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Halftime Report: Profiting from Optimism In This Rally

With the markets in full rally mode, the major indexes hit 2009 highs during today’s trading session. It begs the question: Is the summer rally back on? If so, where are your best plays?

Instant Insights with the Fast Money traders

With the general buzz on the street being that there are still investors on the sidelines, it begs the question of whether there is enough volume to sustain this rally’s momentum. Joe Terranova certainly thinks there is, in fact, there has been enough volume since March. The market has been major consolidation of gains for some time, and now it’s poised to move higher, he says.

Greg Troccoli of Opalesque agrees on that point, and sees the S&P 500 testing the 1000 point level, seeing no indication of the markets backing off at this point. And Brian Stutland of Stutland Equities couldn’t agree more. Pointing out that traders are bidding up the price to the VIX to buy downside protection, he sees VIX futures as overpriced, which allows the bulls to take hold of the market and push it higher.

TRADING JOBLESS CLAIMS

With many economists predicting an improving picture for jobless claims, is this a sign that the recession is over? Is that why we’re seeing this rally, and how can you play it?

Although Christopher Zook of CAZ Investments doesn’t think the recession is necessarily at its end, he points out that the market optimistic: ignoring bad news in lieu of any economic good news to generate a rally. He sees a few more percentage gains and the indexes touching technical numbers, but he thinks it’s possible this rally could cool and investors (and their profits) could come back down to earth. The key is to be patient, he says, you shouldn’t be chasing rallies just for the sake of chasing them.

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OIL ON THE REBOUND

With the commodity back above $66 per barrel in intraday trading, it’s been helped by a falling dollar, news out of China’s central bank that they would maintain a loose monetary policy and positive employment data. Where’s it moving from here?

Joe Terranova explains that the moves in Oil are all about the dollar. With the China-US talks ending, he’s not sure if going long on the commodity is the play to make, but you “definitely don’t want to be short.” This was the general consensus of the traders in the Halftime Report today.

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TOPPING THE TAPE

Mastercard shares are up almost 6% in intraday trading after the company reported results that topped street expectations. Joe Terranova urges caution, as this company may be another example of an intraday reversal that has been so common throughout this rally. Most of the traders were pretty skeptical on the company as the credit card industry may not be out of the woods yet, despite today’s good news.

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TRADE TO GO - NATURAL RESOURCES

It's all about the Dollar, says Joe Terranova. He suggests natural resource names in coal, steel and energy to play off the dollar's weakness.

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CALL THE CLOSE

Joe Terranova of Virtus Investment Partners: I'm a buyer.
Greg Troccoli of Opalesque: I'm a buyer.
Christopher Zook of CAZ Investments: I'm a seller, but I wouldn't be agressively shorting.
Brian Stutland of Stutland Equities: I'm a buyer into the close, although we're closing in on the psychological resistance levels.


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