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Halftime Report: Is Bearish Technical Pattern Forming In S&P?

Wednesday, 9 Sep 2009 | 1:13 PM ET

Both the Dow and S&P 500 traded higher on Wednesday as positive broker comments buoyed stocks while the falling dollar pushed up oil prices and energy producers.

Although the move higher appears bullish technical analysts are starting to see a troubling pattern emerging in the S&P 500.

Instant Insights with the Fast Money traders

Although patterns in the charts of the S&P 500 still appear bullish if we don’t get through Wednesday’s highs and the market sells off we could be looking at a head and shoulders pattern, which is bearish, explains Greg Troccoli of Opalesque. It’s something to watch. Things could become very shaky, very quickly.

There are a lot of disfigured head and shoulders dummies out there, counters Fast Money trader Tim Seymour. We’ve seen those pattern 3 or 4 times in the last few months and the last one catapulted the market higher.

It seems to me that a lot of technicals are pointing toward a bullish push, adds Danielle Hughes of Divine Capital. And we’ll probably see some window dressing through the end of the quarter as portfolio managers look to make their numbers. That would also suggest more buying.


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TAKE YOUR POSITION: APPLE BREAKS OUT

Shares of Apple broke out ahead of the company’s media extravaganza. Although analysts were not expecting any game-changing product announcements there was a bit of a curveball. Both Steve Jobs and Google CEO Eric Schmidt made appearances.

What’s the trade?

Despite the run I think Apple still has upside, says Tim Seymour.

It also seems to me Apple is growing and innovating, muses Jared Levy of Peak6. I’m seeing call buying which suggests more upside.

As long as Apple holds $167 for the next couple weeks I think Apple can make a run toward $190, adds Greg Troccoli.

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THE BURGER TRADE: MCDONALD'S SALES WEAK

McDonald's limited gains on the Dow after the hamburger chain reported a rise in sales at existing restaurants worldwide that missed some analysts' expectations.

Specifically, total sales rose 1.1%, including a 2.6% gain in the U.S., a 3% drop in Europe and a 6.1% rise in Asia Pacific, the Middle East and Africa.

What’s the trade?

These numbers do not shake my confidence in this stock, explains Pete Najarian. And it’s worth noting that McDonalds around $55 tends to bounce.

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THE OBAMA TRADE: HEALTH CARE

President Barack Obama takes on the bitter healthcare reform debate on Wednesday with a high-stakes speech before a joint session of Congress. Faced with falling public approval ratings, Obama said his televised address at 8pm ET will provide Americans with "a much more detailed plan" about his vision for overhauling the $2.5 trillion U.S. healthcare system.

What’s the trade?

If you’re going to play the space, policy proof your portfolio, counsels Danielle Hughes. For me, that can be done with Health Care Services Group or Teva .

I also like Teva, adds Jared Levy.


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Trader disclosure: On Sept. 9th, 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 (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (WFT), (SU); Terranova Owns December Gold Futures; Terranova Is Short Dec. Copper Futures; Terranova Owns Oil Futures; Terranova Is Short (CCL); Terranova Works For (VRTS); Najarian Owns (AAPL) & Short (AAPL) Calls; Najarian Owns (BAC) & Short (BAC) Calls; Najarian Owns (C) Calls; Najarian Owns (INTC) & Short (INTC) Calls; Najarian Owns (DFS) Calls; Najarian Owns (FCX), Owns (FCX) Put, Is Short (FCX) Calls; Najarian Owns (JPM) & Is Short (JPM) Calls; Najarian Owns (JOYG) & Short (JOYG) Calls; Najarian Owns (MS) And Is Short (MS) Call; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (PALM) Calls; Najarian Owns (TEVA); Najarian Owns (V) & Short (V) Calls; Najarian Owns (WFC) Put Spread; Najarian Owns (YHOO) Calls; Seymour Owns (AAPL), (BAC), (DIS), (EEM), (FXI), (RIG); Seymour's Firm is Short (GFI)

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S&P 500
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AAPL
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MCD
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