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Halftime Report: Has Tech Hit A Key Inflection Point?

The Dow threatened to snap a six-session rally on Thursday, as investors took profits after Walmart posted strong earnings but issued a tepid outlook on consumer spending.

The Nasdaq , however is where the Fast Money traders are focused, after Intel and Advanced Micro Devices said they settled all outstanding legal disputes, including antitrust litigation and patent-licensing issues.

The traders are also watching the action in tech after Hewlett-Packard announced a deal to acquire 3Com earlier in the week, for 2.7 billion -- a 39% premium.

How should you play the space, now?

After a deal like 3Com comes down other candidates that weren’t taken out tend to get sold-off, explains OptionMonster Jon Najarian and sometimes it’s overdone. I’m looking at 3Com rival Brocade on the pullback. Also, I’m seeing strong options buying in Cypress, he reveals. That’s likely a speculative trade as investors place bets on the next takeover target in the space.

In this type of environment investors get a little speculative happy, adds JJ Kinahan. Today Seagate Technology is up in the down tape as a rumored takeover target. I’d expect to see the rumor of the day drive technology shares for the next week or so.

I’m excited about the tech deals, adds Danielle Hughes of Divine Capital. They’ve been all cash deals, which suggests to me that the stock is cheap. But the Nasdaq is having trouble at key resistance levels, which suggests tech overall is getting tired.

I agree that we’re at an inflection point in tech, adds Greg Troccoli of Opalesque. The XLK is trading around 22 – which is resistance. From here, I expect to see upside resistance and maybe we even hit a ceiling in tech. Although, I still think we’re in the middle of a bull –we’re at such a key resistance area I’d think about taking profits. And I certainly wouldn’t chase.

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WAL-MART REVERSES COURSE, HIGHER BY OVER 1%

Shares of Walmart traded higher on Thursday after the retail giant posted a higher-than-expected quarterly profit.

The gains came despite a forecast during the key holiday quarter that could miss Wall Street estimates as its customers face rising unemployment.

Executives at the world's largest retailer said on Thursday that its shoppers were still worried about the U.S. economy, including double-digit unemployment levels, despite signs the country was returning to growth

What’s the retail trade?.

I’m watching Kohl’s which reported strong earnings too, says Danielle Hughes. But I’m also worried that investors are setting themselves up for disappointments into the holidays.

With ANF and JCP reporting on Friday, I’ll be looking for more insights into the consumer before I form a trading thesis, says Jon Najarian.

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TAKE YOUR POSITION: DISNEY

Disney shares traded slightly lower on Thursday, ahead of earnings. How should you play it?

I like the Mouse House, says JJ Kinahan. And I’d play it into earnings by selling the December 27 put.

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TRADING BUFFETT/GATES:

Two of the world’s richest men just released information about their top holdings. Should you follow them into any stocks?

Buffett's Top Holdings
Coca-Cola
Wells Fargo
Burlington Northern
Procter & Gamble
American Express

Gates' Top Holdings
McDonald's
Canadian National Railway
Exxon Mobil
Costco
Coca-Cola

Of the names listed above, I like Coke and McDonald’s , says JJ Kinahan.

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CALL THE CLOSE

Jon Najarian – I’m a buyer into the close.

Greg Troccoli – I’m a seller of the S&P.

JJ Kinahan– I’m a buyer off 1089

Danielle Hughes? – I’m a seller. Resistance is too tough.


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Trader disclosure: On November 12th, 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), (BTU), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (CSCO), (MCD), (MSFT), (WMT), (TGT), (M); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spreads; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Is Short (USO); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Is Short (XRT), (IJR), (IWM), (MDY), (SPY), (UNG); Najarian Owns (GE) Calls; Najarian Owns (INTC), Is Short (INTC) Calls; Najarian Owns (JWN) Calls; Najarian Owns (MCD), Is Short (MCD) Calls; Najarian Owns (QLGC) Calls

Najarian Owns (RIMM) Call Spread; Najarian Owns (UUP) Calls; Najarian Owns (YHOO), (YHOO) Puts; Symour Owns (AAPL), (BAC), (EEM), (FXI), (POT); Seygem Asset Management Owns (BUD)

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