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Is The Bull Market Back On?

Both the Dow and S&P made modest gains on Tuesday, rebounding from their sharp losses of the previous session after better-than-expected results from Home Depot, Target and other big retailers encouraged investors to step back into the market.

Along with retail shares, financial and technology stocks were the day’s top advancers with the Nasdaq outpacing the other indexes, after RBC highlighted investment opportunities in the smartphone market.

Is the bull market back on?

I’m cautious, says Guy Adami. I don’t see a catalyst to take the market higher. And the technicals say to me that if the S&P closes below 950 we go down to 905 rather quickly.

Remember that markets don’t move up in a straight line, counters Joe Terranova. They work by finding support and finding resistance. I think support is 950 and resistance is 1010.

There’s no aggression on the sell side, adds Steve Grasso. It’s been slow and orderly selling. But I agree with Adami. Don’t get complacent. If we do breakdown, the move lower will probably be rather sharp.

It seems to me that more investors are holding put protection and as a result fear has not dominated trading, muses Pete Najarian. That says to me investors are somewhat at ease knowing they've put a limit on their downside.

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AFTER HOURS ACTION: HEWLETT-PACKARD

After hours Tuesday, Hewlett-Packard topped analysts' expectations by a penny when it reported third-quarter earnings of 91 cents a share.

"[It's] a bit of a sigh of relief," says Brent Bracelin, senior research analyst at Pacific Crest Securities. "It confirms that the IT fundamentals are improving. The worst is now behind HP."

The tech giant's profit dropped 19 percent in the latest quarter, as ongoing weakness in sales of personal computers and printer ink dragged down the results.

What’s the trade?

The run into earnings has been incredible, reminds Pete Najarian. Expecting it to go much higher seems ludicrous to me.

I’d also be taking profits, counsels Guy Adami.

If you believe that Hewlett-Packard can sustain $45 then stay with it, says Joe Terranova. If you don’t, get out.

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REBOUND: OIL SURGES NEARLY 4%

Oil settled above $69 a barrel on Tuesday, up more than 3 percent, as stronger-than-expected earnings results lifted equities and boosted optimism about the economy. Then, in the after hours action, oil touched $70.

What’s the trade?

If oil can sustains above $70 I'd go after the OIH , says Joe Terranova. But oil would need to sustain above $70 for the next 5 session to take out the double top.

I’d play the energy space with Apache, adds Guy Adami. If the stock gets above $86 and holds I’m a buyer.

I can’t agree with Apache which is a nat gas play, counters Terranova. I think if the spot price of nat gas breaks below $3 it could go to $2.

Across the board I like coal, adds Pete Najarian. It’s a sector that was flushed down the toilet.

If you think oil is going to $85 I’d get long OXY, counsels Steve Grasso.

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HOME DEPOT LEADS RETAIL HIGHER

Retailers were lifted higher on Tuesday by better-than-expected results from some of the nation’s largest stores. Home Depot , the biggest U.S. home improvement chain, beat estimates and raised its outlook, while profit at Target, the No. 2 U.S. retailer, came in better than Wall Street's consensus forecast.

What’s the retail trade?

I hope investors didn’t make the mistake of shorting Home Depot on the back of weaknessin Lowe's, muses Guy Adami. I’m not saying race out and buy Home Depot but I’m a buyer on dips.

If you want a retail play I’d look at Target, counsels Joe Terranova.

I like True Religion, adds Pete Najarian. At a 10 P/E I think it’s attractive.




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Trader disclosure: On Aug. 18th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Najarian Owns (HD) Sept. Call, Is Short (HD) Aug. Call; Najarian Owns (HPQ) Sept. Calls, Is Short (HPQ) Aug. Calls; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (TRLG) Calls; Najarian Owns (YHOO) Call Spread; Najarian Owns (BUCY) And Is Short (BUCY) Calls; Najarian Owns (INTC) And Is Short (INTC) Calls; Terranova Owns (AMZN), (STT), (MSFT), (KBHH); Terranova Owns (GOOG) Puts; Terranova Is Short (GOOG), (AVB); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Grasso Owns (ASTM), (BAC), (C), (COST), (PRST), (V), (WMT), (FAZ), (XLF)

NBC Universal Is The Parent Company Of CNBC

For Steve Grasso
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (MSFT)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NXST)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (ROK)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (TMK)
Stuart Frankel And Its Partners Own (TRV)
Stuart Frankel And Its Partners Own (XOM)
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)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO
Virtus Diversifier PHOLIO Owns (IGE)
Virtus Diversifier PHOLIO Owns (DBC)
Virtus Diversifier PHOLIO Owns (DBV)
Virtus Investment Partners Owns More Than 1% Of (ABD)
Virtus Investment Partners Owns More Than 1% Of (CAL)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBC)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (SKT)
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Virtus Investment Partners Owns More Than 1% Of (UA)
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For Brian Stutland
Stutland Owns (MDAS)
Stutland Owns (BAC)
Stutland Owns (SPY)

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Pali Capital Is A Market Maker In (NFLX), (CSTR), (NWS.A)

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