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Halftime Report: Is Market Tone Turning Bearish?

The Dow and S&P 500 fell on Monday as a stronger U.S. dollar hurt energy and materials stocks.

As of Friday, the benchmark S&P 500 had risen 58 percent off its 12-year closing low from early March, largely because of strong earnings and optimism that an economic recovery is gaining strength.

What should you be watching?

Instant Insights with the Fast Money traders

Bearish investors have been predicting a correction for quite some time, reminds Joe Terranova. If that should happen it will probably happen between now and the end of September.

Although stocks are down broadly both Citigroup and AIG are higher, reminds host Melissa Lee. It would seem that although there’s a flight to safety today the dash for trash also continues.

I’m still seeing buying on the floor of the NYSE, echoes Steve Grasso of Stuart Frankel, My clients are buying the dips. For example as gold declines they’re buying the miners.

It’s also worth noting that GE is trading higher, adds Eugene Profit of Profit Funds, but that was largely because Morgan Stanley analyst Scott R. Davis came out today and lifted his price target to $19 from $17, saying GE Capital Services probably has losses of less than $20 billion — not the $50 billion some investors have claimed.

I’m seeing a lot of options activity in GE, adds OptionMonster Jon Najarian. I’m also seeing it in AIG.

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OIL, METALS/INDUSTRIALS DECLINE/ DOLLAR RISES

Oil prices fell by almost 3.5 percent toward $69 a barrel on Monday due to both a stronger dollar and further signs of weak fuel demand.

Oil prices have more than doubled since hitting lows near $30 a barrel at the height of the global economic crisis, but the market has come under pressure since touching a year high of $75 a barrel almost a month ago.

"There will be little or no sustained upward pressure on oil prices until global economic recovery is firmly established and reviving oil demand begins to draw down bulging oil inventories," analysts at the Center for Global Energy Studies said in their monthly oil market report on Monday.

What’s the trade?

I think the oil trade is pointed to the downside, says Joe Terranova. And that trend probably stays in place through the end of the month.

But longer-term the oil picture is probably bullish, counters Mike Khouw of Cantor Fitzgerald. I like Conoco and Chevron long term.

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DELL BUYS PEROT SYSTEMS FOR $3.9 BLN

Computer maker Dell announced a $3.9 billion proposed takeover of Perot Systems paying a steep 67.5 percent premium to expand its technology services business to compete with Hewlett-Packard and IBM.

The deal for Perot Systems, a computer services provider founded by former U.S. presidential candidate Ross Perot, comes as large technology companies expand into higher margin IT services to secure stable and recurring revenues as computer hardware becomes cheaper.

What’s the trade?

I think Dell also looks to make an acquisition in the device or the video game space, muses Jon Najarian. And broadly in tech, I think the big guys will continue to gobble up smaller players through the end of the year.

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TOPPING THE TAPE: RETAILERS

Retail shares are topping to tape on Monday with TJ Maxx saying its board approved a buyback of up to $1 billion of its common stock.

The amount represents about 6.2 percent of its outstanding common shares at current prices, TJX said.

Also Dollar Tree traded higher after Goldman Sachs reiterated its Buy rating and a $53 price target.

What’s the trade?

In the space, I like Costco says Eugene Profit.

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CALL THE CLOSE

Joe Terranova: I’d move to the sidelines.

Jon Najarian: I’m a buyer.

Eugene Profit: I’m a seller. I want to see what the Fed does.

Mike Khouw: I’d look to buy puts and hold onto my positions.


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Trader disclosure: On Sept. 21st, 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 (AA), (AAPL), (BAC), (EEM), (FITB), (INTC), (RIMM), (RIG), (SBUX); Seymour's Firm is Short (PBR); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman Owns (RIG); 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 (MSFT), (NOK), (PBR), (WMT), (RIG), (TGT), (PLCE), (HPQ); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO); Terranova Owns (FCX) Puts; Terranova Owns (CAT) Puts; Terranova Is Short (WFC); Terranova Is Short (AA); Terranova Is Short (WYNN); Terranova Is Short (JWN)

For Craig Berger:
FBRCM Acts As A Market Maker In (INTC) Securities

For Jon Najarian
J. Najarian Owns (DAL)
J. Najarian Owns (CAL)

For Toni Sacconahi
Bernstein Owns (DELL)
Bernstein currently makes a market in (DELL)
(DELL) Has Been A Client of Bernstein in Past 12 Months


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