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'Fast Money' Recap: Bursting Out of the Gate

As the market soars, the crew notes that traders are even piling into the financial sector.

U.S. stocks soared to kick off the second quarter Tuesday as bullish sentiment for the financials buoyed the markets. The Dow added 3.2%, the S&P 500 climbed 3.6% and the Nasdaq jumped 3.7%.

On

CNBC's

"Fast Money" TV Show, Karen Finerman said that today's rally was very impressive. She said that to look at the gains, one would think that everyone decided at once to reallocate into the financials for the second quarter.

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Pete Najarian said he bought puts in the financials. He said he took this action because he noticed that volatility is coming down, making today's rally reminiscent of the one two weeks ago.

Jeff Macke said that investors who are bearish on the financials after today's rally are trading the market they wish they could trade instead of the one in front of them. The reaction in the financials was incredible and caused today's broad rally, he said. He advised that investors take gains. "You gotta be a dip-buyer on the financials," he said.

3 Stocks I Saw On TV

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Guy Adami pointed out several early-cycle recovery names. He said

DuPont

(DD) - Get Report

is up huge this year, and

Home Depot

(HD) - Get Report

has outperformed, he said. He also likes

FedEx

(FDX) - Get Report

, he said.

Macke said he liked

Microsoft's

(MSFT) - Get Report

announcement that it would not raise its bid for

Yahoo!

(YHOO)

. Macke said he is rotating out of Yahoo! shares and into Microsoft because he believes there's more upside in Microsoft. He said he doesn't even mind chasing Microsoft up a few pennies. Finerman said she's long both Yahoo! and Microsoft. She's happy to own both, she said.

Najarian said

Oracle

(ORCL) - Get Report

and

Hewlett-Packard

(HPQ) - Get Report

are worth a look on the basis of their massive software acquisitions. Margins are huge in software, he said. He said he's selling Yahoo! calls because he thinks the acquisition will drag out for another expiration. Macke urged Yahoo! CEO Jerry Yang to negotiate a buyout.

In commodities, Adami said that gold takes the stairs up and the elevator down, meaning that it can drop in value much faster than it gains. He said that gold still has some room to the downside. He said he would sell out of the

streetTracks Gold Shares

(GLD) - Get Report

or gold itself.

Najarian said that soft commodities are still bullish. He said to look at

Monsanto

(MON)

and DuPont for their seed exposure.

Macke said that from a technical standpoint the streetTracks Gold is broken, but he pointed out that crude oil has pulled back to $100 and appears to be trading in a range from $100 to $110. He said to set a stop at $95 and walk away if it breaks down. He said he likes the

U.S. Oil Fund

(USO) - Get Report

for its oil exposure.

Merck

(MRK) - Get Report

rebounded substantially today off yesterday's bad news for its Vytorin. Fellow Vytorin marketer

Schering-Plough

(SGP)

rallied as well, although not as much as Merck.

Najarian said that the real winner is

AstraZeneca

(AZN) - Get Report

, because money that would have been spent on Vytorin will now go to AstraZeneca. Keep an eye on

Genzyme

(GENZ)

and

Isis

(ISIS)

on the strength of their pipelines.

Adami said he likes

GlaxoSmithKline

(GSK) - Get Report

because Warren Buffett likes it.

Finerman said she thinks Merck is interesting. Najarian said that Merck is a value play and said investors can wait. "You don't have to be the first guy in Merck," he said.

Guy Adami said an uptick in the automakers is a "classic relief rally." He said not to bother with

General Motors

(GM) - Get Report

.

Borg Warner

(BWA) - Get Report

is the real story, he said.

Federal Reserve

Chairman Ben Bernanke is testifying tomorrow before Congress. The traders welcomed Diane Swonk, chief economist at Mesirow Financial, to discuss the upcoming testimony. She said that the Fed has to stay on message, and she hopes that Bernanke shows some conviction when he speaks. "I want to see testosterone," she said.

Finerman predicted that Bernanke would not be as focused on inflation as usual. She bought

iShares Lehman TIPs

(TIP) - Get Report

for inflation protection.

Swonk said that the Fed has looked like it was behind the game but said that Bernanke is the foremost expert on the Great Depression of anyone in the world. She praised his out-of-the-box thinking about the financial crisis.

The crew spoke with Paul Jacobs, CEO of

Qualcomm

(QCOM) - Get Report

, the world's largest chipmaker for mobile devices. Jacobs said Qualcomm expected dips in demand because of the economic downturn. As it turns out, he said, phones are no longer luxury items, and demand is good. He said he thinks shares have been held down by perception of litigation and talks of overhang. He predicted that the company's share repurchase plan would be enacted and completed relatively quickly. He said he's excited about the future of mobile devices, which he said include HDTV-like cable television service.

Najarian said that he likes

Research In Motion

(RIMM)

, which announces earnings after tomorrow. He said he's buying shares tomorrow.

Macke said he loves RIM. He reminded viewers that although phones may be staples, watching TV on a phone is a discretionary expense. He said that by contrast RIM is a must-have for businesses.

Adami said that

China Mobile

(CHL) - Get Report

is another interesting telecom play because it has 369 million subscribers and is still a growth story.

Trader Radar

Philip Morris

(PM) - Get Report

was one of the most actively traded stocks today.

The crew took a look at

JPMorgan

(JPM) - Get Report

CEO Jamie Dimon, one of the show's "subprime savants." They noted that Dimon minimized JPMorgan's exposure to subprime mortgages, and that helped it avoid the biggest pitfalls of the credit crunch. Fittingly, the crew said, the Fed turned to Dimon to buy troubled brokerage

Bear Stearns

(BSC)

.

Adami said that JPMorgan trades at 1.2 times book value and is well-run. He said that the best banks will benefit from a rally out of the subprime crisis. He said he also likes

Morgan Stanley

(MS) - Get Report

.

Macke said that banks that have written down their assets may be due to rebound as they are able to price some of the assets they had valued at zero.

Najarian said that he loves both JPMorgan and Morgan Stanley. He said investors who own these stocks are in a great position.

Fast Money Madness

In the Sweet 16 phase of the Fast Money Madness single-elimination NCAA-esque tournament for stocks,

Johnson & Johnson

(JNJ) - Get Report

beat

Procter & Gamble

(PG) - Get Report

,

Altria

(MO) - Get Report

defeated

Disney

(DIS) - Get Report

, Microsoft trumped Hewlett-Packard and

Apple

(AAPL) - Get Report

vanquished

Google

(GOOG) - Get Report

.

Final Trade

Macke selected Microsoft. Adami chose FedEx. Finerman picked TIPs. Najarian said he was putting on puts on the

Financial Select SPDR

(XLF) - Get Report

.