'Fast Money' Recap: Commodities Shift

Bear Stearns' BSC takeout by JPMorgan Chase JPM at firesale prices caused turmoil early Monday, but the market recovered somewhat from the early losses. The Dow closed up 0.2%, the S&P 500 was off 0.9%, and the Nasdaq dropped 1.6%.

On CNBC's "Fast Money" TV show, Jeff Macke said it was a historic day. Traders took Bear out and shot it, oil spiked, and gold ramped, he said. He believes the day was bullish overall because the market weathered an absolutely huge storm.

Pete Najarian pointed to a spike in the VIX, or volatility index, to 36%. He said that that kind of volatility was the violent move he'd been looking for. Johnson & Johnson JNJ and Merck MRK looked great today, he said.

Joe Terranova said he would like to see a strong rally tomorrow, a bullish reception of Visa's initial public offering and strong earnings from Goldman Sachs GS. Continued upward action would make him much more bullish on the market, he said.

Guy Adami expressed sorrow over the employees at Bear who now face uncertainty and greatly reduced wealth. He said he expects Goldman to beat numbers tomorrow, but he warned viewers of a $3 billion writedown related to exposure to a Chinese industrial bank. Najarian pointed out that the market is pricing in a 10% move on earnings in either direction.

Macke said Goldman looked cleaned out on a technical basis. He said if the world were only technicals, investors would do well to get into Lehman Brothers LEH. Unfortunately, the fundamentals don't look so good. He would, however, go long Goldman with a tight stop close at $150.

Adami pointed out that not all the banks are toxic. For example, U.S. Bancorp USB has very little subprime exposure.

In commodities, Terranova said there was outflow from oil and gold. He predicted a momentum shift in the commodities for the remainder of the month. Adami pointed viewers to Apache APA and XTO Energy XTO as plays on the natural gas bull market. Macke said that the big picture looks good for the U.S. Oil Trust USO ETF and streetTracks Gold GLD.

Terranova said to get a wish list ready, because toward the end of the year commodities will be the story. Najarian suggested that if investors want to get long names like Tesoro TSO and Valero VLO, they should buy puts to protect themselves.

The traders spoke with Dennis Gartman, editor of the Gartman Letter, about the day's hectic action. Gartman noted that commodities were up early but gave way at the end of the day. He predicted serious downside in commodities. Terranova said it's better to be long companies that extract and export commodities vs. companies that use commodities. Gartman agreed.

Gartman went on to indicate there may have been a bottom in the financials. He said his fund bought JPMorgan for the first time today. He praised CEO Jamie Dimon for buying Bear for so little.