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Halftime Report: Is This Market Overbaked?

Thursday, 18 Jun 2009 | 1:18 PM ET

STOCKS SNAP 3 DAY LOSING STREAK

Both the Dow and S&P pushed their way higher on Thursday, buoyed by new data that suggests at least some stabilization in the job market and improving business conditions.

Specifically investors were cheered by jobless claims. Although applications were higher-than-expected, for the first time since January the number dropped – and it was the largest one week drop since November 2001.

Also the Philadelphia Federal Reserve's business activity index boosted sentiment with results that were much better than economists expected, though still negative.

"We're still in this healing process but this is one of the better indications that manufacturing may be getting better," explains Kurt Brunner, portfolio manager at Swarthmore Group.

How should you be positioned now?

Instant Insights with the Fast Money Traders

Fast Money Halftime Report
The Fast Money traders weigh in on the markets and share their midday trading advice.

Personally, I think the market is overbaked, says Jared Levy of Peak 6. I wouldn’t chase trades. For me, July earnings will be tell-tale. That’s when we’ll know if the market can sustain these gains.

Sometimes a pullback like the one we’ve had is good for the market, adds Jeff Tomasulo of SMB. If we can stay above the 200-day moving average on the S&P – the market looks okay to me.

I’m modestly bullish of stocks, adds Dennis Gartman. I’m erring upon the side of owning aluminum and steel and the stuff of economic growth. Personally, I think in Q3 we’ll find out the economy is in a rebound.

Lairs and fools absolutely know for sure everyone else is just watching the data, muses Dan Fitzpatrick of StockMarketMentor.

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FINANCIALS SHAKE OFF REGULATION CONCERNS

What a difference a day makes. Just 24 hours after President Obama introduced sweeping new reform designed to reign in Wall Street, banks stocks traded in positive territory. The move comes despite a 18 bank downgrade by S&P on concerns of increased regulations.

I wouldn’t pull the trigger on the financials, counsels Dan Fitzpatrick. They’re due for a technical bounce but that’s it.

I’m short financials, counters Jeff Tomasulo. Specifically, I think they’re tired. I’m short Goldman and Wells. If the market rolls over the financials should pull back.

I’d be careful shorting Goldman, chastises Dennis Gartman. I’d sell something already going down like Berkshire.

Berkshire, exclaims Tomasulo. I wouldn’t bet against Warren Buffet.

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MOVING NOW: CARNIVAL

Investors bid shares of Carnival higher on Thursday after the cruise line posted a quarterly profit that beat analysts' estimates helped by better-than-anticipated pricing and lower net cruise costs.

"What is very encouraging is that, since the end of March, everything is trending up right through the travel advisory, both volumes and yields," Carnival Chief Executive Mickey Arison said during a conference call with analysts.

"So we're encouraged by that. Whether that will be sustainable, time will tell."

Who was expecting anything out of Carnival, says Jared Levy. And that speaks to my trading thesis of the day. Look for stocks that have moved out of their normal range. If you see a stock that’s been bid up you probably should be a seller. And if it’s been selling off that’s a potential buy.

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TAKE YOUR POSITION: RIMM EARNINGS

Investors are eager to hear from RIMM which reports earnings on Thursday after the bell.

If history is any indication results should move Research In Motion’s stock. In fact, over the past year share price has made big moves after the numbers came out. Take a look:

June '08 - 16%
Sept '08 - 20%
Dec '08 + 11%
April '09 + 27%
Today ?

I think RIMM is facing issues, muses Jared Levy. They have to keep margins and now they have competition from the Palm Pre as well as the iPhone. I like the stock but I’d sell the $80 call against it.


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Trader disclosure: On June 18th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (C), (GS), (BTU), (AGU), (INTC), (MSFT), (NUE); Seymour Owns (AAPL), (BAC), (BX), (EEM), (FXI); Seymour's Firm Owns (RSX); Levy's Firm Owns (MON); Terranova Owns (XBI), (TER), (BTU), (ABT), (MSFT); Terranova Owns (BRCM) & Is Short (BRCM) Calls; Terranova Owns (POT)& Short (POT) Calls; Terranova Is Short (JPM)& Is Short (JPM) Calls; Terranova Owns (MS) & Short (MS) Calls; Teranova Owns (X) & Is SHort (X) Calls; Terranova Owns July Nat Gas Futures ; Terranova Owns (DIS) Octovber Call Spread; Terranova Is Short (XOM) Call Spread; Terranova Is Short (GENZ) Call Spread; Terranova Is Short (OIH)& (OIH) Puts; Terranova Is Short (RIG)& (RIG) Puts; Terranova Is Short (FCX)& (FCX) Puts; Terranova Is Short (RIMM)& (RIMM) Puts; Terranova Is Short (IBM) Calls

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CCL
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GS
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BB
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WFC
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