Monday's Rally: A New Breath of Confidence?


On a day that GM announced the fourth-largest American bankruptcy of all time, the bulls weren’t scared away, rather, the were encouraged by the economic news. With the Dow rallying over 200 points, and the S&P 500 gaining 2% to its highest levels since November.

In fact, the S&P 500 rose above its 200-day moving average for the first time since May 2008 on an intraday basis, sending a major technical signal to the market.


Strong Economic Data Drives Markets

Behind the rally was news from China that their PMI data came in better than expected and that US treasuries may have their interest rates in prime position for investment into equities.

Because of today’s strength, Jeff Macke is concerned that if you didn’t buy into the markets already, you may be coming in a little late in the rally. When you get a rally like that, you simply have to take some off the table, he says.

There are good things and bad things in this market, says Guy Adami, who points out that Honeywell continues to work, even with technical analysis. Pete Najarian is also a little put off by the technicals, pointing out that the S&P 500 has been around the 900 mark for some time and says people never believed it would break to the upside. Why did the Volatility Index shoot up today? Najarian thinks it’s because nobody believed what they were seeing.

If you’re looking for reasons that the markets were up today, Karen Finerman is seeing a reverse side to the fear that has been so prevalent in the markets – money that had simply been sitting on the sidelines is now being put in play because people are afraid of being left out of profits.


Strategies To Make Money Now

So what can you do with this market? In her firm, Karen Finerman of course always is hedging herself, and is moving some of her S&P hedging into puts to protect herself on the downside, but still be exposed to profits if the market continues upwards.

Jeff Macke has a more traditional strategy, where if a stock goes below a certain predetermined level, he will simply sell and take the profits. That’s trading 101, he says.

With the S&P 500 rising above its 200 day moving average for the first time in almost a year and a half, the one caveat, says Guy Adami, is to not let one day’s close above the 200 day fool you: it needs to close above this level for two days, if not an entire week.

But what outperformed in today’s rally? Pete Najarian points out that the financials didn’t participate in move upwards, as investors flocked to technologies and commodities, which outperformed today. Some of these names can continue higher if they harness this momentum.


Market Rallies Despite GM Bankruptcy

With all the news surrounding GM’s bankruptcy filing today, investors are playing the announcement in different ways. Jeff Macke, for instance, thinks the right play is for the company’s major competitor: Ford, which was up 6% on the day. Karen Finerman says that the road to bankruptcy has been happening in slow motion for some time now, and this is no big surprise to investors.

Another possible beneficiary of the GM bankruptcy is BorgWarner, along with O’Reilly, says Guy Adami.


Behind The Rally: Commodities

Commodity markets were also experiencing a bullish run today, with Oil off its 7 month high, along with Copper, Soybeans and Wheat are also hitting similar technical levels. Guy Adami points out that many companies heavily exposed to commodity are defying logic and have benefited nicely from market swings, like Freeport McMoran and US Steel , and for names like Potash and Agria who are running into resistance on the upside, you may want to consider taking some profits on now.

Karen Finerman agrees that now may be the time to take some money off the table, and she cites names like Transocean or Anadarkowho have had big moves of late.

To combat volatile commodity prices, Pete Najarian suggests names like ConocoPhillips and BP who have been outperforming competitors like ExxonMobil and Chevron , or names that have more diversification like Marathon who has better exposure to natural gas, tar sands and more.


Technologies Pushing The Market Higher

With positive data on chip sales and an upgrade for Yahoo! today, technologies were another force driving the market higher. Guy Adami points out Intel as moving out of its trading range above $16, and prior to this move offered numerous opportunities to buy when the stock was at depressed levels, although traders not already bought in may have missed the opportunity and for that reason he doesn’t like the stock.. A name he does like, however is Red Hat , who may be a possible takeover candidate.

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Trader disclosure: On June 1st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (WFC), (AAPL), (F), (TGT); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (TBT), (RIG), (NOK); Finerman Owns (TBT); Finerman's Firm And Finerman Own (BAC) Preferred Shares And Are Short (BAC); Finerman's Firm Owns (MRO); Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (IJR), (MDY), (SPY); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (USO); Najarian Owns (AMAT) Call Spread; Najarian Owns (BP) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (HIG) Put Spread; Najarian Owns (PFE); Najarian Owns (MOS; Najarian Owns (XHB) Call Spread; Najarian Owns (MRO) Calls; Najaria Owns (NBR) Calls with wires