Halftime: Smart Traders Taking Profits In Oil?

Again, the Fast traders were closely watching the tight correlation between the S&P and the price of oil on Tuesday; this time stocks jumped as oil prices receded.

Largely two catalysts dragged down oil: Published reports suggested OPEC may schedule an emerging meeting and boost production for the first time in more than two years.

Also White House economist Austan Goolsbee said on Tuesday that tapping the U.S. emergency oil stockpile "is an option we are considering."

"The SPR exists to deal with large international supply disruptions. That is why we created it," he said.

The Street took developments as a signal that both the White House and OPEC intended to become much more aggressive in capping prices.

Is the smart trade to take profits in oil?

Instant Insights with the Fast Money traders

Joe Terranova remains bullish oil. “I’m not ready to say abandon the overweight trade. I don’t know if price appreciation is over,” he says on CNBC's Halftime Report.

Terranova thinks the latest inventory numbers could generate buying later in the week. “Stay long. I still think that’s the right trade,” he says.

Steve Cortes also tells the desk to stay long oil. “I’m impressed how well oil reacted to somewhat bearish headlines,” he explains. And he points to the price action to support his thesis. “Yes oil is sharply off its highs but it’s also sharply off its overnight lows. As as long as it stays above $100 I’m staying long.”

Jon Najarian is looking out the curve. “And when we look out the curve we’re not seeing huge upward pricing of contracts going out.” In other words prices are not ramping. “It’s looking flat. (Although he didn't say it outright on TV, that suggests he does not expect oil prices to go much higher.)

Strategic investor Dennis Gartman expects oil prices to recede. On Monday's Fast at 5 he calls oil prices 'sporty.' “I have a hard time thinking oil prices go any higher than where they are right now,” he says.

Patty Edwards is looking at rising oil prices and their impact on retailers. Although US sales for McDonald's weren't what the Street had hoped for, she doesn't think high gas really hurts the value restaurants. "Over the long-term if you're looking at how gas prices will impact consumers, people will stay away from those mid-range restaurants but not McDonald's," she says.

Steve Cortes is more focused on auto makers. “Looking back to January 25^th when the Cairo unrest really began, from that time the XRT is up,” he says. However, on the flip side he says auto makers are being punished. “Ford was very recently at $19 and is trading at $14 today and I think a large part of that is due to oil prices.”

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CHART OF THE DAY: DOLLAR ETF

It seems nearly everyone on Wall Street had one eye on the potential trend line break in the dollar ETF. But the dollar tested the key 22 level and then bounced.

Are we due for a big snapback?

Patty Edwards expects the dollar to to catch a bid. "It looks like we’re hitting a second bottom on a 'W' and I’d think the next leg is higher."


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MARKET BUZZKILL: GRAINS HIT BY STRONGER DOLLAR

Arguably the hottest trade of this 2-year bull market has been grains, but softs took a hit on Tuesday as the dollar gained.

Is it time to pack it in on this long-time winner?

Joe Terranova is cautious. "I’m not long in this space," he says.

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BANK OF AMERICA LEADS FINANCIALS HIGHER

Bank Of America led the financials higher on Tuesday after CEO Brian Moynihan told the crowd at its investor day that the bank's earnings power is back and a dividend is coming soon. He also said not to expect any more acquisitions.

What’s the trade?

Jon Najarian is bullish BofA. "I’m a buyer on dips," he says. Najarian thinks BofA stands to benefit from a flurry of M&A he expects later in the year.

Steve Cortes tells the desk not to extrapolate what BofA says to the sector in general. If you want to be long in the space, he prefers Canada-based banks such as TD Bank.

Patty Edwards is also bullish banks in Canada. "I’d rather be in a company like Bank of Montreal ," she says .

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Trader disclosure: On Mar. 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), (ABT), (MS), (PBR), (BAX), (TEVA), (CVI), (RSX), (SU), (CNQ), (JPM), (PNC), (GS) and (USB). Steve Cortes owns (EXC) and (PM). Steve Cortes owns (SDY) VS. S&P Long. Steve Cortes is long Crude. Steve Cortes is long the U.S. Dollar. Steve Cortes is short (MOS). Steve Cortes is short (C). Steve Cortes is short Wheat. Steve Cortes is short Corn. Jon Najarian owns (CME), is short (CME) calls. Jon Najarian owns (CBOE), is short (CBOE) calls. Jon Najarian owns (NYX), is short (NYX) calls. Jon Najarian owns (AMD), is short (AMD) calls. Jon Najarian owns (BRCM), is short (BRCM) calls. Jon Najarian owns (HPQ), is short (HPQ) calls. Jon Najarian owns (BSFT), is short (BSFT) calls. Jon Najarian owns (IBM), is short (IBM) calls. Jon Najarian owns (PCX), is short (PCX) calls.

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GERARD CASSIDY
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