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Halftime Report: Trade Like The Recession Is Over?

Thursday, 29 Oct 2009 | 1:17 PM ET

Both the Dow and S&P 500 rallied on Thursday following four losing sessions as data showed the U.S. economy grew faster than expected in the third quarter after more than a year of contraction.

Specifically, better than expected GDP numbers sent the bulls off and running after the latest numbers showed the economy expanded at a 3.5%, unofficially ending the worst recession in 70 years.

Also quarterly profits at consumer product giants Procter & Gamble and Colgate-Palmolive both surpassed expectations, and lifted investors sentiment.

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

What should you be watching?

I’m still negative on the market, explains Christopher Zook of CAZ. The pop today is likely a reaction to the overly pessimistic reaction to GDP we got on Wednesday afternoon. But I’m more focused on the uptrend that started on March 9th. That trend line is now broken. That says to me we’re on a neutral path not a bullish one.

I’m also closely watching patterns in the S&P, explains Greg Trocolli of Opalesque. Specifically, I’m closely watching 1066 as an inflection point. If we get above 1066 all short bets are off.

Also watch the Vix counsels OptionMonster Jon Najarian. It’s down significantly which may be confirmation that investors are getting out of the way -- to the upside. If the S&P closes above 1063, then I think the rally is back on.

When I look at Thursday’s GDP I think without the government stimulus we’d be in a terrible position, muses Michael Gurka of Empower. As far as I’m concerned the market action today is shorts unwinding their positions.

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MOTOROLA IGNITES TECH TRADE

The smartphone trade seems to be back on after Motorola forecast a higher-than-expected profit for the current quarter.

Investors recently turned bullish on this stock after the firm announced plans to release its new Droid phone on November 6th – in an attempt to win market share from Apple’s iPhone.

What’s the trade?

I think there is more upside to come in the smartphone space, muses Greg Troccoli.

I would not be a buyer, counters Christopher Zook. RIM and Palm charts both look broken to me.

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THE OBAMA TRADE: HOMEBUILDERS

The Homebuilders ETF traded higher on Thursday after a published report suggested Congress is not only poised to extend the home buyer tax credit for first-time homebuyers through April -- but also expand coverage to repeat buyers.

The report said the tax credit would remain at its current $8,000 for first-time buyers, while a new credit for repeat buyers of a primary residence who have been in their house for at least five years would receive a credit of $6,500.

What’s the trade?

I ‘d look downstream in this space, says Jon Najarian. I think the trade is longMohawk Industries , he says. And I’d look at Masco too, also as a derivative play.

Or think about long copper , counsels Mike Gurka. Historically it’s still cheap. Unless I see a major rejection I’m positive on the metal.

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TRADERS BETTING ON LAS VEGAS SANDS

Jim Iurio has spotted unusual options activity in Las Vegas Sands.

The volume of Jan 20 calls traded suggests to him that this stock could make a significant move higher. Iuiro suggests that big investors are betting LVS earnings will surprise to the upside.

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CALL THE CLOSE

Jon Najarian: I’m long into the bell.

Greg Troccoli: I’m short with a stop at 1072.

Christopher Zook: I’m short.

Michael Gurka: I’m long. We held a trend line of 1033.


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Trader disclosure: On October 29th, 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), (AA), (BAC), (BX), (EEM), (MYL), (INTC), (MSFT), (VALE); Seymour Is Short (FXI); Grasso Owns (AAPL), (ABK), (BA), (C), (COST), (PFE), (WMT), (FAZ); Terranova Owns (IBM), (QCOM), (GS); Finerman Owns (BAC), (PDE), (TGT), (WMT); Finerman's Firm Owns (PDE), (FLS), (RIG), (TBT), (YUM); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (UNG), (TLT); Jon Najarian Owns (INTC) Calls, Jon Najarian Owns (AMD) Calls

For Steve Grasso
Stuart Frankel Owns (MSFT)
Stuart Frankel Owns (PFE)
Stuart Franked Owns (SDS)


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