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Traders Bet Tech To Lead The Way

Friday, 8 Jan 2010 | 5:26 PM ET

In a late rally, bulls seized control of the Nasdaq as well as the broad market after stocks spent much of the day in no-man’s land.

A weaker-than expected jobs report spooked investors however it failed to send stocks tumbling as some had expected it might.

Instead investors rotated into tech late day, gobbling up shares of Google, Apple and other bellwethers in a bet that technology would lead the charge higher in 2010 as it did last year.

Should you scoop up some tech bargains too?

Word on the Street
The Fast Money traders take a look at today's top business stories.

Strategy Session with the Fast Money traders

I like Google, says Karen Finerman. I think current levels present a buying opportunity.

It seems to me that investors are looking for places to garage some money and tech is one of them, says Steve Grasso. I expect it to remain that way until the market finds new leadership. My tech trade is long Apple and short Amazon, because I think the iTablet pressures the Kindle.

There is too much hype in Amazon stock, adds Karen Finerman. It ‘s trading at a 57 multiple. I just think there will be all kinds of pressure on this stock in days to come.

With money moving back into technology, I’m bullish Microsoft , EMC as well as Qulacomm, adds Joe Terranova. But all my trades are bets on enterprise spending not consumer spending. I think the consumer returns to frugality.

I watching Appled Materials, adds Pete Najarian. Upside call buying suggests institutional buyers are bullish. Else where in the space I love Intel , he adds.

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BANKS TO BREAKOUT DESPITE SELLOFF?

Bank shares only traded modestly lower on Friday despite word that Citigroup slashed estimates on a slew of rivals including Goldman , JPMorgan , and Morgan Stanley saying falling trading volumes could hurt the banks' key profit engines.

How should you play banks?

I'm still longBank of America and short Comerica against it, says Joe Terranova. I’m also a seller of ICE as a play on low trading volumes.

I'm long Bank Of America and JPMorgan Jan. calls, adds Karen Finerman. I think JP Morgan is a bellwether for the financials. And I'm still short the Long Bond ETF for a long term trade.

I'm holding on to my XLF calls, says Pete Nanarian. And I’m still bullish Morgan Stanley.

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BELIEVE UPS OR JOBS REPORT?

Investors are trying to make sense of almost conflicting information from UPS versus the Labor Department.

UPS raised its fourth-quarter profit forecast on Friday to reflect improved shipping volume amid an economic recovery. Economists consider UPS and rival FedEx bellwethers for the U.S. economy because they handle such a huge chunk of the nation's shipping. FedEx also raised its outlook before reporting fiscal second-quarter earnings in December.

However it’s hard to ignore the Friday’s jobs report from the Labor Department which showed U.S. employers cut 85,000 jobs in December far more than the expected loss of 8,000.

What’s the trade?

I find UPS guidance to be a good baromter for the transports, adds Pete Najarian.

Speaking of transports, I'm a seller of Continental Airlines, adds Joe Terranova. It seems oil prices are going to remain high.

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STRIKE WHILE THE STEEL TRADE IS HOT?

Shares of steel companies rose on Friday after JPMorgan raised its earnings estimates and stock price targets for several producers, citing improved pricing prospects for the metal.

Analyst Michael Gambardella said integrated steel stocks such as AK SteelArcelorMittal and U.S. Steel , should still have room to run.

JPMorgan raised AK Steel's price target to $34 from $29, U.S. Steel's to $75 from $55 and ArcelorMittal's to $55 from $45.

What’s the trade?

I’m long Freeport McMoRan, Cliffs as well as Teck Resources, says Pete Najarian. And elsewhere in the space I'm watching Patriot Coal .

I’m also bullish Freeport McMoRan, adds Joe Terranova.

When steel gets to $70, $72, it's probably time to get out of the trades, says Steve Grasso.

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EAR TO THE WALL: FORD TO SURPRISE NEXT QUARTER?

Ford closed higher on Friday as investors grew more bullish on the company. That's largely due to speculation that the company is going to report a stronger than expected quarter at the end of this month.

I'm hearing that Ford could go to $14, says Steve Grasso.

