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Are Traders Betting On A Boom?

We went from talk of doom and gloom to expectations of an economic boom in less than a week.

Just take a look at Wednesday’s market action – investors shook off concerns about the euro and instead bet big on a global recovery with Deere , Caterpillar and other industrials making noteworthy gains.

It's enough to make your head spin.

How should you play it?

Strategy Session with the Fast Money traders

Industrials are up over 6% for the year, explains Steve Grasso of Stuart Frankel. That seems to suggest a solid belief that a global recovery is underway. In fact, the industrials sector is now the best performing sector of the S&P this year. But not so fast. Industrials were one of the most shorted sectors. Some of the move higher is covering. Professional money managers don’t like to be wrong twice.

When I look at the charts of commodity stocks I think they look fantastic, says Tim Seymour. I’m long.
But, the Financial Times says that Goldman, Morgan and others are buying warehouses to store precious metals, explains Brian Kelly of Kanundrum. I take that to mean demand isn’t there right now.

I take that to mean they’re betting on much higher prices in the future, counters Tim Seymour.

I have a hard time trusting the action in commodities, adds Karen Finerman. In the past when the price of copper went up it was because it was going to be used - that was bullish. But if it's landing in a warehouse, I can't help but wonder won't supply flood the market at some point down the road.

Speaking of copper, I’m watching the chart of copper producer Freeport McMoRan , says Todd Gordon. $81.15 to $82.15 looks like resistance.

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TOPPING THE TAPE: TRANSPORTS

If you think global growth is bouncing back, then you've got to get products from point "a" to point "b".

Should you get bullish transports?

I’m not a believer in this market, counsels Guy Adami. I don’t think we’re out of the woods. If you want to play transportation, Goldman initiated coverage of CSX with a sell rating, he adds. If you’re in this stock, I’d take profits.

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EAR TO THE WALL: ATTACK BY REGULATORS

Specifics about the much anticipated Volcker Plan hit the wires on Wednesday and took down financials near the close of trading.

The worry?

The new regulations could crimp profits in the financials broadly and not just at Goldman Sachs .

CNBC’s news partner Reuters obtained a copy of a summary of the administration's draft language. Below are excerpts and are subject to change.

* PROPRIETARY TRADING BAN

Banking firms would be banned from "purchasing or selling, or otherwise acquiring and disposing of, stocks, bonds, options, commodities, derivatives, or other financial instruments for the institution's or company's own trading book, and not on behalf of a customer, as part of market making activities, or otherwise in connection with or in facilitation of a customer relationship.

* HEDGE FUND, PRIVATE EQUITY FUND RESTRICTIONS

Banking firms would be banned from investing in or sponsoring hedge funds, private equity funds, or other similar funds that are exempt from federal registration.

The prohibition on sponsoring these private funds would include acting as a managing member or general partner of a fund, controlling the management of a fund, or sharing the firm's name with a fund.

* PRIVATE FUND LIMITS

Banking firms would continue to be able to serve as investment adviser to private funds, but would be prohibited from lending, providing prime brokerage services, or engaging in any transactions that provide support to a private fund advised by the banking firm.

*CAPITAL REQUIREMENTS

Non-bank firms would be allowed to continue to engage in proprietary trading and hedge fund and private equity activities, but would be subjected to tough consolidated supervision, more stringent capital and liquidity requirements, and be required to provide more information to the market about their risks.

Any firm that is identified for heightened supervision would be subject to additional capital and quantitative limits on these activities.

MARKET SHARE CAP

Financial firms would not be allowed to grow by acquisition above 10 percent of the liabilities of the financial system.

The financial firm would not be allowed to acquire another company if the resulting firm would have more than 10 percent of the liabilities of the financial system.



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Trader disclosure: On March 3rd, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Cortes Is Long Soybeans; Cortes Is Short Treasuries Through Futures And Puts; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (USO), (UNG); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (GGWPQ); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (MIL), (MIL) Calls; Finerman's Firm Owns (OSIP); Finerman's Firm Owns (TGT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (WMT); Grasso Owns (AAPL), (ABK), (ASTM), (BA), (BAC), (BGP), (C), (COST), (CSCO), (PFE), (PRST), (V), (WMT), (FAZ); Seymour Owns (CHL)

GE Is The Parent Company Of CNBC

For Steve Grasso:
Stuart Frankel & Co. Inc. And Its Partners Own (ABK)
Stuart Frankel & Co. Inc. And Its Partners Own (CUBA)
Stuart Frankel & Co. Inc. And Its Partners Own (GERN)
Stuart Frankel & Co. Inc. And Its Partners Own (GLG)
Stuart Frankel & Co. Inc. And Its Partners Own (HSPO)
Stuart Frankel & Co. Inc. And Its Partners Own (NWS.A)
Stuart Frankel & Co. Inc. And Its Partners Own (NXST)
Stuart Frankel & Co. Inc. And Its Partners Own (NYX)
Stuart Frankel & Co. Inc. And Its Partners Own (PDE)
Stuart Frankel & Co. Inc. And Its Partners Own (PRST)
Stuart Frankel & Co. Inc. And Its Partners Own (RDC)
Stuart Frankel & Co. Inc. And Its Partners Own (TLM)
Stuart Frankel & Co. Inc. And Its Partners Own (TOL)
Stuart Frankel & Co. Inc. And Its Partners Own (XRX)
Stuart Frankel & Co. Inc. And Its Partners Own (SDS)
Stuart Frankel & Co. Inc. And Its Partners Are Short (QQQQ)
Stuart Frankel & Co. Inc. And Its Partners Are Short (CL)

For Brian Kelly
Kanundrum Capital Owns (TM)

For Jared Levy
Peak6 Investments Owns And Has An Options Position In (AET)
Peak6 Investments Owns And Has An Options Position In (BAC)
Peak6 Investments Owns And Has An Options Position In (C)
Peak6 Investments Owns And Has An Options Position In (DE)
Peak6 Investments Owns And Has An Options Position In (GLD)
Peak6 Investments Owns And Has An Options Position In (GS)
Peak6 Investments Owns And Has An Options Position In (JOYG)
Peak6 Investments Owns And Has An Options Position In (MON)
Peak6 Investments Owns And Has An Options Position In (MOS)
Peak6 Investments Owns And Has An Options Position In (OIH)
Peak6 Investments Owns And Has An Options Position In (UNH)
Peak6 Investments Owns And Has An Options Position In (USO)
Peak6 Investments Owns And Has An Options Position In (WFC)
Peak6 Investments Is Short And Has An Options Position In (AGU)
Peak6 Investments Is Short And Has An Options Position In (EXPE)
Peak6 Investments Is Short And Has An Options Position In (FCX)
Peak6 Investments Is Short And Has An Options Position In (HUM)
Peak6 Investments Is Short And Has An Options Position In (JPM)
Peak6 Investments Is Short And Has An Options Position In (MS)
Peak6 Investments Is Short And Has An Options Position In (NVLS)
Peak6 Investments Is Short And Has An Options Position In (POT)
Peak6 Investments Is Short And Has An Options Position In (QQQQ)
Peak6 Investments Is Short And Has An Options Position In (XLF)
Peak6 Investments Is Short And Has An Options Position In SPX
Peak6 Investments Is Short And Has An Options Position In NDX
Peak6 Investments Is Short And Has An Options Position In RUT


CNBC.com with wires