Trader Steve Cortes is also a buyer “because Monday was so chaotic,” he says. "When traders are cryin' I'm buyin'."
Cortes if focused on consumer staples and is a buyer of Walmart , Procter & Gamble and J&J . Cortes feels that oil’s down move – which totals $40 from peak to trough – presents massive relief to consumers in the form of lower prices at the pump. “It’s time to be constructive,” he says.
Trader Patty Edwards is more cautious. She’s staying on the sidelines and doesn't trust the rally. “Bounces can be quick and violent,” she says. “Nobody sprinkled any magic fairy dust on this market.”
According to Chris Verrone of Strategas – Patty Edwards probably has the best strategy. After looking at chart patterns he tells us that he thinks “Tuesday's gains are a classic oversold bounce.”
Verrone points to a few indicators. Looking at the Investors Intelligence Bull Bear Ratio, bulls still outnumber bears by a 2-1 ratio. “That number needs to come down – people are too optimistic to set a bottom,” he says. Also Verrone doesn’t think the put to call ratio shows enough fear to suggest a bottom.
That's not to say as a trader you can't game the bounce, it's just that Verrone thinks you need to be nimble. “As the S&P rallies I’m skeptical the market can get above 1200 – 1220. That should be resistance. From there, I think we retest 1100 – 1070 lows,” he says.
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Trader disclosure: On Aug 9th 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian owns (AAPL); Najarian owns (C); Najarian owns (MS); Najarian owns (PFE); Najarian owns (TCK); Najarian owns (ECA); Najarian owns (BAC) options; Cortes owns (JNJ); Cortes owns (PG);Cortes owns (WMT);Cortes is short Silver;Cortes is short Gold;Cortes is short Euro; Cortes is short GBP
Edwards Owns (AMZN) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (DIS) For Clients
Edwards Owns (CVX) For Clients
Edwards is double short (SDS) For Clients
Edwards is long Gold For Clients
Edwards is long Silver For Clients
Edwards owns (XLK)
Edwards owns (APA)
Edwards owns the Canadian Dollar
For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (SLV) calls
Accounts Managed By Brian Kelly Capital Own (MCO) puts
Accounts Managed By Brian Kelly Capital Own (GLD) call spreads
Accounts Managed By Brian Kelly Capital are short the Euro
For Dan Dicker
Daniel Dicker owns (TOT)
Daniel Dicker owns (APA)
For Chris Verrone
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