'Fast Money' Recap: A Rally No One Believes In

The markets rebounded Tuesday after an unexpected jump in housing starts and a tech stock rally.

The Dow Jones Industrial Average jumped 178.73, or 2.48%, to 7,395.70, while the S&P 500 rose 24.23, or 3.21%, to 778.21. The Nasdaq added 58.09, 4.14%, to 1,462.11.

Guy Adami said on CNBC's "Fast Money" TV show that the rally still has more upside. "I think it's going to 900 (in the S&P), he said. "Money is being put to work. No one believes in the rally, which is why it will continue to go higher."

Pete Najarian said the rally is the extension of the one that began last week. He was impressed with its broad base although he expressed conerns about the light volume. "We aren't seeing enough conviction from the buyers."

Najarian said the volatility index is still holding in the 40 to 50 range. He said there needs an extended break under 40 to provide more conviction to the rally.

Joe Terranova said the market, having baked in the negative news in the stocks, is interpreting economic news and earnings in a positive light.

Melissa Lee, the moderator of the show, asked the panel what to make of the conflicting uprades and downgrades of financial stocks like Morgan Stanley (MS Quote) and Goldman Sachs (GS Quote).

Adami said that's been certainly the case with the switch in assessment of Citigroup (C Quote) by Oppenheimer with the departure of noted banking analyst Meredith Whitney and arrival of a new analyst.