Halftime: Are Calls for $100 Oil, Wrong?

On Tuesday, investors were again trying to determine if the bulls could continue to push stocks considerably higher.

And again, the wild action in the oil landed in the spotlight with potential weakness in energy among the rally’s biggest threats.

Energy traded lower after Beijing raised interest rates by 25 basis points, It’s China’s second increase in six weeks and the move triggered worry that in its quest to temper inflation Beijing could stymie growth.

Meanwhile, analysts at JPMorgan have warned of the potential for downside in the energy space through the rest of the year. They think oil averages $89 this year.

What should you make of it? How should you position now?

Instant Insights with the Fast Money traders

Esteemed energy trader Addison Armstrong of Tradition Energy shares JPMorgan’s view. He tells the desk that the best quarter for energy will likely be the first quarter. Although he wouldn’t be surprised to see oil test $100, especially if the crisis in the Middle East heats up again, later in the year he thinks the oil trade cools off. “Overall I think it’s going to be a down year for oil. Our average forecast is $88.25 a barrel.”

Fast trader Steve Cortes is also skeptical. He says that the forecast from Addison Armstrong and JPMorgan for lower oil are the exception, not the rule. As a result he finds the long oil trade too crowded. “I am short," he says. But aside from his contrarian view Cortes also thinks there's a fundamental reason to be bearish oil. “EM is not trading well and that does not bode well for oil.” (In other words, he takes weakness in EM as a signal growth in the emerging markets is coooling off.)

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Brian Kelly is more positive. “To short oil is to short the global recovery,” he says. "Also supplies are tight. The last oil market report showed supplies were in a deficit. That’s not a commodity I’d want to short.

Joe Terranova feels very differently. He sees opportunity in energy. He’s particularly focused on refineries after Valero temporarily took its Port Arthur, Texas, refinery off line. “I think the refiner trade is the trade investors should focus on,” he says. “And I’d focus on mid-continent refiners such as FTO , CVI and Western Refinery," he says.

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GOLD SPIKE

Gold spiked on Tuesday due to China's rate hike and perhaps due to word that JPMorgan began accepting bullion as collateral for trading.

What’s the trade?

Trader Patty Edwards is long gold and silver for clients. "I expect the global economy will get stronger and that should be bullish for both metals."

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PIECE OF APPLE

With Apple again hitting new record highs, analysts scrambled to increase their price targets.

What’s the trade?

Although some investors may worry that the Street is too bullish, Joe Terranova isn't one of them. He says the powerful fundamentals remain unchanged. “I think the path for Apple is higher.”

"My target for Apple is $450," adds Jon Najarian. "I think the Verizon iPhone and the second version of the iPad are two good reasons to own the stock."

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UNUSUAL ACTIVITY: BAXTER INTERNATIONAL

Jon Najarian has spotted unusual activity in Baxter International.

A larger than usual volume in the Baxter August 55 calls leads Najarian to speculate that this stock could make a move higher but not necessarily in the short term.

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Trader disclosure: On Feb. 8, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova owns (VRTS), (C), (UPL), (GM), (PEP), (LTD), (CVI), (SU) and (CNQ). Terranova owns (POT) puts. Steve Cortes owns (SVU). Steve Cortes owns (K). Steve Cortes owns (SWY). Steve Cortes owns (PM). Steve Cortes owns (MO). Steve Cortes is short (LVS). Steve Cortes is short the British Pound. Steve Cortes is short the Australian Dollar. Steve Cortes is short Crude. Steve Cortes is short (XLE) vs. S&P long. Jon Najarian owns (BAX) calls

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JOE TERRANOVA
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (DPUKF)

PATTY EDWARDS
Edwards owns (ALK) for clients
Edwards owns (SPY) for clients
Edwards owns (XLB) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (BP) for clients
Edwards owns (BA) for clients
Edwards owns (AMZN) for clients
Edwards owns (V) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (GOOG) for clients
Edwards owns (VZ) for clients
Edwards owns (MSFT) for clients
Edwards owns (C) for clients
Edwards owns (GE) for clients
Edwards owns (TGT) for clients
Edwards owns (MCD) for clients
Edwards owns (DIS) for clients
Edwards owns (TEVA) for clients

BRIAN KELLY
Accounts Managed by Kanundrum Capital Own (ATW)
Accounts Managed by Kanundrum Capital Own (BAC)
Accounts Managed by Kanundrum Capital Own (DAL)
Accounts Managed by Kanundrum Capital Own (EBAY)
Accounts Managed by Kanundrum Capital Own (GLD)
Accounts Managed by Kanundrum Capital Own (IAU)
Accounts Managed by Kanundrum Capital Own (MCP)
Accounts Managed by Kanundrum Capital Own (MS)
Accounts Managed by Kanundrum Capital Own (RDC)
Accounts Managed by Kanundrum Capital Own (SLV)
Accounts Managed by Kanundrum Capital Own (DRYS)
Accounts Managed by Kanundrum Capital Own (JEF)
Accounts Managed by Kanundrum Capital Own The U.S. Dollar
Accounts Managed by Kanundrum Capital Are Short the Australian Dollar
Accounts Managed by Kanundrum Capital Are Short The Yen

ADDISON ARMSTRONG
Armstrong has no disclosures

CNBC.com with wires.