Stocks shed their losses on Tuesday and traded higher after the European markets closed off their lows and the euro climbed toward positive territory.
Consumer and tech stocks were among the biggest winners as investors turned cautiously optimistic.
However skepticism wasn’t gone from the market entirely, especially in the financial services sector which lagged, as investors questioned whether a $1 trillion bailout could stem Europe's debt crisis in a meaningful way.
In fact US financials including Morgan Stanley and Citigroup followed their European counter-parts lower, but weakness at home was largely triggered by a proposal to ban proprietary trading activity at large banks.
How should you be positioned now?
Strategy Session with the Fast Money traders
The Vix has come in significantly, reminds Pete Najarian. It tells me that fear is coming out of the market, quickly. I believe it's a sign that options investors like the way events are shaping up in Europe. As a result, I think the market’s a buy.
1165 had been an important technical level and the market broke above it, adds Steve Grasso of Stuart Frankel. Now I’m watching 1172 on the S&P, he says. That’s the 50-day moving average. It may the true 'tell' - as a level of real resistance.
Patterns in the charts suggest to me that the market wants to go to 1162 on the S&P, adds Oppenheimer’s Carter Worth. That’s lower from where the market was at lunchtime but higher on the day.
If you’re trading this market, I’d make my bets with options to help limit downside risk, adds Jeff Tomasulo of SMB. And with so much uncertainty, I’d hedge bets on both the upside and downside.
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GOLD RALLY
Gold touched a new 2010 high on Tuesday as investors resumed their flight to safety. Meanwhile, gold miners have also made gains with the Gold Miners ETF sharply higher on the session.
What’s the trade?
If you compare charts of gold to the US dollar, British pound or euro, the patterns in gold look best to me, says Carter Worth. I think gold has plenty of room to run.
I’m watching miners, says Pete Najarian. They’ve really lagged when compared to the metal itself. But they’re finally just started to climb. The high volume of calls traded in the miners suggests these stocks still have room to run.
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OIL EXECS ON CAP HILL
On Tuesday, Wall Street was preparing for the blame game to begin on Capitol Hill as the heads of BP , Transocean and Halliburton all testified before Congress about the oil rig explosion and who bears responsibility.
What’s the trade?
I’m a buyer of BP, says Steve Grasso. It seems like some of the selling in this space is overdone.
I’m also a buyer in BP, adds Pete Najarian. I agree that the stock has been punished enough and this is probably a good entry level.
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TAKE YOUR POSITION: DISNEY
The traders are keeping a close eye on Disney which is scheduled to report earnings after the bell on Tuesday.
What should you be looking for?
Investors will largely be looking for signs to see if ad spending is coming back.
Because Disney touches many parts of the economy through its merchandise, theme parks, movie studios, cable channels and more -- what they say could confirm or deny the health of the media sector.
Analysts, on average, are expecting earnings of 45 cents per share on revenue of $8.39 billion, according to a survey by Thomson Reuters.
What’s the trade?
It seems the fundamentals in media are incredibly bullish, says RBC analyst David Bank. I’m a buyer of Disney. I think 2011 looks good for this company.
*Check out our entire interview with Bank. Watch the video above.
Read More:
> Disney Earnings Preview
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CLASH OF THE TITANS: APPLE
CNBC is continuing our coverage of American Titans, Tuesday, with a focus on Apple .
Can this tech titan continue to outperform for investors or is it poised to give back some gains?
Charts in Apple are impressive, says Carter Worth. I’d stay long Apple, he counsels.
I’d look at getting long some chips, says Pete Najarian. I think that’s a solid second derivative trade.
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TRADE TO GO: BIOTECH
Biotech names topped the tape on Tuesday after Gilead authorized a program, for the second time this year, to repurchase up to $5 billion in common stock through May 2013.
What’s the trade?
At $6 or $7 off the highs, I’d look at Teva, says Pete Najarian.
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CALL THE CLOSE:
Pete Najarian: I think the market’s a buy.
Steve Grasso: I’m a buyer.
Carter Worth: I think we’re heading to 1162 on the S&P.
Jeff Tomasulo: I’d hedge my bets and both buy and sell.
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Trader disclosure: On May 11, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Tomasulo Owns (VXX); Tomasulo Is Long VIX Options; Tomasulo Owns (GLD); Tomasulo Is Long Spot Gold Futures; Tomasulo Owns (VZ); Tomasulo Owns (CAT) Puts; Najarian Owns (KGC) Call Spread; Najarian Owns (XOM) Call Spread; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (YHOO) Call Spread; Najarian Owns (C) Calls; Najarian Owns (BP), Is Short (BP) Calls; Najarian Owns (TEVA); Najarian Owned (BP), Was Short (BP) Calls Today; Grasso Owns (BP), (NDAQ), (DYN), (LPX), (ASTM), (ABK), (BAC), (BGP), (C), (CVGI), (JPM), (NEM), (PRST), (PFE), (BA), (T), (CSCO), (X); Terranova Owns Gold; Terranova Owns (GLD), (RIG), (SWN), (PFE); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Kelly Owns (FXE) Puts; Kelly Owns (FXB) Puts
For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (DRYS)
For Steve Grasso
Stuart Frankel And Its Partners Own (AMR)
Stuart Frankel And Its Partners Own (BAX)
Stuart Frankel And Its Partners Own (DYN)
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (DYN)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (HSPO)
Stuart Frankel And Its Partners Own (MERC)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PALM)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PFE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)
Stuart Frankel And Its Partners Are Short (AAPL)
For Brian Kelly
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (GFI)
Kanundrum Capital Owns (AUY)
Kanundrum Capital Owns (TLT)
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Pound
Kanundrum Capital Is Short Swiss Franc
Kanundrum Capital Is Short (USO)
Kanundrum Capital Is Short (DE)
Kanundrum Capital Is Short (NUE)
Kanundrum Capital Is Short (XOM)
Kanundrum Capital Is Short (HES)
Kanundrum Capital Is Short (XLE)
Kanundrum Capital Is Short (XLK)
Kanundrum Capital Is Short (XLI)
Kanundrum Capital Is Short (XLY)
Kanundrum Capital Is Short (FXI)
Kanundrum Capital Is Short (EWH)
Kanundrum Capital Is Short (RSX)
Kanundrum Capital Is Short (XLF)
Kanundrum Capital Is Short (EXPE)
Kanundrum Capital Is Short (IBM)
Kanundrum Capital Is Short (SU)
Kanundrum Capital Is Short (CME)
Kanundrum Capital Is Short (DE)
Kanundrum Capital Is Short (FDX)
Kanundrum Capital Is Short (AA)
Kanundrum Capital Is Short (CLF)
For Anthony Scaramucci
Scaramucci Owns (AAPL), Skybridge Owns (AAPL)
Scaramucci Owns (BAC), Skybridge Owns (BAC)
Scaramucci Owns (DIS), Skybridge Owns (DIS)
Scaramucci Owns (GS), Skybridge Owns (GS)
Scaramucci Owns (JPM), Skybridge Owns (JPM)
Scaramucci Is Long S&P 500, Skybridge Is Long S&P 500
For Peter Schiff
Schiff Owns Gold
Schiff Owns Gold For Clients
For David Bank
RBC Capital Markets Provides (DIS) With Non-Securities Services
RBC Capital Markets Has Provided (DIS) With Non-Securities Services In The
Past 12 Months
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