The change in sentiment is likely due from commentary from the Fed, Kelly adds, which has suggested if anything bad happens they will pump more money into the economy. That’s bad for the dollar and good for equities.
However, I can’t completely take off my bear suit, says Brian Kelly. We're also looking at higher oil prices. That may be good for the oil bulls but $90 a barrel won’t be good for the consumer.
Having just popped 8% does the S&P tack on another 10%? The odds of that are very low, adds Oppenheimer's Carter Worth. When stocks recover losses of this magnitude people who had lost money -- and have now recaptured those losses -- tend to be sellers.
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DOES VIX CONFIRM MARKET GAINS?
In an attempt to understand if the market moves are sustainable, OptionMonster Jon Najarian suggests taking a look at action in the Vix over the past few quarters.
On Monday the Vix fell below its 200-day moving average, suggesting some of the near-term fear on the market has diminished.
Since the beginning of May, the VIX has closed below its 200-day MA only twice, both times occurring last week.
"The more times a level is tested, it heightens the significance of the move when you finally do break through," explains Richard Ross, global technical strategist at Auerbach Grayson in a Reuters interview.
What’s the bottom line?
I’m bullish, says OptionMonster Jon Najarian. For all those guys wearing bear suits - it’s got to be getting kind of hot.
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CHART OF THE DAY: OIL BREAKS ABOVE $80
The traders are keeping a close eye on oil which moved sharply higher on Monday and closed above $80 for the first time in 3 months.
What must you know?
Oil is generally a seasonal trade and this is when investors buy crude for the forth quarter, explains Joe Terranova. I think the next stop for oil is $90.
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KINROSS GOLD ACQUISITION
In extended trade shares of Kinross tumbled about 3% after published reports said that the gold miner intended to acquire Red Back Mining in an all-stock deal valued at $7.1 billion.
The combined company would have 10 mines and four development projects in eight countries.
What’s the gold trade, now?
I think it's time to get into the miners, says Tim Seymour. If resources start to rally I think gold becomes attractive as a hedge against inflation and that benefits miners.
I covered my gold short and went long gold , says Brian Kelly. On any hint that the dollar is getting much weaker, then long gold is my trade.
That may be true but I'm seeing clients sell out of their gold position and put that capital into higher beta plays, counters Steve Grasso.
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UNDER THE RADAR: FERTILIZER AND GRAIN STOCKS
With wheat sitting at 23 month highs, is the fertilizer trade the best under the radar commodities play?
What’s the trade?
Potash and Mosaic have both exploded through the 200-day, says Tim Seymour. These are both charts that I think are now buys.
One cautionary note, is that Potash has gone from $84 to $103 in a matter of weeks, counters Zach Karabell on the Halftime Report. There could be more upside but I’d be careful of the momentum trade turning.
Ag tends to be highly correlated to oil reminds, Joe Terranova. Keep that in mind.
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AFTER HOURS ACTION: HERBAL LIFE
Shares of Herbalife popped 10% in extended trade after the company released second-quarter results that outpaced market expectations, boosted by robust volume growth.
The company also raised its quarterly cash dividend by 25 percent to 25 cents. Herbalife, which sells weight-management, nutrition and personal care products, expects third-quarter earnings of between 99 cents and $1.03 a share, and sees sales rising 13 percent to 15 percent in the quarter.
What's the trade?
I don't really like this stock, says Tim Seymour.
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CHARTOLOGY WITH CARTER WORTH
As we mentioned above, strong gains in the market aren't wildy bullish to technical analyst Carter Worth. At current levels he doesn't think stocks have much more room to run.
Get all the details. See his full analysis. Watch the video now!
