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Halftime Report: Can Strong Tech Drive Next Leg Higher?

HALFTIME REPORT: CAN STRONG TECH DRIVE NEXT LEG HIGHER?

Both the Dow and S&P powered higher after solid results from Intel reinforced hopes for an economic recovery and a rebound in technology spending.

The bulls were particularly happy to hear about Intel’s upbeat outlook, which was due to strong consumer demand for PCs. Rival Advanced Micro Devices jumped on the news.

Is strong tech spending about to trigger the next leg up?

Instant Insights with the Fast Money Traders

Intel certainly knocked the cover off the ball, says Fast Money trader Tim Seymour. But with the S&P around 930 I’m starting to worry about resistance. If you want to play the space look at tech stocks which could benefit in a slowing consumer economy.

Patterns in the charts suggest the tech sector may be ahead of itself, adds John Kosar of Asbury Research. The relative performance of the Nasdaq as compared to the S&P 500 is reaching levels I consider 'overbought'. Historically, from 2003 to present, tech has rolled over at these levels of outperformance.

Outside tech, I think JPMorgan results are going to be a major tell for this market, counsels Patty Edwards of Storehouse. (They should speak to the health of the consumer with their credit card business.)But then we won’t know that much about the recovery until the retailers report and that’s not until August. For me we have to wait for Walmart , JCPenney , Kohl’s and Macy’s to know what’s happening with middle America and if the rally is sustainable.

If you're looking for a play in the near term, options action suggests big moves in either direction for Google and IBM, adds Scott Nations of NationsShares. Here’s what I’m seeing

Implied Move On Earnings
Google 5% +/-
IBM 4% +/-

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OIL CLIMBS OVER $60

Oil rose above $60 a barrel on Wednesday, after data showed supplies fell far more than expected. However the bullish sentiment was balanced by a bigger than forecast rise in gasoline supplies.

I think that the crude oil draw which was nearly double expectations was a bit of a bullish surprise, explains Mike Zarembski, of optionsXpress. (However, it's a mixed bag overall with gasoline versus crude. Obviously with a higher stock market here today and a lower dollar everything is looking better -- at least for today.

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COMMODITY STOCKS UP ON CHINA RESERVE GROWTH

Miners such as Rio Tinto and Freeport McMoRan shot higher on Wednesday on reports that China's currency reserves surged past the $2 trillion mark in June.

Is China about to trigger a commodities comeback?

If you’re looking for a commodities play, I like Alcoa and Freeport McMoRan, counsels Dennis Gartman of the Gartman Letter

Also, China will release GDP numbers on Thursday, adds Tim Seymour, and I think that moves the market tomorrow.

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TAKE YOUR POSITION: JPMORGAN

JP Morgan Chase is scheduled to report their second quarter 2009 results before the market opens on Thursday, July 16. How should you play it?

I think JPMorgan is a very solid play, says Patty Edwards. I’m a buyer on weakness for the long-term, but if you’re a short-term trader a lot of the good news is probably baked into this stock.

In the broader financial services sector, I think the move higher is long in the tooth, counsels John Kosar. I think there will be a pullback later in the quarter.


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Trader disclosure: On July 15th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (DRYS), (EEM), (FXI), (MON), (POT); Seygem Asset Management Owns (NOK) Calls; Finerman's Firm Owns (BAC) Preferred Shares, Finerman Owns (BAC) Preferred Shares And Owns (BAC); Finerman's Firm Owns (WFC) Preferred Shares And Is Short (WFC), Finerman Owns (WFC) Preferred Shares; Finerman's Firm Owns (CSCO), (MSFT), (YUM), (HPQ); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (CAKE), (CPKI), (USO); Najarian Owns (CSCO) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (JPM) And Is Short (JPM) Calls; Najarian Owns (JPM) Call Spread; Najarian Owns (MCD) Call Spread; Najarian Owns (MFE) Calls; Najarian Owns (MOS) Call Spread; Najarian Owns (MS) Call Spread; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (PALM) Call Spread; Najarian Owns (XLF) Call Spread; Najarian Owns (YHOO) Call Spread; Najarian Owns (DELL) Calls; Najarian Owns (INTC) Calls; Najarian Owns (ORCL) Calls; Terranova Owns (TER), (RIMM), (MSFT), (SUN), (FTO); Terranova Owns (CCE) Calls

GE Is The Parent Company Of CNBC

Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)

Virtus Investment Partners Owns More Than 1% Of (ABD); Virtus Investment Partners Owns More Than 1% Of (CBL); Virtus Investment Partners Owns More Than 1% Of (CAL); Virtus Investment Partners Owns More Than 1% Of (CLB); Virtus Investment Partners Owns More Than 1% Of (DLR); Virtus Investment Partners Owns More Than 1% Of (EXR); Virtus Investment Partners Owns More Than 1% Of (IGE); Virtus Investment Partners Owns More Than 1% Of (MEE); Virtus Investment Partners Owns More Than 1% Of (DBC); Virtus Investment Partners Owns More Than 1% Of (DBV); Virtus Investment Partners Owns More Than 1% Of (DBA); Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co; Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights; Virtus Investment Partners Owns More Than 1% Of (SKT); Virtus Investment Partners Owns More Than 1% Of (TNB); Virtus Investment Partners Owns More Than 1% Of (UA); Virtus Investment Partners Owns More Than 1% Of (WBMD)

For Dennis Gartman:
Gartman Owns (AA)
CIBC Gartman Index Owns (AA), (K), (GIS), (X)

For Zachary Karabell:
Karabell Owns (IBM), (GOOG)

For Mark Mahaney:
Employees Of Citi Own (GOOG)
Citigroup Global Markets Or Affiliates Owns 1% Or More Of (YHOO)
Citigroup Global Markets Or Affiliate Received Non-Investment Banking Compensation From (GOOG), (YHOO) In Past 12 Months
(GOOG), (YHOO) Are Or In Past 12 Months Were Clients Of Citigroup Global Markets (Non-Investment Banking, Non-Securities Related And Non-Investment Banking, Securities-Related)
Citigroup Global Markets Is A Market Maker In (GOOG), (YHOO)


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M
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GOOGL
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