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Grasso’s Proprietary Signal for Buying Energy

Witha slew of stocks across the energy sector getting beaten up, are you just itching to buy on the decline?

Although top trader Steve Grasso concedes energy stocks look cheap, he says don’t hit the buy button just yet.

According to Grasso you can't trade energy until you get the go ahead from technology and financials.

Huh?!

Both tech stocks and bank stocks have led the market in 2012. And during that time the general philosophy in the market has been 'stick with what's working.' In other words, buy high and sell higher.

But Grasso feels dynamics in the market are changing.

“But you have to wait for the leaders to break before the laggards can be bought,” Grasso explains.

“Only when we see when the XLK break down and only when we see the XLF break down, only then would I go into the XLE,” he says.

"That’s will be the signal investors are tired of throwing money at tech and financials."



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Trader disclosure: On May 4, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long MS CALLS; Pete Najarian is long INTC; Pete Najarian is long INTC CALLS; Pete Najarian is long YHOO; Pete Najarian is long SBUX; Pete Najarian is long SBUX CALLS; Pete Najarian is long PEP; Anthony Scaramucci is long AAPL; Anthony Scaramucci is long BAC; Anthony Scaramucci is long GS; Anthony Scaramucci is long IBM; Anthony Scaramucci is long PEP: Steven Grasso is long ASTM; Steven Grasso is long AVAV; Steven Grasso is long BA; Steven Grasso is long D; Steven Grasso is long FRO; Steven Grasso is long LNG; Steven Grasso is long MHY; Steven Grasso is long NUAN; Steven Grasso is long MO; Steven Grasso is long PFE; Steven Grasso is long PRST; Steven Grasso is long S; Steven Grasso is long XLU; Steven Grasso is long ZAZA

For Patty Edwards
Patty Edwards is long for clients AAPL
Patty Edwards is long for clients BAC
Patty Edwards is long for clients C
Patty Edwards is long for clients GLD
Patty Edwards is long for clients INTC
Patty Edwards is long for clients JOY
Patty Edwards is long for clients COP
Patty Edwards is long for clients AMZN
Patty Edwards is long for clients PEP
Patty Edwards is long for clients DIS
Patty Edwards is long for clients CAT
Patty Edwards is long for clients SBUX
Patty Edwards is long for clients KMB
Patty Edwards is long for clients ED
Patty Edwards is long for clients EXC
Patty Edwards is long for clients KO
Patty Edwards is long for clients HNZ
Patty Edwards is long for clients PM
Patty Edwards is long for clients BMY
Patty Edwards is long for clients JNK
Patty Edwards is long PM

For Dennis Gartman
Nothing to disclose

Mark Mahaney
The Firm is a market maker in the publicly traded equity securities of YHOO
The Firm is a market maker in the publicly traded equity securities of AMZN


CNBC.com with wires.