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Halftime Report: Buy Tuesday's Dip?

Tuesday, 12 Jan 2010 | 1:22 PM ET

Stocks fell on Tuesday, dragged lower by Alcoa’s worse-than-expected results and a warning from Chevron that its fourth-quarter earnings will drop.

Of the major indexes, it's the tech-heavy Nasdaq that's faring worst after Electronic Arts cut its fiscal 2010 forecast, citing weak holiday sales in Europe.

Considering tech led Tuesday's sell-off, should you buy the dip or is the market starting to break down?

Instant Insights with the Fast Money traders?

Chips stocks are particularly weak with Intel struggling near 21, explains Pete Najarian. Although I’d be a buyer of the broader market on dips, I would not look to add to any position in semiconductors.

Part of the sell-off in the chip stocks stems from commentary out of the Needham conference, explains Patty Edwards of Storehouse. The market does not like what it’s hearing

In the chip space, Intel is the name I’m focused on, says JJ Kinahan of TD Ameritrade. Options action suggests the stock could move as much as 7% in either direction when it reports on Thursday.

And looking at the broader market, I’d use any rally as a selling opportunity, adds Kinahan. We’re at a key level on the S&P at 1132 and if we stay below it, I think it’s a selling opportunity all the way down to 1119.

I’m watching commodities , explains Mike Gurka of Empower. Considering how investors spanked Alcoa on yesterday’s miss, I think we could see a big dip in commodity stocks. But I’m a buyer on the dips. I think 1130 will be support in the S&P.

And looking at the broad market, I’m a buyer of weakness, adds Gurka. I think the misses we’ve seen so far are headfakes. Don’t get scared.

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CHART OF THE DAY: CANARY IN THE COAL MINE?

Once again the traders are keeping a close eye on the action in Goldman after the stock fell below its 50-day moving average?

Should you buy into the weakness?

This is not a buying opportunity, says Joe Terranova. The broad market is under pressure right now. Goldman Sachs has lost its mojo. I’m watching $157 as the next level of resistance. But before you make a thesis wait for earnings on the 21st.

I’m seeing unusual action in the February 165 Goldman puts, adds Pete Najarian. It suggests to me that investors are feeling uncomfortable. And looking at the Banking Sector ETF, if it breaks below $15, I’d start getting nervous.

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CALL THE CLOSE

Pete Najarian: I’d be a buyer of the broader market but be careful of the semiconductor names.

Mike Gurka: I’m a buyer of dips. I think 1130 will be support in the S&P. I think early earnings weakness is a headfake.

Patty Edwards: I’m bullish on the high end of retail after strong results from Tiffany, but overall I’d avoid the market broadly.

JJ Kinahan: I’d use any rally as a selling opportunity. We’re at a key level on the S&P futures at 1132 and if we stay below it I think it’s a selling opportunity all the way down to 1119.


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Trader disclosure: On Jan 12th, 2010, 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), (AKS), (BAC), (FXI), (GE), (INFY), (LVS), (MGM), (SBUX), (MOO), (INTC), (VALE); Seymour Is Short (TSO); Finerman's Firm Is Short (IJR), (MDY), (SPY), t (IWM); Finerman's Firm Is Short (USO); Finerman's Firm Is Short (UNG); Finerman Owns (AAPL); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spreads; Finerman's Firm Owns (WFC) Preferred; Finerman Owns (BAC) Preferred, (BAC); Finerman Owns (JPM) Calls; Finerman's Firm Owns (MCD), (MSFT), (MSFT), (PBR), (STJ), (TGT), (TJX), (WMT), (YUM), (STJ), (BDX), (BCR), (BSX), (GOOG); Najarian Owns (AMAT) Calls; Najarian Owns (AA) Feb. Calls, Is Short (AA) Jan. Calls; Najarian Owns (CLF), Is Short (CLF) Calls; Najarian Owns (FCX), Is Short (FCX) Calls; Najarian Owns (MGM) Call Spread; Najarian Owns (MS); Najarian Owns (STJ) Calls; Terranova Is Long March British Pound Futures; Terranova Is Long Copper Backwardation: Long May 2009, Short July 2009; Terranova Is Short (AGU), (JCI), (CMA), (ICE), (ESS),(CAL); Terranova Owns (BAC), (QCOM), (MSFT), (EMC), (FTO), (XOM); Terranova Owns (XHB) March Puts; Adami Owns (GS), (INTC), (AGU), (BTU), (C), (MSFT), (NUE); Kaminsky Is Short (QQQQ)

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