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).
As for Greece, Dennis Gartman, editor and publisher of The Gartman Letter, said the country seems better off exiting the eurozone. Initially, this will likely send the euro lower, but as investors realize the currency is stronger without Greece, the euro will rally. For now, Gartman likes being short the euro and the yen and being long silver and gold.
FitBit plans to price its IPO between $17 to $19 on Wednesday and open for trading on Thursday with an implied market cap of $3.7 billion. Grasso stated that the company is profitable, which will definitely boost its appeal to investors. The stock is unlikely to trade within its initial range and will probably shoot higher on the day, trading into the high $20s and possibly low $30s, he said.
However, Grasso said the company should have filed for its IPO before the launch of Apple's (AAPL) Apple Watch.
Seymour disagreed, arguing that the Apple Watch is helping to bring more awareness to the wearable technology market - an industry that is nowhere near reaching its peak yet. The company's strong balance sheet and potential to be acquired makes it an attractive stock.
So far, the IPO market remains strong, Adami said. For that reason, he likes Goldman Sachs (GS), a stock he sees climbing back to $240.
The conversation turned to the airlines, which have struggled this year despite a strong 2014. Although it didn't trade well on Tuesday, Adami said he still likes JetBlue Airways (JBLU). Grasso agreed.
Delta Air Lines (DAL) is near very key support at $40. While it has an "extremely attractive" valuation, investors need to make sure this level holds as support, Seymour said.
"The airlines, to me, seem very, very challenged," Kelly said. Oil prices and capacity issues could weigh on the stock and instead, he likes Boeing (BA).
For their final trades, Seymour is selling the IWM ETF for portfolio protection and Grasso is a buyer of Deckers Outdoors (DECK). Kelly said to buy Under Armour (UA) and Adami is buying Adobe Systems (ADBE).