1. ARE EASY MONEY TRADE STILL ON?
The Fed came out Tuesday, and in five short paragraphs suggested that the easy money trades are still on.
What’s your next move?
GE, Intel and IBM led the Dow on Tuesday, says Pete Najarian. That says to me in the wake of low interest rates, investors are going after what they perceive to be growth and companies that could increase dividends. That’s where I expect to find performance going forward.
If you think the highs are already in for the S&P you’ve got it wrong, says Joe Terranova. I’d trade on the expectation that the S&P drives toward 1200. And I agree quality names like those listed above will be the drivers.
I bought Schwab as a bet that the retail investors come back into the market in the wake of the Fed decision, says Brian Kelly.
If you’re looking for a trade I’d look at Tiffany, says Guy Adami. I’d be taking profits at these levels.
2. TOPPING THE TAPE: OIL
Oil marched higher, above the technically important $80 level on Tuesday, largely buoyed by a weaker dollar.
What’s the trade?
I’m a buyer of the USO, says Joe Terranova, because the front of the board is strengthening relative to the back of the board. And as a second derivative trade I’d be a seller of the airlines. Oil above $80 is not good for the airlines.
I’d closely watch the action in oil on Wednesday, counsels Guy Adami. I think the moves will tell investors if the next $10 in oil is higher or lower.
If you’re looking for a stock, in this space I like BP, says Pete Najarian.
In the space, I like Exxon, says Tim Seymour, especially because it’s under performing.
I agree that Exxon is cheap here, adds Guy Adami.
3. MASSEY ENERGY TO BUY CUMBERLAND RESOURCES
In a deal worth $960 million Massey Energy agreed to buy Cumberland Resources, a privately held company, to boost its steel-making coal reserves. Cumberland operates primarily underground coalmines in Southwestern Virginia and Eastern Kentucky, and it assets include an estimated 416 million tons of contiguous coal reserves, explains Fast Money host Melissa Lee.
What’s the trade?
If you’re looking for a trade in the space, I’d look at Walter Energy, says Guy Adami.
I like Patriot, says Pete Najarian, especially on pullbacks. Or look at Arch Coal.
In this space I like MTL, says Tim Seymour. As far as I’m concerned it’s cheap even at these prices.
If you think coal is going higher, you might want to play wood pellets, explains Brian Kelly and the play is long Plum Creek.
4. COMMODITIES EXPLODE TO UPSIDE
The dollar fell against the euro on Tuesday after European Union finance ministers backed plans to help Greece if needed and Standard & Poor’s affirmed its ratings on the debt-stricken country.
In turn the weak dollar sent commodities exploding with gold, copper as well as materials names (XL
all rallying in the wake.
What’s the trade?
I think the downtrend in the dollar remains in tact, says Joe Terranova. Trade accordingly.
Looking at charts of the Dollar index, ahead of the broadcast Todd Gordon told our products he expects the greenback to rally further – perhaps to 82.5 by summer.
5. TOPPING THE TAPE: CHIPS
Chips (SMH) were among the big winners on Tuesday with Intel making particularly noteworthy gains.
What’s the trade?
21 had been a difficult level for Intel stock, explains Pete Najarian. It may have broken out.
In this space, I’d get long WDC and let it run, says Guy Adami.
6. CALLS OF THE DAY: CLOROX, STARBUCKS
Clorox
On Tuesday Barclays upgraded shares of Clorox from Equal Weight to Overweight and raised its price target on the stock to $71 from $67 citing revenue momentum.
What should you make of it?
I also like this stock. Not only is Clorox is a potential takeover target, explains Gary Kaminksy, but it’s also experiencing organic growth.
I agree, says Guy Adami. I also think it goes higher.
Starbucks
UBS upgraded Starbucks from Neutral to Buy, and boosted its target price by $2 to $29 citing the potential for strong sales and profits.
What should you make of it?
I agree that Starbucks management is doing an excellent job, says Pete Najarian. Good things are probably coming.
7. EAR TO WALL HOG
Shares of Harley-Davidson popped on Tuesday amid speculation the motorcycle maker was the target of a takeover with private equity firm KKR among the rumored buyers.
What’s the trade?
Options volume suggests to me this stock could make a sharp move higher, says Pete Najarian.
8. YOUR FIRST MOVE FOR WEDNESDAY
Tim Seymour suggests long AA.
Guy Adami recommends long WDC.
Joe Terranova prefers short AMR.
Pete Najarian thinks GE is a buy.
