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Dow Hits News 2009 High

The Dow Jones industrial average climbed to its highest close in 14 months on Tuesday as a weak dollar boosted natural resource companies' shares and economic data reinforced hopes for a sustainable recovery.

Sentiment also got a lift as concerns receded about the impact of Dubai's debt trouble after news that Dubai World planned to restructure about $26 billion in debt.

What must you know to trade this market?

It seems to me the market's ascent is all about the chase for performance, says Joe Terranova. I expect the phenomenon to continue through the month.

But Goldman and Apple were down on the day, counters Guy Adami. They're two bellwethers that typically lead. That makes me scratch my head.

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CHART OF THE DAY: LOST DECADE

Looking at the decade, Howard Silverblatt from S&P says there are 22 days left before we put the first negative decade in S&P 500 history into the books.

As of Monday, we need a 12.14% return in December to keep it from happening.

It says to me that this is a traders market, muses Guy Adami. The only way to have made money over the past decade was to pick winners and losers.

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TOPPING THE TAPE: METALS LEAD COMMODITIES HIGHER

It appears the weak dollar trade is back on, with the U.S. dollar index falling as anxiety over Dubai abates and limits the greenback's appeal as a safe-haven.

In fact, the dollar's decline bolstered shares of commodity-oriented companies including U.S. Steel and Alcoa; two of the day’s notable advancers.

What must you know?

Shorting any commodity trade right now is ludicrous, says Joe Terranova.

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GOLD TOPS $1,200

Gold hit record highs above $1,200 an ounce on Tuesday as dollar weakness drove buying of the metal as an alternative asset.

Prices could push further through the $1,200 an ounce level to new record highs if the dollar continued to weaken, analysts say.

Significant downside risks to the price were unlikely to be seen before January, adds Michael Lewis, head of commodities research at Deutsche Bank, with seasonal factors affecting the dollar likely to drive gold higher in the short term.

What’s the trade?

It costs about $450 an ounce for miners to pull gold out of the ground, explains Steve Grasso. The miners are way in the money.

Right now being long the miners works, says Guy Adami, but I can assure you that if the market goes down the miners will go with it.

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TOPPING THE TAPE: AG STOCKS RIP HIGHER

The traders are again taking a close look at ag stocks after Morgan Stanley said it believes the bias keeps shifting to the upside for the ag products group – and after Broadpoint raised its price target for Potash, Mosaic and Agrium.

Should you buy here?

Corn and wheat futures are trading above their 100-day moving average, says Joe Terranova. That’s bullish for the companies mentioned above.

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TOPPING THE TAPE: SPECIALTY RETAILERS

The RTH closed higher on Tuesday after preliminary results suggested that "Cyber Monday" sales could set a a new record, with rivals Amazon and Walmart poised to be the big winners.

"From a growth perspective, Walmart could potentially be the winner, but from a dollars perspective we still think Amazon will trump it," says Jefferies analyst Youssef Squali, who estimates that Amazon will report about 30 percent sales growth in its holiday fourth quarter.

What’s the trade?

I’m starting to think we shouldn’t make judgments about retail off Black Friday sales, muses Karen Finerman. Now we need to wait until Cyber Monday. It seems we’re seeing a sea change - a shift in the way people are spending. However, with that said, it’s probably too early to make a call as to whether retail will do well this holiday season.

In the space I’m bearish on specialty retailers such as Abercrombie , says Guy Adami

I like Visa and Mastercard, says Joe Terranova.

Be careful of Guess?, counsels Steve Grasso. I think there’s a lot of risk to the downside if the stock doesn't trade above $45.

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MARKET BUZZKILL: FINANCIALS CAN’T KEEP UP

The traders are closely watching the action in bank stocks, which appear to be underperforming the market.

What’s the trade?

If you’re looking for a trade in this space, I’d look at Jeffereies, says Guy Adami.

I think Goldman is getting attractive, says Karen Finerman. If it drops another $7, I think it’s a buy.

If we see a significant rally in the dollar I think money rotates into the financials, says Joe Terranova, and if that happens, Goldman and JPMorgan are poised well.

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FED READY TO PULL AWAY 'PUNCH BOWL'?

The U.S. Federal Reserve must be prepared to raise interest rates if needed before the jobless rate has fallen to an "acceptable level", or risk losing its inflation-fighting credibility, a senior Fed official said on Tuesday.

Philadelphia Federal Reserve Bank President Charles Plosser said he has become more confident in the sustainability of the U.S. economic recovery even once government stimulus fades, and stressed the Fed must take a forward-looking approach.

Meanwhile, once again the U.S. dollar fell against the euro and a basket of currencies.

What does CNBC’s Rick Santelli has to say about the dollar trade? Watch the video now and find out.

You can find our interview with Santelli at the end of the Word on the Street video.



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Trader disclosure: On Dec. 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; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (SU), (GOOG); Grasso Owns (AAPL), (BA), (BAC), (C), (WMT), (V); Finerrman Owns (GLNG); Finerman's Firm Owns (GLNG), (PLCE), (MSFT), (WMT), (PDE), (RIG), (TGT); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Calls; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (USO), (UNG)

For Steve Grasso:
Stuart Frankel Owns (NWS)
Stuart Frankel Owns (PDE)
Stuart Frankel Owns (SDS)
Stuart Frankel Owns (YHOO)
Stuart Frankel is Short (QQQQ)


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