMAN UP BARELY
Largely considered a market tell shares of Goldman Sachs hit a 52-week high on Tuesday then reversed direction.
Earlier in the day Calyon Securities upgraded Goldman Sachs from Underperform to Outperform and raised their price target on the stock to $230 from $194.
What’s the trade?
Goldman really started to roll over around $189, says Pete Najarian, but then it bounced. I’m watching the XLF , he adds. I’ve noticed a great deal of call buying in the ETF.
In the space I’m watching Jefferies , says Guy Adami. I like the stock fundamentally but now that the stock has touched $29, if you're not already in it I think you're late to this trade.
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Trader disclosure: On Oct. 6th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (NOV), (MOS), (JPM); Terranova Owns Dec. Gold Futures; Terranova Owns March Sugar Futures; Terranova Owns Crude Futures; Terranova Is Short (CCL), (WYNN), (GRMN); Seymour Owns (AAPL), (STD), (EEM), (RIMM), (BAC), (MSFT), (SBUX), (VIP), (RTP); Najarian Owns (C) Calls; Najarian Owns (BRCD) Call Spread; Najarian Owns (DELL) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (LAZ) & Short (LAZ) Calls & Long (LAZ) Put Spread; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (MYL) Calls; Najarian Owns (TEVA); Najarian Owns (ORCL) & Short (ORCL) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (WFC) Puts; Najarian Owns (YHOO) Call Spread ; Najarian Short (AA) Calls
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