David Tepper AKA Captain Obvious

David Tepper appeared on CNBC's Squawk Box on Friday. In his brief appearance, he laid out his investment thesis for the short-term: the market is presently a "difficult investment environment" and there will be no more quantitative easing unless the S&P 500 drops several hundred points. No kidding? Tepper's views are considered influential because last September Tepper was able to successfully predict the movement of the market. Back then, Tepper stated that traders should buy in because either the economy would improve, or there would be another round of quantitative easing—in either case, the market would rally. The subsequent decision by the the Federal Reserve to engage in QE2 and the bull-run in the markets have vindicated Tepper's assessment. But is he not just stating the obvious? Ben Bernanke and the rest of the Federal Reserve has been claiming for months that there is no QE3 planned. Some contrarian investors may have denied this, but even that crowd has generally believed that QE3 would only materialize after a significant drop in the markets. Even in his prediction last September, the Fed was not shy about the possibility of QE2 before Tepper made his call. So, is Wall Street going to crown Tepper when he's proven right once again? Or will investors finally come to the conclusion that Tepper's predictions are nothing more than the street's consensus? Action Items Bullish: Traders who believe that Tepper is right in his assessment might want to consider the following trades:

• Buy ProShares UltraPro Short Dow30 SDOW. A short play on the Dow Jones, if Tepper is right in calling for a weak market, going short the Dow may prove profitable.
• Buy ProShares UltraShort 20+ Year Treasury ETF TBT. If the Fed exits the bond market, the market may tank. TBT is a short play on bonds.

Bearish: Traders who believe that Tepper will be wrong, and the market will either rally or the Fed will quickly implement QE3 may consider taking positions in the following:

• SPDR Gold Trust GLD is a long play on gold. Gold may rally if the Fed enters the market for another round of quantitative easing.
• ProShares Ultra Dow30 DDM is a long play on the Dow Jones. If the market improves, the Dow Jones might reflect that improvement.

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