×

Pros: Will China Reignite the Commodity Bull?

The S&P closed higher on Tuesday with bulls cautiously hopeful that the rout in commodities was over.

Energy and materials closed in the green after news of a trade surplus in China eased fears about slow global growth and helped to support the market.

"I think the market has absorbed most of the negative news to date and should push higher based on the fact investors are focused on earnings recovery and growth," says Jay Leupp, who manages $30 million in assets as president and portfolio manager at Grubb & Ellis AGA Funds in a Reuters interview.

Leupp sees "at least 3-5 percent more upside in the near term" before any kind of market correction takes place.

Are we starting to see signs that commodities have stabilized? Could they even drive the stock market higher?

Instant Insights with the Fast Money traders

Fast Money trader Brian Kelly is bullish on on the markets because he thinks China's latest economic numbers released overnight will provide confirmation that global growth remains in tact. "The OECD said the leading indicators in China are starting to re-accelerate." And Kelly's thesis suggests that anything that gets China going should get commodities going.

Trader Stephen Weiss is also constructive. “Don't forget about the demand cycle globally," he says. He also thinks "the bulls case in commodities is in tact."

Tim Seymour is more cautious. He thinks if China numbers come in hot, Beijing will step on the brakes even harder. Also he says, “The dollar is not your friend in commodities.” With QE2 winding down and more financial woes surfacing in Europe, Seymour expects the dollar to move sharply higher.

Trader Steve Cortes is downright bearish on commodities - also because of an expected move higher in the dollar . That becomes a problem for both commodities and for the S&P, he says.

Turning attention to the S&P, Guy Adami suggests keeping a close eye on the 1350 level. Although he's been bearish he admits "price is truth" and all the market seems to do is grind higher. In this environment he thinks the best move is to “buy protection but let your winners continue to run.”




______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our Web site send those e-mails to fastmoney@cnbc.com.


Trader disclosure: On May 10, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss owns (VZ); Weiss owns (QCOM); Weiss owns (DE); Weiss owns (INTC); Weiss owns (MSFT); Weiss owns (COP); Weiss owns (DVN); Weiss owns (HK); Weiss owns (SWC); Weiss owns (NIHD); Weiss owns (UUP); Weiss owns (TBT); Weiss is short (X); Weiss is short (AKS); Cortes owns (K); Cortes owns (KFT); Cortes owns (SO); Cortes owns (EXC); Cortes owns (TGT); Cortes is short Nasdaq Futures; Cortes is short EUR vs. USD and CHF; Cortes is short EEM vs. S&P long; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU)

For Brian Kelly
Accounts Managed By Brian Kelly Capital are long Aussie Dollar
Accounts Managed By Brian Kelly Capital are long Mexican peso
Accounts Managed By Brian Kelly Capital own (EBAY)
Accounts Managed By Brian Kelly Capital are long natural gas
Accounts Managed By Brian Kelly Capital own (SLV)
Accounts Managed By Brian Kelly Capital own (BHP)
Accounts Managed By Brian Kelly Capital own (MCP)
Accounts Managed By Brian Kelly Capital own (LYC)
Accounts Managed By Brian Kelly Capital are short U.S. Dollar
Accounts Managed By Brian Kelly Capital are short Swiss franc


CNBC.com and wires