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Halftime Report: Is Oil Heading To $96?

Tuesday, 24 Nov 2009 | 1:13 PM ET

Stocks fell on Tuesday, a day after the Dow hit a 13-month high, after data showed the economy grew in the third quarter, but at a slower rate than expected.

Growth domestic product (GDP) expanded 2.8 percent, rather than the 3.5 percent pace the government estimated last month. While the data could signal an end to the recession, investors are looking for more robust growth to justify additional stock gains after a 22 percent rise in the S&P 500 this year.

Fast Money Halftime Report
The Fast Money traders share their market insight and midday trading advice.

What must you know to trade this market?

I’m impressed that the market isn’t down more, muses Fast Money trader Pete Najarian. It seems like we found a base in the S&P. We bounced off 1097.

But I don’t think investors should go long right now, says Jefff Tomasulo of SMB. Volumes are too light and the data is bad. I'd just stay on the sidelines.

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CHART OF THE DAY: XOM

Oil fell on Tuesday as investors braced for weekly figures expected to show crude stocks rose last week as rigs in the Gulf of Mexico came back online after Tropical Storm Ida shut some of them down in the previous week.

What’s the oil trade?

Crude appears to be testing it’s 50-day moving average, explains Katie Stockton of MKM. The trend lines suggest it’s short-term oversold and oil has a break out in place that projects a target of $96.50.

Meanwhile, I’m also watching the action in Exxon Mobil, she adds. This stock gapped above a really important resistance level on its chart – at $75. That breakout comes on the heels of a breakout from a long-term triangle formation that coincided with a breakout in the price of crude oil.

That all says to me if oil breaks higher Exxon is poised to benefit.

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HOUSING DATA DISAPPOINTS

The Homebuilders ETF traded lower after the Standard & Poor's/Case-Shiller index showed U.S. home prices rose in September, but at a much less robust rate than forecast. (Case-Shiller measures home prices in 20 metropolitan areas.)

What’s the housing trade?

I’d stay away from this space, says Jeff Tomasulo. There are better places to put your money.

If you want a related play I’d look at copper , says Pete Najarian. And I’d play it with a long position in Freeport McMoRan. Or you can go downstream a little more and establish long positions in Lowe’s and Home Depot.

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TOPPING THE TAPE: SPECIALTY RETAILERS

Shares of the XRT were modestly lower on Tuesday, although American Eagle made gains after the company posted a quarterly profit in line with analysts' expectations and said it is looking for a continued recovery in 2010.

What’s the retail trade?

The consumer is still looking for value, says Patty Edwards of Storehouse. I’d play retail either with companies that offer consumers value, like Dollar Tree or with the best operators. And in my opinion that’s J Crew. They report after the close and I think you could profit from a long position into the close.

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GOING FORD GOLD

Gold prices see-sawed on Tuesday as the dollar recovered losses from the day before, curbing interest in the precious metal as an alternative asset.

Long term, analysts say prices remain firmly underpinned, however, by the prospect of rising inflation next year and more gold acquisitions by the official sector.

What must you know about this trade?

Gold isn’t just making new highs in dollar terms, says Dennis Gartman. Gold is making new highs in terms of the euro, Australian dollar and more. That’s impressive. I think we’re seeing a move of capital away from currencies.

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CALL THE CLOSE

Pete Najarian: I would stay on the sidelines because of light volumes.
Patricia Edwards: I’m on the side, too.
Jeff Tomasulo: I’m also going to the side.
Katie Stockton: I’m a buyer. The market has positive intermediate term momentum.


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Trader disclosure: On November 24th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;

Tomasulo owns (AMZN)
Tomasulo Owns (XOM)
Tomasulo Owns (FCX)
Edwards Owns (WMT)

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  Price   Change %Change
DJIA
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S&P 500
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AEO
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DLTR
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FCX
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HD
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LOW
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SPDR SP HB
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SPDR SPRET
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XOM
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