'Fast Money' Recap: What's Your Strategy Ahead of the Fed Announcement?

NEW YORK (TheStreet) -- Should investors buy stocks ahead of the Federal Reserve's statement on Wednesday? On CNBC's "Fast Money" Tuesday, Brian Kelly, founder of Brian Kelly Capital, said investors should wait. 

"It's all about financials," he said. If the Fed indicates that it may increase interest rates in September, the financial sector should rally. Look for a breakout over $25.25 in the Financial Select Sector SPDR ETF (XLF). 

Stocks simply do not appear to have priced in enough risk from the current environment -- whether it's bond yield volatility, the Fed's statement or Greece. Tim Seymour, managing partner of Triogem Asset Management, said investors shouldn't be so complacent and should consider hedging their portfolio. To do so, he said to sell-short the iShares Russell 2000 ETF (IWM). 

Seymour believes the S&P 500 could be headed to 2,000. Steve Grasso, director of institutional sales at Stuart Frankel, was quick to point out a few levels that many short-term traders are likely watching. The 100-day and 200-day moving averages come into play at 2,088 and 2,048, respectively. 

Grasso believes that stocks will ultimately break below the 200-day moving average and suffer a larger correction. He's a buyer of the XLF ETF and a seller of the Utilities Select Sector ETF (XLU). 

Guy Adami, managing director of stockmonster.com, said investors should buy insurance companies, which will benefit from higher rates. Specifically, he likes Prudential Financial (PRU). 

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