In the space, I like American Axle, says Karen Finerman.

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BEHIND THE TRADE: JOBS

Tim Seymour tells the desk he’s going long the Emerging Markets ETF. Friday’s weak jobs number suggests to him that the Fed won’t raise rates for a while and that should be bullish for commodity prices – and in turn emerging nations.




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Trader disclosure: On Jan 8th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (AMAT) Calls; Najarian Owns (TEVA); Najarian Owns (CELG); Najarian Owns (PCX) Calls; Najarian Owns (CLF), Is Short (CLF) Calls; Najarian Owns (FCX), Is Short (FCX) Calls; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (PFE) Stock; Najarian Owns (TCK), Is Short (TCK) Calls; Najarian Owns (XLF) Calls; Finerman Owns (AAPL); Finerman's Firm Owns (AXL), (AXL) Calls; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (JPM) Calls; Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spread; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Owns (IBB), (CSCO), (MSFT), (NDAQ); Finerman's Firm Is Short (TLT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Is Short (IJR), (MDY), (SPY), (USO), (UNG); Grasso Owns (ABK), (AAPL), (ASTM), (BAC), (BGP), (C), (COST), (CSCO), (FAZ), (PFE), (PRST), (WMT), (V); Terranova Owns March British Pound Futures; Terranova Is Long Copper Backwardation: Long May 2010, Short July 2010; Terranova Is Short (CMA), (JCI), (ESS), (ICE), (SHLD), (CAL); Terranova Owns (XHB) Puts; Terranova Owns (QCOM), (MSFT), (EMC), (FTO), (XOM), (BAC)

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Additional Disclosures for Steve Grasso:
Stuart Frankel & Co. Inc. And Its Partners Own (AIZ)
Stuart Frankel & Co. Inc. And Its Partners Own (CUBA)
Stuart Frankel & Co. Inc. And Its Partners Own (GERN)
Stuart Frankel & Co. Inc. And Its Partners Own (GLG)
Stuart Frankel & Co. Inc. And Its Partners Own (HSPO)
Stuart Frankel & Co. Inc. And Its Partners Own (NWS.A)
Stuart Frankel & Co. Inc. And Its Partners Own (NXST)
Stuart Frankel & Co. Inc. And Its Partners Own (NYX)
Stuart Frankel & Co. Inc. And Its Partners Own (PDE)
Stuart Frankel & Co. Inc. And Its Partners Own (PRST)
Stuart Frankel & Co. Inc. And Its Partners Own (RDC)
Stuart Frankel & Co. Inc. And Its Partners Own (ROK)
Stuart Frankel & Co. Inc. And Its Partners Own (TLM)
Stuart Frankel & Co. Inc. And Its Partners Own (XRX)
Stuart Frankel & Co. Inc. And Its Partners Own (SDS)
Stuart Frankel & Co. Inc. And Its Partners Own (SBU)
Stuart Frankel & Co. Inc. And Its Partners Are Short (QQQQ)
Stuart Frankel & Co. Inc. And Its Partners Are Short (CL)

Additional Disclosures for Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For Tim Seymour
Seymour Owns (EEM)
Seygem Asset Management Owns (EEM) Puts

For Brian Stutland
Stutland Owns (AA) Calls
Stutland Owns (GS) Bonds
Stutland Owns (WFC) Bonds
Stutland Owns (GS) Calls, Is Short (GS) Put Spread
Stutland Is Short (BAC) Volatility
Stutland Is Long (MU) Through Options



CNBC.com with wires

  Price   Change %Change
NASDAQ
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AKS
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AMAT
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AMZN
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AXL
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BAC
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CPT
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CLF
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CMA
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EEM
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EMC
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F
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FCX
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FDX
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GS
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ICE
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INTC
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JPM MLP ETN
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MS
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MSFT
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MT
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PAYX
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QCOM
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TBT
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TCK.B
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UPS
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X
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SPDR TEC SEL
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AAPL
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GOOGL
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  • Najarian, the "Pit Boss," is cofounder of optionMONSTER.com, a news site for options traders.

  • Finerman is president of Metropolitan Capital Advisors, Inc., a company she co-founded.

  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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