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Mutual Fund Mondays

Monday’s gains in the stock market come as no surprise to Pete Najarian. He’s spotted an interesting trend.

Pete calls it mutual fund Mondays because on Monday “a lot of capital comes into the market.”

In other words, money managers are chasing performance and seem to be getting long on Mondays, broadly driving stocks higher on the first day of the week.

Take a look at the numbers: The last 4 weeks especially, says Najarian.

S&P Monday Moves
Sept 14th +6.30
Sept 21st -.60
Sept 28th +17.90
Oct 5th +14.70
Oct 12th +3.40
Oct 19th +9.10
Oct 26th -1050
Nov 2nd +6.10
Nov 9th + 25.50
Nov 16th +14.90
Nov 23rd +14.85

It’s an interesting trend and well worth putting on your radar, adds Karen Finerman. Pete's been all over it. Excellent call.

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DOW HITS ’09 HIGHS

Both the Dow and S&P 500 snapped three-day losing streaks on Monday as stronger-than-expected home sales data fueled optimism the recovery was in tact, while a weaker dollar boosted commodity-linked stocks.

Specifically, sales of previously owned U.S. homes rose to their highest level in more than 2-1/2 years last month. That helped to ease concerns about the sector generated last week when another report showed housing starts fell sharply in October.

In fact, the Dow industrials reached a new 13-month high but volume was light, which some investors read as a lack of conviction.

Meanwhile, the U.S. dollar index slid on comments by St. Louis Federal Reserve President James Bullard who said that the Fed should extend its mortgage-related assets purchase program to give policy-makers more flexibility.

What must you know to trade this market?

I’m concerned about the dollar, says Guy adami. I ask myself, could something happen in the mideast or somewhere in the world that triggers a huge flight to safety. If the dollar got significantly stronger quickly it could derail the rally in no time flat.

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TOPPING THE TAPE: COMMODITIES

Commodities marched higher on Monday with oil prices making gains due to weakness in the dollar as well as signs of buoyant demand from China, the world's second-largest energy consumer.

Meanwhile, the weak dollar pushed gold as high as $1,170.55 an ounce on Monday and through key technical resistance levels.

What’s the trade?

I’m watching for a blow-off top in gold , says Joe Terranova. Short traders may get squeezed so hard they have to pay prices they never thought possible to cover their shorts.

In commodities I’m watching Deere, says Guy Adami. The stock hit a 52-week high following an upgrade from Morgan Stanley.

In the space I’m still watching RIG , adds Karen Finerman, but at these levels I wouldn't be in -- with both feet.

The price action in oil says to me to get a little more defensive in this space, adds Terranova. I’d look at the integrated names and stay away from the refiners.

If you’re looking for a short trade, I’d look at Alcoa, adds Adami. That’s a stock seems to want to go lower.

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TOPPING THE TAPE: HOME RESALES BOOST REAL ESTATE NAMES

The S&P Homebuilders ETF closed higher on Monday after the National Association of Realtors said sales of previously owned U.S. homes rose at a faster-than-expected pace to the highest level in more than 2-1/2 years

What must you know?

I’m optimistic that the bottom is in, speculates Karen Finerman. Every body talks about the crash coming in commercial real estate but many REITs have been able to extend their loans. As long as they can extend, I think they may avoid a crash.

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TOPPING THE TAPE: TECH REBOUNDS FROM ROUGH WEEK

The Nasdaq recovered recent losses on Monday with the bellwethers Apple, and Microsoft leading the way.

How should you trade tech now?

I still believe that Google has a $600 price target on it, speculates Joe Terranova.

I like Intel and Texas Instruments on pullbacks, says Pete Najarian.

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AFTER HOURS ACTION: HEWLETT-PACKARD

After hours Hewlett-Packard released quarterly results and said a strong performance in China and improved profit margins in its services business helped drive quarterly earnings 14 percent higher.

The fiscal fourth quarter results released on Monday were in line with those the company preannounced two weeks ago, which topped Wall Street's estimates

What must you know?

If you put a 13 multiple on HPQ it’s a $58 stock, says Guy Adami. I expect this stock to continue climbing.

> For complete coverage of Hewlett-Packard earnings click here

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OUTSIDE THE STOCKS

U.S. Treasury debt prices were little changed on Monday as investors poured into riskier assets and after a decent reception for $44 billion of two-year notes.

Despite $118 billion of new Treasuries hitting the market this week and rising stock prices, demand for the safety of U.S. government debt has limited losses as traders seek to lock-in gains for the year.

What must you know about the bond market?

This is an indication of the wall of cash that's being put to work in all asset classes, including the front end of the Treasury curve, says Michael Pond, a Treasury strategist at Barclays Capital. We do think that yields should have gone higher given what equities and the data did but we recognize there's just a slew of cash in the market.

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PROP DESK: TIME TO BUY TURKEYS

With the Dow up 19% year to date, is it a good time to buy the turkeys?

Jon Najarian thinks it is. He says when the market rallies you want to buy underperformers.

So which underperformers is he looking at buying into year’s end?

Here’s the short list:UnitedHealth: up 9% in 2009
Becton, Dickinson: up only 9% year to date
Lowe’s: up only 2% year to date

Warren Buffett owns all three and that’s one of the many reasons to like them, concluded Najarian.



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Trader disclosure: On November 23rd, 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 (POT), (GOOG), (AAPL); Terranova Owns (UNG) April 2010 Calls; Finerman's Firm Owns (PLCE), (MSFT), (NOK), (WMT), (FLS), (PDE), (RIG), (TGT), (CDY), (ACL); Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (USO), (UNG), (KFT); Finerman's Firm Owns (PEET) Call; Finerman's Firm Owns (AAPL); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Calls; Finerman Owns (BAC) Preferred, (BAC); Najarian Owns (AAPL) Call Spread; Najarian Owns (DELL) Calls; Najarian Owns (DE) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (INTC) & (INTC) Calls; Najarian Owns (LAZ) & short (LAZ) Calls; Najarian Owns (SEED) Call Spread; Najarian Owns (CLF) & Short (CLF) Calls

J. Najarian Owns (LOW)
J. Najarian Owns (UNH)

For Kimberly Greenberger
Citi Owns (ANF)
Citi Owns (AEO)
Citi Has Received Compensation from (AEO)
Citi Has Received Compensation from (ANF)
Citi Has Received Compensation from (JCG)
Citi Has Received Compensation from (URBN)
Citi Has Received Compensation from (LTD)
Citi Has Had (GPS) As A Client in Past 12 Months
Citi Has Had (TJX) As A Client in Past 12 Months
Citi Is A Market Maker in Securities of (HOTT)
Citi Is A Market Maker in Securities of (URBN)
Citi Is A Market Maker in Securities of (PLACE)
A Suit Filed by (AEO) Against Citi is Currently Pending in Federal Court


CNBC.com with wires

Symbol
Price
 
Change
%Change
DJIA
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NASDAQ
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S&P 500
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AA
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BDX
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DE
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HPQ
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INTC
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LOW
---
MSFT
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RIG
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TXN
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UNH
---
SPDR SP HB
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AAPL
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GOOGL
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