The Dow jumped more than 100 points on Tuesday as regional manufacturing data and solid earnings from Merck and Abercrombie fueled investor optimism.
However it's the action in the currency markets that has really captured the attention of the Fast Money traders.
New plans by EU leaders to control the crisis in Greece generated a tailwind for the bulls; it gave the euro a boost against the greenback; putting weak dollar trades back in play.
With the euro moving higher, is it time to bet big that the global commodity trade is back on?
Instant Insights with the Fast Money traders
If you believe that EU has put a backstop on Greece, then I think you can play the global growth trade, says Tim Seymour. I do think that demand is returning to the commodities space. In India we’re hearing there’s a real shortage of fertilizer. But you have to trade carefully. Demand isn’t consistent across the whole space. Copper still seems challenged at $3.10. And make no mistake about the euro / dollar move – the move is euro short covering.
As far as I'm concerned, the situation in Europe is bad and getting worse, adds veteran trader Gary Kaminksy. What’s happening with the dollar on Tuesday is a short term phenomenon. I think the dollar will continue to strengthen long-term. Place your bets accordingly.
If you’re a short term trader, I think we have a trade-able rally in the euro , counsels Brian Kelly of Kanundrum. But I’m using the strength to add to my short position.
I don’t think strength in commodities is a function of the dollar; instead I think it’s demand driven, muses Jon Najarian. If you're looking for a play, I’m watching $75 in Freeport , he says. If it can violate through to the upside I see a very good trade there.
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FAST FLASH: BARCLAYS SURGING AN AMAZING 10%
Banks are another group blamed for correction fears, but it appears the sector is coming back with Barclays surging higher on Tuesday.
Is this reason to buy the financials?
Barclays may be up on Tuesday, but I think English banks as well as other banks across Europe will have trouble as the EU weakens further, says Gary Kaminksy. I can't get on board.
I’d take profits in this space, counsels Jon Najarian. I’m reducing my position in UBS and Barclays. Over the next 30 days I think these stocks have a tough time.
I disagree on Barclays, says Tim Seymour. They didn’t take a bailout so I don’t think they’re facing the same headwinds. They don’t have the same regulatory pressure on them.
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WHO'S EXPOSED TO GREECE?
A report in the New York Timesand carried by CNBC.com suggests that Wall Street helped cover up Greek debts, fueling crisis.
The report points the finger squarely at Goldman Sachs.
"One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels," writes the Times.
Considering the developments, what other American banks may have big exposure to Greece?
It’s possible that BofA bought into the problem via their acquisition of Merrill Lynch, explains Bernstein analyst Brad Hintz. Also Morgan Stanley and Citi are believed to have exposure. If credit default spreads open up it’s going to impact them.
But with that said, I would not sell out of my position in any of these stocks, adds Hintz. I think this is going to be a short term issue.
If you're looking for a short term trade and believe the US is stronger than Europe, you might consider a pairs trade, he adds. I’d consider long BofA and go shortDeutsche against it.
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BIG MONEY: BIG BLOCK TRADE IN AUTODESK
Autodesk is on the Fast Money trader radar after Goldman upgraded the stock to 'Buy' from 'Neutral' and increased its price target to $30, from $27.
What’s the trade?
I think this is a great play going forward, says Jon Najarian.
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THE OBAMA TRADE
Promising "this is only the beginning," President Barack Obama announced more than $8 billion in federal loan guarantees Tuesday for the construction of the first nuclear power plant in the United States in nearly three decades.
On the news shares of and uranium producer Cameco jumped.
What’s the trade?
I’d keep an eye on Cameco as well as Jacobs, McDermott and USEC , says Tim Seymour.
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TAKE YOUR POSITION: WHOLE FOODS
With Whole Foods scheduled to report earnings on Tuesday after the bell, how should you trade?
If you want to play the space, I’d do it with Supervalu , says Brian Kelly.
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CALL THE CLOSE
Tim Seymour: I’m watching 1089 as a critical level in the S&P.
Jon Najarian: I’m a buyer into the close.
Brian Kelly: I’m a buyer.
Gary Kaminsky: I think the market will hold but expect euro weakness to return Wednesday.
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TAKE YOUR POSITION: NAHB
Housing stocks could be big movers on Tuesday with the February NAHB Housing Market Index due this afternoon – according to estimates it’s expected to fall 1 point to 14.
What must you know to trade the space?
Find out from Hovnanian CEO Ara Hovnanian. Watch the video now!
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Trader disclosure: On February 16, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman's Firm And Finerman Own (GGWPQ); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred, (BAC) Leaps; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO); Finerman Owns (AAPL); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (KFT); Finerman's Firm Owns (NOK), (TGT), (WMT); Seymour Owns (AAPL), (AA), (CCJ), (FXE), (INC). (VALE), (X); Terranova Owns (AAPL), (GOOG), (RIMM), (JPM), (QCOM), (IBM), (MSFT), (DELL), (EMC), (PALM); Terranova Is Long Dec. 2010 Crude Oil Futures; Terranova Is Long Dec. 2011 Crude Oil Futures; Grasso Owns (ABK), (AAPL), (ASTM), (BAC), (BGP), (C), (COST), (CSCO), (FAZ), (PFE), (PRST), (WMT), (V); Seymour Owns (X); Jon Najarian Owns (AMR), (BAC), (BCS), (C), (GS), (HD), (MS), (SPG), (UBS), (TRA), (WFMI)
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Stuart Frankel & Co. Inc And Its Partners Own (ABX)
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For Brad Hintz
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